Launched in April 2024, the Ethos sustainability bond index and the BCV bond fund that replicates it have been awarded the “Swiss ETF Special Awards” by XENIX, and index fund rating specialist. This award crowns a year 2024 in which all the sustainable indices offered by Ethos outperformed their benchmark.
On Tuesday, Ethos won the Swiss ETF Special Awards 2024 for its Swiss Responsible Bond Index (SRBI). Awarded by the German ETF ratings specialist XENIX, the prize recognises “a cooperation [between Ethos and BCV] which impressively demonstrates how a bond market can be made accessible to both institutional and private investors in a sustainable and transparent manner’’, according to a press release published on Wednesday.
This index has been replicated since its launch by the BCV Swiss Responsible Bond Indexed fund, a fund launched by BCV, Ethos banking partner since 2020. Pension funds and other institutional investors can also mandate their managers to replicate this sustainable index.
This award crowns a positive year in 2024 for the Ethos’ indices, whether dedicated to good governance or sustainability, which all outperformed their benchmark indices. ‘This shows that taking into account ESG criteria in investment choices is not at the expense of financial performance, as some people think,’ says Vincent Kaufmann, CEO of the Ethos Foundation, with satisfaction.
A range of five Swiss and international indices
Over the years, Ethos has developed a range of governance and sustainability indices. There are currently three Swiss equity indices, one Swiss franc bond index and one international equity index. These indices aim to give preference to companies - or issuers in the case of the bond index - whose practices and performance in terms of governance and/or management of environmental and social issues that are superior to those of their peers.
Launched in April 2024, the SRBI is the latest index. It is composed of issuers (corporate, municipal, regional, sovereign or supranational bonds) included in the ‘Swiss Bond Index AAA-BBB’ benchmark universe whose ESG rating awarded by Ethos is at least B+ (on a scale from A+ to C). The index thus encourages investment in issuers that manage their ESG issues with conviction and whose extra-financial performance is better than that of their peers.
ESG assessment by Ethos
Ethos assesses the sustainability of issuers according to their exposure to ESG risks and the way they manage them. For companies, this assessment takes into account their governance, their sustainability strategy and the way they interact with their stakeholders. For sovereign or regional issuers, the assessment takes into account the management of risks, the environmental footprint and social challenges, such as inequality, human rights and decent living conditions, as well as the management of structural risks related to governance.
This analysis is then supplemented by exclusion criteria. For corporate issuers, all those whose products are incompatible with the values set out in the Ethos Foundation Charter - i.e. those that generate more than 5% of their turnover from arms, tobacco, gambling, pornography, GMOs, nuclear energy or unconventional fossil fuels - or whose behaviour does not respect the fundamental principles of ethics and sustainable development are excluded from the SRBI index.
Sovereign issuers are also subject to exclusion principles. This occurs when the country's situation and institutional framework are deemed incompatible with the fundamental principles of sustainability. The assessment focuses on three aspects: international sanctions; an alarming human rights situation; and non-ratification of key treaties on non-conventional weapons.
The SRBI index is managed by Ethos, which is responsible for determining the ESG ratings and exclusion criteria used, while SIX calculates the index in accordance with market standards.
