UNCTAD Sustainable Fund Awards
Sustainable funds, which integrate environmental, social, and corporate governance (ESG) considerations and the Sustainable Development Goals (SDGs) into their asset allocation process, have grown rapidly in number, variety and size. UNCTAD estimates that, today, there are nearly 4,000 such funds, with assets under management of over USD 1.7 trillion. These sustainability‐oriented funds have become important instruments for institutional investors to invest in sustainable development, channeling billions of dollars into key sectors that are critical for achieving the SDGs.
Despite their rapid growth, the total assets of sustainable funds account for 3.2% of the entire fund universe, and most of them are domiciled and invested in developed economies. Meanwhile, a lack of transparency and inconsistency of standards around sustainability labelling have given rise to credibility issues and “ESG washing” concerns.
To encourage the development of high‐quality, high‐impact sustainable funds, and in particular those investing in SDG‐related sectors and in developing countries, the UNCTAD sustainable fund awards recognize outstanding funds that demonstrate the highest standards of sustainability and impact, while outperforming their respective financial performance benchmarks.
UNCTAD Sustainable Fund Awards 2021
To encourage the development of high-quality, high-impact sustainable funds, in particular those investing in SDG-related sectors and in developing countries, the UNCTAD sustainablefund awards recognize outstanding funds that demonstrate the highest standards of sustainability and impact, while outperforming their respective financial performance
The 2021 Awards have two categories:
- The 2021 UNCTAD Sustainable Global Fund Award is dedicated to sustainable equity mutual funds, which represent the largest share of the sustainable fund universe by both number of funds and assets under management. Four winners were awarded.
- The 2021 UNCTAD Sustainable Emerging Market Fund Awards recognizes the achievements and impact of sustainable equity funds that invest (solely or mainly) in emerging markets. Two winners were awarded.
The Awards were announced at an online awards ceremony at the UNCTAD WorldInvestment Forum on 20 October 2021.
The 2021 UNCTAD Sustainable Global Fund Award is dedicated to sustainable equity funds, which represent the largest share of the sustainable fund universe by both number of funds and assets under management. Four winners were awarded:
- Aegon Global Sustainable Equity Fund
- Baillie Gifford Positive Change Equities Fund
- New Alternatives Fund A
- Swisscanto (LU) Equity Fund Sustainable Global Climate
The 2021 UNCTAD Sustainable Emerging Market Fund Award recognizes the achievements and impact of sustainable equity funds that invest (solely or mainly) in emerging markets. Two winners were awarded:
- Matthews Asia ESG Fund
- Stewart Investors Global Emerging Markets Sustainability Fund
|Evaluation of funds was based on five sustainability indicators of their holdings: 1. ESG rating at the portfolio level, which is provided by Conser based on its multisource ESG Consensus® rating, with its methodology and process audited by PwC; 2. SDG alignment; 3. net impact on climate; 4. relative performance; and 5. investment performance resilience. Technical support was provided by Anglo-Swiss Advisors on the analysis of the financial performance of the funds. For details, please refer to Methodology below.|
Click here to download the 2021 UNCTAD Sustainable Fund Awards and the 2021 UNCTAD Sustainable Fund Awards “Short List”
- Ms. Xiaolan Fu, Director, Technology and Management Centre for Development, University of Oxford
- Mr. Manuel Leuthold, Chairman, Compenswiss (Fonds de compensation)
- Ms. Fiona Reynolds, CEO, Principles for Responsible Investment (PRI)
- Ms. Lisa Sachs, Director, Columbia Center on Sustainable Investment, Columbia University
- Ms. Nandini Sukumar, CEO, World Federation of Exchanges (WFE)
- Mr. James Zhan, Director, Division on Investment and Enterprise, UNCTAD
- Mr. Laurent Zylberberg, Chairman, European Long-Term Investors Association
1.Sustainable Global Fund Award
All sustainable equity mutual funds (excluding ETFs) that report a systematic adoption of ESG or SDG factors in their asset selection process, in their prospectus or other documents, were eligible for the long list for the Sustainable Global Fund Award, if they met the following criteria as of 30 June 2020:
- They had a 3-year performance history;
- They had minimum assets of $20 million, and
- Their holdings were accessible on leading global fund databases, with a
maximum delay of three months.
