Impact Investing

We don't consider buying/selling stock as making an impact. Using the dialog with our portfolio companies, we engage to measure, map and create impact.

We use a blended approach to investing, which differentiates itself through...

- financial as well as

- socio-ecological

...performance and by combining these two qualities and revealing the positive effects they may have achieved (impact from ESG & SDG mapping).


Definition

1) Carnot Impact Investing promotes the reduction of energy and natural resource consumption.

Carnot Impact Investing addresses the consumption reduction of natural resources. The focus is on products, technologies and services that conserve natural resources or make more efficient use of them as production factors. Concrete fields of application are the topics of energy and natural resources, which in turn are divided into the four elements fire, water, earth and air.

2) Carnot Impact Investing prioritizes the financial return with the maximum possible consideration of positive social impacts (ESG, sustainability).

In-depth financial analysis evaluates the return potential and ensures that financial return is a priority. Positive investment returns and positive societal impacts (ESG, sustainability) are compatible.

3) As an equity specialist, Carnot Impact Investing combines a value approach with a sustainability analysis (ESG filter) to a "blended approach" for active impact investors.

In addition to a value approach with proven financial analysis, as a supervised "Independent Asset Manager of Collective Investment Schemes" and a specialist in equities an active strategy is used. The value approach based on financial ratios is combined with a sustainability analysis (ESG filter) and extended to become a "blended approach" of an active investor.

4) Carnot Impact Investing uses SDG mappings to document the sustainability of external effects of selected portfolio companies in a qualitative and quantitative report.

The sustainability analysis does not only comprise a negative screening (exclusion lists) but also uses a positive screening (ESG Rating) which is qualitatively deepened several times. Furthermore, external effects are included in the qualitative and quantitative reporting by means of SDG mappings.

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Map

The portfolio companies make it possible to reduce energy consumption and thus make a critical contribution to the UN's Sustainable Development Goals (SDG). The primary focus goals are «Affordable & Clean Energy» (# 7) as well as «Climate Action» (# 13). Furthermore, the portfolio companies make a substantial contribution to the decoupling of economic growth from environmental degradation (target 8.4), the upgrading of infrastructure and retrofit industries to make them sustainable (9.4) or to help provide safe, affordable, accessible and sustainable transport systems (11.2). Some portfolio companies have effects in terms of further development goals, which we do not present here.


For impact assessment, we consider the share of revenues of the relevant products as well as their effectiveness. We map the results according to companies and development goals in an "Impact Heatmap".

Impact Investing


Measure

Focusing on the issue of energy and resource efficiency means that all positions have a positive ecological impact (excluding cash). We measure this portfolio contribution based on the UN's Sustainable Development Goals (SDGs).

Impact Investing

Our approach continues with the measurement of the share of revenues of impact products. In our impact questionnaire, we determine the impact-relevant revenues. On average, the portfolio companies generate around half of their revenues with products, services and projects with a positive impact (for details see table). A fund investment of CHF 1 million represents approximately CHF 0.5 million in revenues that have a positive ecological impact. Part of this revenue has a social impact, as shown above (SDGs 9.4 und 11.2); however, we do not determine the exact revenue figure.

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Finally, we also look at the research and development of impact products. A significant positive impact results from the research and development expenses of the portfolio companies. Based on the revenues of the companies, the expenditures amount to more than 5%. A fund investment of CHF 1 million will therefore serve as several tens of thousands of francs of development expenditure to improve energy efficiency.


Engage

Our goal is to increase the value of our portfolio companies. We aim to do this through continuous dialogue, careful criticism and acting as owners. By defining a company-specific "Carnot Impact Case", we ensure the continuity of our dialogue.


Create

Our commitment, dialogue and constant criticism of our portfolio companies enables us to create a tangiable and measurable impact. Our aspirations are captured in specially created questionnaires related to impact, ESG and engagement. While the Impact questionnaires serve to measure the impact, the ESG questionnaires allow us to take an opinion on the company's ESG standpoint and the engagement questionnaires allow us to define the "Carnot Impact Case".

 

Impact Investing


Research Paper

Our research paper on the topic of impact investing in public equities contains an in-depth analysis of our approach and is available in both German and English.

Impact Investing

 

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