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L&T may soon become ESG ‘investible’ stock
April 21, 2021
The firm has been upgraded to ‘BB’ from ‘B’ by MSCI
Engineering giant Larsen & Toubro may soon be out of the “exclusion list” for environmental, social and governance (ESG) investors. Companies, which adhere to noble or responsible norms, are termed as ESG and L&T was placed under the exclusion list, citing its involvement in manufacturing cluster munitions due to its Defence business.
According to global investment advisory firm CLSA, the company has been upgraded to ‘BB’ from ‘B’ on ESG score by global index major MSCI, which many global pension funds follow.
<p><span>Today, SIX launched new ESG indices in the Swiss equity and bond markets. These cover the sustainability criteria of environment, social/society and governance.</span></p>
According to search
QN-2654, the global mandate will follow the Bloomberg Barclays MSCI Global Aggregate ex-CHF Sustainability Index. As for the Swiss bonds mandate (search
QN-2655), the active segregated strategy will follow the SBI AAA-BBB 1-5 Total Return Index.
The global mandate, also an active segregated strategy, is expected to invest in global corporate and government bonds, hedged to the Swiss franc, it said, adding that portfolio currencies are to be fully hedged – hedge ratio must be between 95%-105% at all times.
According to the notices, up to 5% of assets in off-benchmark listed securities – subject to limitations, such as a minimum rating of BBB- and the issuer being a corporate – will be permited. The use of collective investment schemes (i.e. implementing the mandates via pooled vehicles), however, will not be permitted.