2. Sustainable Emerging Market Fund Award
All sustainable equity mutual funds (excluding ETFs) that invest solely or mainly (over 70% of their assets) in developing markets were eligible for the Sustainable Emerging MarketFund Awards, if they met the following criteria as of 30 June 2020:
- They have a 3-year performance history;
- They have minimum assets of $10 million, and
- Their holdings are accessible on leading global fund databases.
1. The Sustainable Global Fund Award
Prescreening and the long list
Based on their holdings as of 30 June 2020, UNCTAD, supported by independent experts, analyzed the sustainability and financial performance of all eligible funds, and a weighted sustainability score was given to each of them, based on five indicators: ESG rating at the portfolio level (40%), SDG alignment (15%), net impact on climate (15%), relative performance (15%), and investment performance resilience (15%) (as defined below). The top 100 sustainable funds with the highest scores were long-listed for the Global Sustainable Fund Award.
|ESG rating||Numeric rating from 10 to 1 (best to worst) based on the ESG score provided by Conser, a Swiss independent ESG expert. The multi-source approach developed by Conser with its ESG Consensus® is selected due to enhanced comparability of ESG data and mitigated analytical bias that otherwise could be associated with the use of a unique source of ESG rating. The Conser Consensus methodology and process were audited by PWC.|
|Net impact on climate||% of assets in clean tech minus % of assets in fossil fuels.|
|SDG alignment||% of assets invested in 8 SDG sectors, i.e. water and sanitation transport infrastructure, telecommunication infrastructure, health, food and agriculture, education, ecosystem diversity, and climate change mitigation (renewable energy).|
|Relative performance||Relative financial performance against the respective benchmark.|
|Investment performance resilience||Measured by the upside/downside capture ratio of the fund.|
The short list or the nominees for the Sustainable Fund Awards
In order to ensure consistent outperformance, UNCTAD rated all long-listed funds, based on their holdings as of 31 March 2021, with the same methodology mentioned above. The top 20 funds with the highest average of the 2020 and 2021 sustainability scores were short listed for the award.
2. Sustainable Emerging Market Fund Award
Due to limited data availability of emerging market sustainable funds, especially those domiciled in developing economies, eligible funds for the Sustainable Emerging Market Fund Award were rated by their latest available holdings, with the same methodology
described above for both the long lists. Ten funds with the highest sustainability score were short listed for the Awards.
3. Preconditions for qualifying for the short list
For a fund to be qualified for the short lists for the two award categories, it must meet the following conditions with respect to its holdings:
- An ESG rating of 6 and above.
Outperforming its respective benchmark in returns.
- Zero exposure to weapons (including cluster bombs), gambling, pornography,
tobacco and alcohol.
- An exposure to international norm-related risks of less than 0.5% of its holdings.
In addition, any funds with any material sustainability concerns or governance issues identified by UNCTAD in its due diligence review (see section IV), with respect to its provider, will be excluded from the short list.
4. The Award Selection Committee and the selection of the winners
An Award Selection Committee comprised of 7 international experts was established to review the short-listed funds and decide the winners by voting. The Committee was chaired by an UNCTAD senior official and included six international experts with proven expertise in the field of sustainable finance, with due consideration given to geographic and gender balance. The committee cannot have more than one member from the same organisation/body/company.
Each committee member voted for 4 funds for the Sustainable Global Fund Award, and 2 funds for the Sustainable Emerging Market Fund Award. The top 4 and top 2 funds were the winners of each Award.
The members of the Committee acted in their own name, with complete impartiality,objectivity and independence. Each Member had equal weight in the decisions taken. The Chair of the Committee ensured proper debate and voting process and compliance with the rules.
Each member undertakes to disclose in advance any mandate and/or contractual or other relationship with the provider of a short-listed fund(s) that could result in a potential conflict of interest, and has a duty to abstain from voting for the fund(s).
UNCTAD conducted due diligence on all short-listed funds for both awards. Any serious ESG concerns identified will lead to exclusion of a fund from nomination. In particular, the due
diligence looked into the following issues:
- Whether the portfolio of the fund on 30 June 2020 and 31 March 2021 was exposed to any material sustainability concerns or controversial issues.
- Whether there is any reputation or governance concern with respect to the fund’s provider, its management and investment practices (any fraud, legal action, etc.).
- Whether the fund has a good track record of transparency in terms of disclosing its holdings, sustainable investment strategies and practices and impact in a timely manner.
Click here to download the methodology