Case Story: Pictet Asset Management

Swiss investment firm Pictet Asset Management has developed a new type of country bond fund: one that rates countries based on their ability to provide a high quality of life at a minimal ecological cost.

While typical bond ratings tend to favor those countries with the highest income levels (and, often, the highest Ecological Footprints), Pictet’s rating system flows investment to countries that are developing along a more sustainable path. Using a ratio of Ecological Footprint to U.N. Human Development Index (HDI), a measure of human well-being, the bonds evaluate countries based upon how high a standard of living is provided per unit of nature.

Over the last several years, there has been a growing interest in “Socially Responsible Investment” (SRI) as people think not only about their financial legacy but also about the type of world they will leave to future generations, according to Pictet Sustainability Expert Christoph Butz. Yet, while interest in SRI has grown, there are a limited number of SRI bond and fixed-income products on the market.

The new sustainable bond rating has been already fully implemented in client portfolios, for instance for Geneva-based Ethos, an investment foundation that regroups more than 80 small and large Swiss pension funds.

UN Human Development Index and Ecological Footprint of Nations