gestión isr en pictet modelo de gestión y engagement · los factores de riesgo están indicados...
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3Modelo de Inversión y EngagementPictet Asset Management
Dos caminos hacia la sostenibilidad
“El ascenso sostenible”“La vía directa”
Enfoque temático(Agua, Energías Limpias, Madera)
Enfoque temático/sectorial
“Best-in-Class”
Oferta/orientado a soluciones
Uno o pocos criterios sostenibles
ASG (Ambiental, Social y Gobierno Corporativo
Inversión “Core”
“Best-in-Class” (sostenibilidad)
Demanda/orientada al consumo
Multitud de criterios ASG
Fuente: Pictet Asset Management
PAM* Sector Teams PAM Quantitative Investments & SRI
4Modelo de Inversión y EngagementPictet Asset Management
Asignación sostenible “Core-Satellite”
Soluciones SRI Core Carteras Best-in-Class (Inversiones Mixtas & Cuantitativas de PAM, Equipos de Renta Fija)
Fuente: Pictet Asset Management
Pictet-Clean Energy
Pictet-Water
Pictet-Timber
Pictet-Agriculture
Satélites Medio ambientalesFondos temáticos(Equipos sectoriales y temáticos de PAM)
Ethos – World
SustainableEmerging Equities
Ethos - Pacific
Institutional European Sustainable Equities
Pictet-European Sustainable Equities
Equities World, indexedwith exclusions
Equities Europe, indexedwith exclusions
Pictet-Ethos (CH) – SwissSustainable Equities
Ethos SRI Bonds International
Ethos SRI Bonds CH
Ethos – North America
Ethos – Europe
5Modelo de Inversión y EngagementPictet Asset Management
Inversión Sostenible en Pictet– Datos clave
Histórico de la Inversión Sostenible en Pictet
20072008
Lanzamiento Pictet - European SustainableEquities Fund& Mandatos
Lanzamiento Pictet-Ethos (CH) – Renta Variable sostenible suiza
2002
1999
2005 2006
Lanzamiento Pictet-Timber
Acuerdo entrePAM & Ethos
3 veces “Proveedor ISR del año” por la revista Global Pensions
2009
2004
Primeros mandatos indexados con criterios de exclusión & Gobierno Corporativo
2010
Primer mandato ISR para Mercados Emergentes
Lanzamiento Pictet-CleanEnergy
Total AuM: >EUR 5 bn*
(RV Core ISR & Fondos Temáticos)
2000
Pionero temático conPictet- Water
Lanzamiento Pictet-Agriculture
Fondos temáticos
Renta Variable Core ISR
*a 31.12.2012Fuente: Pictet Asset Management
2012Lanzamiento Pictet-
Environmental-Megatrend Lanzamiento Pictet-Emerging Markets
Sustainable Equities
6Modelo de Inversión y EngagementPictet Asset Management
Proceso de Inversión: Objetivo
“Queremos crear sostenibilidad
financiera Y extra-financiera”
La sostenibilidad extra-financiera se logra restringiendo el universo de inversión a las compañías más sostenibles según medición de nuestro propio “estándar e indicadores de impacto”
La sostenibilidad financiera se logra seleccionado aquellas compañías que presentan una alta correlación con nuestros “propios indicadores sostenibles financieros”.
7Modelo de Inversión y EngagementPictet Asset ManagementPictet Asset Management
Solución – Un proceso de inversión sostenible e innovador
Asegurar sostenibilidad extra-financieraExcluir actividades controvertidasConservar compañías “best-in-class”
Fomentar sostenibilidad financieraMejorar las características riesgo-rendimientoApostar por factores financieros rentables
INDICE MSCIUNIVERSO DE INVERSION CARTERA FINAL
Análisis extra-financieroAnálisis de sostenibilidad
financiera
Sostenibilidad extra-financiera insuficiente
Sostenibilidad financiera insuficiente
8Modelo de Inversión y EngagementPictet Asset ManagementPictet Asset Management
1.Rating ASG „Standard“
Fuente: Inrate ‘Summary Profile’ 2011
9Modelo de Inversión y EngagementPictet Asset ManagementPictet Asset Management
2.Thomson Reuters: rating ASG & herramiento de filtro
Fuente: Thomson Reuters 2011; PCO Customised Rating.
