Don't invest
in destructive companies

Investing sustainably is challenging because everyone has different beliefs and values. We focus on one guiding principle:
we don't support companies that we consider destructive to the planet.

Sustainability criteria

Because everyone's values differ, it's not a surprise that there are many different criteria for sustainability defined by several institutions and agencies. Each of the funds in your portfolio adheres to one or more of the following standards:

  • has an A+ rating from United Nations Principle for Responsive Investing (UNPRI)
  • invests in companies that have signed the standards of the United Nations Global Compact (UNGC)
  • does not invest in companies that are involved in the production of tobacco or controversial weapons, or in the production and mining of thermal coal

What's UNPRI?

UNPRI is a set of principles created by the United Nations and that investment funds can adhere to. By signing, the fund provider commits themselves to apply ESG factors in the investment process and maintain an active dialogue with companies to ensure sustainability factors are met. Furthermore, they must vote on the basis of sustainability at shareholders' meetings.

What does ESG mean?

Environmental, Social, and Corporate Governance (ESG) refers to the three factors in measuring the sustainability and societal impact of a company. Good governance essentially means that the company is "well run". For instance, it implies that all stakeholders in a company have a fair weight in the decision making.

What's UNGC?

Companies all over the world can pledge to the United Nations Global Compact. When doing so, they commit to responsible business practices in the areas of human rights, labour, the environment, and corruption.

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Classifying funds

Investment funds have to classify themselves according to their level of sustainability. There are three classifications:

1. Not sustainable

These are funds without sustainability ambitions. Curvo portfolios do not deal with any of these funds.

2. ESG investment fund

These funds promote environmental or social characteristics as part of their investment strategy. For instance, they may choose to exclude certain companies and sectors.

3. Impact investment fund

An impact investment fund goes a little further than an ESG fund and has sustainability as its main objective. The achievement of a financial return is second to the positive contribution they wish to make to the planet. Microcredit and green bonds are examples of impact investment funds.

Curvo portfolios only work with ESG investment funds.

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The sustainability of your portfolio

Discover how each of the funds meets sustainability standards.

Morningstar's Sustainability Rating is used to measure the sustainability policies of the funds. An average rating of 25 or below is the target. This is measured on a scale of 0 to 50, where 0 represents negligible risk to non-sustainability and 50 represents serious risk.

Vanguard ESG Developed World All Cap Equity Index Fund

ISIN: IE00B5456744

This fund offered by Vanguard promotes environmental and social characteristics by excluding companies from the following industries:

  • non-renewable energy (nuclear power, fossil fuels)
  • vice products (adult entertainment, alcohol, gambling, tobacco)
  • weapons (civilian firearms, military weapons)
  • controversies: companies that do not meet the labour, human rights, environmental and anti-corruption standards defined by the UNGC

Morningstar Sustainability Rating: 21.13 (as of June 30th, 2021)

Vanguard ESG Emerging Markets All Cap Equity Index Fund

ISIN: IE00BKV0W243

This fund offered by Vanguard promotes environmental and social characteristics by excluding companies from the following industries:

  • non-renewable energy (nuclear power, fossil fuels)
  • vice products (adult entertainment, alcohol, gambling, tobacco)
  • weapons (civilian firearms, military weapons)
  • controversies: companies that do not meet the labour, human rights, environmental and anti-corruption standards defined by the UNGC

Morningstar Sustainability Rating: 25.47 (as of June 30th, 2021)

Vanguard Socially Responsible Investing Euro Investment Grade Bond Index

ISIN: IE00BYSX5D68

The fund promotes environmental and social characteristics by excluding companies that:

  • violate the United Nations Global Compact principles
  • that are involved in the production of controversial weapons such as cluster munitions, land mines, biochemical and nuclear weapons, or are involved in the manufacture and distribution of tobacco products.

Morningstar Sustainability Rating: 20.26 (as of June 30th, 2021)

Funds invested in government bonds

The funds above invest in companies or company bonds. Curvo portfolios are also made up of two funds that invest in Euro government bonds:

  • iShares Euro Government Inflation-Linked Bond Index Fund (ISIN: IE00B4WXT857)
  • iShares Euro Government Bond Index Fund (ISIN: IE0031080868)

These funds do not apply sustainability criteria. However, they are still considered to match the investment principles for not being destructive to the planet because European governments are among the most sustainable globally. This is based on the results of European countries in the Sustainable Development Report 2020. This report contains a ranking and score of 192 countries on how well they score on achieving the Sustainable Development Goals (SDGs) set by the United Nations. A score of 100 indicates that these goals have been achieved.

The table below highlights that the top 10 countries which are all European. Furthermore, all countries represented in the two government bond funds are in the top 30.

Sustainable Development Report 2020 list of countries in Europe

There are European government bond funds that have strict sustainability. However, our conclusions show that the sustainability scores of Euro countries are close enough so there's little value to be gained. Furthermore, they come at a higher cost and at the expense of less diversification.

How it's monitored

As mentioned above, the Morningstar Sustainability Rating is used to check whether the sustainability policies of the selected funds are still in line with the criteria.

What if a fund changes their policy?

When the implemented policy of a fund is no longer in line with the conditions of the selection process, or that the rating in the Morningstar Sustainability Rating is lower than in the previous measurement, the fund manager is asked for an explanation.

If the explanation is not satisfactory, this can lead to the fund being removed from the investment strategy.

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