Why ESG?

Informally, sustainability is often only equated with environmental and climate protection. However, in the world of investment funds, sustainability goes way beyond that. Here, the ESG approach has taken root. The so-called ESG criteria and their three dimensions are:

• environmental,
• social,
• and governance

Each criterion is assigned specific evaluation attributes and objectives, based on which a precise analysis can be conducted. A precise sustainability analysis can be carried out based on these. Therefore, the ESG criteria result in greater transparency in the green financial market and provide orientation. We at Raiffeisen KAG can determine the Raiffeisen ESG Indicator based on these criteria. This indicator is our means of measuring sustainability for companies and funds.

What lies behind E, S, and G?

Environmental

This criterion primarily deals with how a company incorporates environmental aspects in its business activities, and what contribution it delivers to achieve general climate targets (such as those in the Paris Agreement). Here, environmental and climate protection, careful management of resources, and the use of renewable energy play a role.

• What effort is put in to save energy and to reduce greenhouse gas emissions?
• Does the company pay attention to environmental and climate protection at all points of its supply chain?
• Is attention paid to the recyclability and reuse of products?

Social

This criterion covers a wide range of issues, from adhering to core human rights and labour laws in general – and also along the supply chain – to the actual conditions for staff. The company’s involvement in society and social engagement are also assessed.

• What occupational safety and health standards does the company observe?
• Are there possibilities for professional further education and training?
• Are the wage policies fair and are there equal opportunities for women and men?

Governance

This may well be the deciding factor. For sustainable, ethical corporate governance forms the basis for the successful implementation of various activities relating to environmental and social aspects. Not only does it connect both criteria to each other; it also connects these to the corporate goal as such. Sustainable corporate governance provides the foundation for companies to safeguard themselves for the future.

• Is sustainability management incorporated in the company?
• Are transparent measures put in place to prevent corruption?
• Is the compensation system for managers linked to achieving sustainability targets?

The ESG Indicator

For Raiffeisen KAG, our own Raiffeisen ESG Indicator is the main indicator for the sustainability performance of a company or an investment fund. This indicator includes a considerably wider range of aspects than those already mentioned as examples.

How is the ESG Indicator determined?

To evaluate ESG information for a company, we first focus on internal expertise. As part of our "Future Topics," an in-house assessment of key issues related to future viability and sustainability is conducted. Another dimension of internal evaluation is based on an assessment of the engagement dialogues we conduct with companies and issuers. In addition, we purchase comprehensive data and sustainability analyses from reputable rating agencies, which we verify, interpret, and process. The data from internal and external sources is compiled for each security into the Raiffeisen ESG Indicator. The higher the rating, the higher the sustainability performance is considered to be.

You can read about what ESG Indicator our respective ESG funds achieve, for example, in our publication INVESTMENT ZUKUNFT.

Our integrative sustainability concept

For a fund company such as Raiffeisen KAG, sustainability primarily means investing responsibly. Our integrative sustainability concept forms the basis for this, and the ESG criteria are a core component. Find out how Raiffeisen KAG promotes sustainability by means of this concept and thus exerts its influence and achieves results.

Two further tips

• People who want to find sustainable investment funds can also use the relevant quality seals as orientation. We have made a concise list of the most important ones.
• When sustainability alone is not enough for financial products such as investment funds: Impact investing goes beyond the pure ESG concept. Discover the focus of these investments.

*Raiffeisen Kapitalanlage-Gesellschaft m.b.H. continually analyses companies and countries with the help of internal and external research providers. Together with an overall ESG rating including an ESG risk assessment, the results of the sustainability research are converted into the so-called Raiffeisen ESG Indicator. The Raiffeisen ESG Indicator is measured on a scale of 0-100. The assessment is made in consideration of each company’s respective branch of business. Further information can be found in German at Raiffeisen-ESG-Indikator and in English at Raiffeisen ESG Indicator.