10Modelo de Inversión y EngagementPictet Asset ManagementPictet Asset Management
3.RepRisk: Detecta y monitoriza los riesgos de reputación
Fuente: RepRisk Online Tool
11Modelo de Inversión y EngagementPictet Asset Management
Factores de impacto
Dimensión ambiental: Emisiones de CO2 de un coche (ejemplo) Dimensión social : Preocupaciones de los votantes suizos
100%75%
19%
4%2%
0%
20%
40%
60%
80%
100%
120%
Montaje Materiasprimas
ProducciónCombustible
Uso del vehículo
Total0 20 40 60 80
UE/Bilaterales
Seguridad personal
Extranjeros
Cobertura social
Servicios sanitarios
Planes de pensiones
Desempleo
Fuente: Inrate, Pictet Asset Management,
CO2 EMPLEOS
Fuente: Crédit Suisse, 2011
12Modelo de Inversión y EngagementPictet Asset ManagementPictet Asset Management
Creencia n°1: Un alto crecimiento conduce a un mayor rendimiento
Hecho: Las empresas de crecimiento más lento tienden a ser más rentables
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
Q1-LOWEST GROWTH Q2 Q3 Q4-HIGHEST GROWTH
En teoría
Se espera que las compañías con crecimiento más rápido logren mayor rendimiento para los accionistas
En la práctica
Las empresas de alto crecimiento tienden a rendir menos que sus homólogos más conservadores
Nota: Rentabilidad anual compuesta de acciones globales por crecimiento de activos 1991-2011.Clasificado por crecimiento total de activos sobre periodos de 5 años. Carteras equiponderadas rebalanceadas dos veces al año. Retorno total en USD.
Rentabilidad geométrica
Renta Variable 1991-2011
13Modelo de Inversión y EngagementPictet Asset ManagementPictet Asset Management
Creencia n° 2 : El apalancamiento fomenta los rendimientos
6.0%
7.0%
8.0%
9.0%
Q1-LOWEST LEVERAGE Q2 Q3 Q4-HIGHEST LEVERAGE
Hecho: Más allá de cierto umbral, el apalancamiento financiero es perjudicial para la rentabilidad del título
En teoría
Cuanto mayor sea el apalancamiento, mayor es el rendimiento esperado sobre el capital
En práctica
Las empresas altamente endeudadas tienden a rendir menos que sus homólogos menos apalancados
Rentabilidad anual compuesta de renta variable global por apalancamiento financiero 1991-2011Clasificado por ratio renta fija/renta variableCarteras equiponderadas rebalanceadas dos veces al año. Retorno total en USD.
Rentabilidad geométrica
renta variable global 1991-2011
14Modelo de Inversión y EngagementPictet Asset ManagementPictet Asset Management
Creencia n° 3 : Mas riesgo, mayor recompensa
Hecho: Mayor rendimiento no require mayor riesgo
En teoría
Los inversores sostenibles deben ser recompensados en proporción directa con el riesgo sistemático que están tomando.
En práctica
Las empresas de altos vuelos tienden a rendirmenos que sus homologosmás defensivos
800
400
200
75
100
12.1
989
12.1
991
12.1
993
12.1
995
12.1
997
12.1
999
12.2
001
12.2
003
12.2
005
12.2
007
12.2
009
12.2
011
World Index High Beta Low Beta
Carteras equiponderadas (USD), rebalanceadas cada 6 mersesClasificado por beta histórica.Retorno total en USD.
16Modelo de Inversión y EngagementPictet Asset ManagementPictet Asset Management
Tres niveles de sostenibilidad
EXCLUSIÓN INCLUSIÓN
COMPROMISOACTIVO (engagement)
17Modelo de Inversión y EngagementPictet Asset Management
Compromiso Activo
• Votar directrices basadas en una recomendación internacional globalmente aceptada, en la mejor práctica local y en consideraciones relativas a sostenibilidad
• Involucrar a las empresas en un dialogo con el objetivo de mejorar los estándares de negocio y mejores prácticas en una industria particular
• Contamos con la amplia experiencia y track record de la Fundación Ethos en Ginebra (para las compañías suizas) y con la red de Servicios de Gobierno Corporativo Europeo (para las compañías europeas)
Fuente: Ethos
Votando derechos y engagement son los dos instrumentos utilizados porPictet para ejercer un compromiso activo
18Modelo de Inversión y EngagementPictet Asset ManagementPictet Asset Management
Proceso de engagement de Ethos
MONITORIZACION ASG
MEJOR PRÁCTICA Y REQUISITOS DEMEJORA
CONTACTOS DIRECTOS CON COMPAÑIA
RECOMENDACIONES ETHOS
EVALUACIÓN COMPROMISO
19Modelo de Inversión y EngagementPictet Asset Management
Gracias por su atención
Patricia de ArriagaSubdirectora GeneralPictet Asset Management Iberia
Este documento comercial es una publicación de Pictet Funds (Europe) S.A. No va dirigido ni deberá ser distribuido a, ni utilizado por ninguna persona o entidad, que sea ciudadano o residente de o que se encuentre en algún lugar, estado, país o jurisdicción, en el que dicha distribución, publicación, disponibilidad o uso sea contrario a sus leyes o normativas. A efectos de la toma de decisiones de inversión, sólo podrán considerarse publicaciones del fondo las últimas versiones publicadas del folleto, del reglamento y de los informes anual y semestral del fondo. Estos documentos están disponibles en www.pictetfunds.com o en Pictet Funds (Europe) S.A., 3 Boulevard Royal, L-2449 Luxemburgo.La información y los datos presentados en este documento no deberán considerarse como una oferta o una incitación para comprar, vender o suscribir valores o instrumentos financieros.La información, las opiniones y las estimaciones expresadas en este documento reflejan un juicio emitido en su fecha original de publicación y están sujetas a cambios sin previo aviso. Pictet Funds(Europe) S.A. no ha tomado ninguna medida para asegurarse de que los valores mencionados en el presente documento son adecuados para un determinado inversor, y este documento no deberáutilizarse como sustituto del ejercicio de un juicio independiente. El tratamiento fiscal depende de las circunstancias particulares de cada inversor y puede cambiar en el futuro. Antes de tomar una decisión de inversión, es conveniente que obtenga asesoramiento profesional específico.El valor y la renta de cualquiera de los títulos o instrumentos financieros mencionados en este documento pueden bajar o subir y, en consecuencia, es posible que los inversores recuperen un importe inferior al que invirtieron originalmente. Los factores de riesgo están indicados en el folleto del fondo y el presente documento no tiene como propósito volver a exponerlos en su totalidad.Las rentabilidades pasadas no son una garantía ni un indicador fiable de los futuros resultados. Los datos relativos a la rentabilidad no incluyen las comisiones y los gastos cobrados en el momento de la suscripción o amortización de las acciones. Este material comercial no pretende sustituir la documentación completa del fondo ni ninguna información que deban obtener los inversores de los intermediarios financieros que intervengan en relación con su inversión en Pictet Funds (Lux).
Indice Anexos
1 Fichas Técnicas Gama ISR de Pictet
Core ISR Pictet European Sustainable Equities Pictet Emerging Markets Sustainable Equities Pictet Global Bonds Fundamental Satélite ISR Pictet Agriculture Pictet Clean Energy Pictet Environmental Megatrend Selection Pictet Timber Pictet Water
2 Presentación Pictet Agua 3 ETHOS
Informes Diálogo Sostenibilidad con Fibria Diálogo Sostenibilidad con Syngenta Engagement en Pictet Environmental Megatrend
RESULTADO INDEXADO
Fuente : Pictet Funds
RENTABILIDAD TRIMESTRAL
Fuente : Pictet Funds
REPARTO POR SECTORESProductos de consumo no Básico 16,1%Finanzas 15,1%Productos de consumo 14,3%Atención sanitaria 12,1%Servicios de telecomunicaciones 10,9%Industrial 8,5%Materiales 7,0%Servicios de utilidad publica 5,7%Energía 5,5%Tecnología de la información 4,4%Liquidez 0,6%Fuente : Pictet Funds
DISTRIBUCIÓN POR PAÍSESGran Bretaña 24,6%Francia 20,1%Suiza 17,8%Alemania 11,5%España 7,5%Suecia 5,4%Italia 3,9%Noruega 3,2%Dinamarca 2,4%Holanda 2,2%Otros 0,9%Liquidez 0,6%Fuente : Pictet Funds
LAS 10 POSICIONES MÁS IMPORTANTESNestlé 2,9%Roche Holding 2,3%UBS 2,2%L'Oréal 1,9%BBVA 1,8%Muenchener Rueckver Reg. 1,7%Essilor International 1,7%GlaxoSmithKline 1,7%Cie Financière Richemont 1,7%Danone 1,6%Fuente : Pictet Funds
NIVEL DE RIESGORiesgo menor Riesgo mayor
Rentabilidad potencialmente menor Rentabilidad potencialmente más elevada
1 2 3 4 5 6 7Fuente : Pictet Funds
OBJETIVO DE INVERSIÓNEl compartimento tiene por objetivo el crecimiento del capital invirtiendo como mínimo dostercios de su patrimonio total en acciones de empresas que tengan su actividad principaly/o su sede en Europa y que apliquen los principios del desarrollo sostenible en susactividades. Se adopta un enfoque cuantitativo para la construcción de la cartera.Fuente : Pictet Funds
RESULTADO vs. MSCI EuropeFondo Indice Fondo Indice
AnualizadoAcumuladoYTD 8,05% 7,16% - -1 mes 1,88% 1,62% - -3 meses 5,11% 4,24% - -1 año 18,9% 18,5% 18,9% 18,5%3 años 24,3% 24,5% 7,52% 7,58%5 años 6,24% 6,11% 1,22% 1,19%Desde inicio 76,8% 99,0% 5,53% 6,72%
Anual Abril a AbrilFondo Indice Fondo Indice
2012 15,3% 18,3% 18,9% 18,5%2011 -7,05% -8,86% -6,15% -5,91%2010 11,2% 11,4% 11,4% 11,7%2009 32,1% 32,2% 34,1% 32,8%2008 -44,9% -44,0% -36,3% -35,8%Fuente : Pictet Funds
INFORMACIÓN TÉCNICAValor liquidativo EUR 176,81 Dividendos ReinvertidosPatrimonio (mio) EUR 70,0 Títulos en cartera 82Alza máxima 39,3% Baja máxima -20,9%Volatilidad 11,2% Tracking error 2,33%Sharpe ratio 0,58 Information ratio -0,02Alpha Jensen 0,75% Beta 0,88Correlación 0,99 R cuadrado 0,98Fuente : Pictet Funds
INFORMACIÓN GENERALGestor Laurent NguyenBanco depositario Pictet & Cie (Europe) S.A.Estatuto jurídico Compartimento de la SICAV de derecho luxemburgués
PictetLugar de registro AT, CH, CY, DE, ES, FI, FR, GB, GR, LI, LU, NL, PT, SE,
SGFecha de constitución 30 septiembre 2002Cierre del ejercicio 30 septiembreMulticlase SíCálculo NAV Diario, "forward pricing"Comisión de gestión 0,45% p.a.TER 0,63% p.a.Com. máx. suscr. 5,00% A favor del distribuidorCom. máx. reemb. 1,00% A favor del distribuidorISIN LU0144509550Bloomberg PTFSEEI LXFuente : Pictet Funds
Datos a finales de abril 2013
Pictet-European Sustainable Equities-I EUR
1 / 2
RESULTADO INDEXADO
Fuente : Pictet Funds
RENTABILIDAD TRIMESTRAL
Fuente : Pictet Funds
REPARTO POR SECTORESFinanzas 23,6%Tecnología de la información 11,6%Servicios de telecomunicaciones 11,1%Productos de consumo 11,0%Materiales 10,3%Industrial 8,4%Energía 7,9%Servicios de utilidad publica 7,8%Productos de consumo no Básico 5,3%Atención sanitaria 1,4%Liquidez 1,6%Fuente : Pictet Funds
DISTRIBUCIÓN POR PAÍSESChina 16,3%Taiwán 14,7%Brasil 13,1%Corea Del Sur 11,0%Africa Del Sur 6,7%Malasia 6,3%Indonesia 5,2%Chile 4,6%México 4,2%Tailandia 3,2%Otros 13,1%Liquidez 1,6%Fuente : Pictet Funds
LAS 10 POSICIONES MÁS IMPORTANTESTaiwan Semiconductor 2,4%China Construction Bank 2,1%China Mobile 1,9%Bank of China 1,3%Enersis 1,2%China Minsheng Banking 'H' 1,2%Bancolombia Priv. 1,2%Coca-Cola Femsa 'L' 1,2%Perusahaan Gas Negara 'B' 1,1%Uni-President Enterprises 1,1%Fuente : Pictet Funds
NIVEL DE RIESGORiesgo menor Riesgo mayor
Rentabilidad potencialmente menor Rentabilidad potencialmente más elevada
1 2 3 4 5 6 7Fuente : Pictet Funds
OBJETIVO DE INVERSIÓN
Fuente : Pictet Funds
RESULTADO vs. MSCI EMFondo Indice Fondo Indice
AnualizadoAcumuladoYTD 0,99% -0,88% - -1 mes 1,38% 0,75% - -3 meses -0,50% -2,23% - -1 año 5,18% 3,97% 5,18% 3,97%Desde inicio 3,48% 2,73% 3,21% 2,52%Fuente : Pictet Funds
INFORMACIÓN TÉCNICAValor liquidativo USD 103,48 Dividendos ReinvertidosPatrimonio (mio) USD 69,7 Títulos en cartera 225Alza máxima 22,0% Baja máxima -14,0%Fuente : Pictet Funds
INFORMACIÓN GENERALGestor Laurent NguyenBanco depositario Pictet & Cie (Europe) S.A.Estatuto jurídico Compartimento de la SICAV de derecho luxemburgués
PictetLugar de registro AT, CH, CY, DE, ES, FI, FR, GB, GR, LI, LU, NL, PT, SE,
SGFecha de constitución 30 marzo 2012Cierre del ejercicio 30 septiembreMulticlase SíCálculo NAV Diario, "forward pricing"Comisión de gestión 0,80% p.a.TER 1,36% p.a.Com. máx. suscr. 5,00% A favor del distribuidorCom. máx. reemb. 1,00% A favor del distribuidorISIN LU0725973548Bloomberg PTEMSIU LXFuente : Pictet Funds
Datos a finales de abril 2013
Pictet-Emerging Markets Sustainable Equities-I USD
1 / 2
RESULTADO INDEXADO
Fuente : Pictet Funds
RENTABILIDAD TRIMESTRAL
Fuente : Pictet Funds
PLAZOS DE VENCIMIENTO10 años y más 4,2%7 - 10 años 6,9%5 - 7 años 28,8%3 - 5 años 42,8%1 - 3 años 1,5%< 1 año 15,8%Fuente : Pictet Funds
REPARTO POR RATINGNC (ef.y eq. Include) 2,8%Ba 3,5%Baa 16,5%A 1,8%Aa 47,1%Aaa 28,4%Fuente : Pictet Funds
DISTRIBUCIÓN POR MONEDAEUR 21,0%USD 10,7%JPY 10,0%CNY 9,8%CAD 7,8%AUD 6,6%MXN 5,4%GBP 4,8%TRY 3,5%Otros 20,5%Fuente : Pictet Funds
NIVEL DE RIESGORiesgo menor Riesgo mayor
Rentabilidad potencialmente menor Rentabilidad potencialmente más elevada
1 2 3 4 5 6 7Fuente : Pictet Funds
OBJETIVO DE INVERSIÓNEl compartimento pretende la revalorización del capital invirtiendo principalmente en unacartera diversificada de bonos emitidos o garantizados por gobiernos nacionales o locales,o por organismos supranacionales, y seleccionados utilizando un enfoque fundamental.Las inversiones pueden realizarse en todos los mercados.Fuente : Pictet Funds
RESULTADO vs. Citigroup WGBI All MatsFondo Indice Fondo Indice
AnualizadoAcumuladoYTD 0,35% -1,74% - -1 mes 1,60% 1,07% - -3 meses 0,50% -0,48% - -1 año 2,72% -1,07% 2,72% -1,07%Desde inicio 3,52% -1,36% 2,80% -1,09%Fuente : Pictet Funds
INFORMACIÓN TÉCNICAValor liquidativo USD 135,75 Dividendos ReinvertidosPatrimonio (mio) USD 66,1 Títulos en cartera 34Alza máxima 6,01% Baja máxima -3,06%Rendimiento medio 2,24% Cupón medio 3,92%Duracion 4,88 añosFuente : Pictet Funds
INFORMACIÓN GENERALGestor Mickael Benhaim, David BoppBanco depositario Pictet & Cie (Europe) S.A.Estatuto jurídico Compartimento de la SICAV de derecho luxemburgués
PictetLugar de registro AT, CH, CY, DE, ES, FI, FR, GB, GR, LI, LU, NL, PT, SE,
SGFecha de constitución 30 enero 2012Cierre del ejercicio 30 septiembreMulticlase SíCálculo NAV Diario, "forward pricing"Comisión de gestión 0,35% p.a.TER 0,60% p.a.Com. máx. suscr. 5,00% A favor del distribuidorCom. máx. reemb. 1,00% A favor del distribuidorISIN LU0725946650Bloomberg PGBDFIU LXFuente : Pictet Funds
Datos a finales de abril 2013
Pictet-Global Bonds Fundamental-I USD
La duración se refiere a la duración modificada ponderada del fondo. 1 / 2
RESULTADO INDEXADO
Fuente : Pictet Funds
RENTABILIDAD TRIMESTRAL
Fuente : Pictet Funds
REPARTO POR SECTORESServicios de la cadena de suministro 44,6%Insumos agricolas 38,8%Cultivo 13,4%Liquidez 3,2%Fuente : Pictet Funds
DISTRIBUCIÓN POR PAÍSESEstados Unidos 39,7%Canada 11,5%Suiza 8,6%Japón 4,9%Gran Bretaña 4,5%Noruega 4,2%China 3,6%Alemania 2,9%Singapur 2,1%Malasia 2,1%Otros 12,7%Liquidez 3,2%Fuente : Pictet Funds
LAS 10 POSICIONES MÁS IMPORTANTESPotash Corp. of Saskatchewan 5,0%Deere 4,8%Syngenta 4,5%Archer Daniels Midland 4,3%Bunge 4,0%SysCo 4,0%Mccormick -Nvtg- 3,6%Mosaic 3,3%Ingredion 3,2%Yara International 2,9%Fuente : Pictet Funds
NIVEL DE RIESGORiesgo menor Riesgo mayor
Rentabilidad potencialmente menor Rentabilidad potencialmente más elevada
1 2 3 4 5 6 7Fuente : Pictet Funds
OBJETIVO DE INVERSIÓNEl compartimento tiene por objetivo el crecimiento del capital invirtiendo principalmente enuna cartera diversificada de acciones de empresas activas en la cadena de valor de laagricultura. El compartimento se centra en las empresas que se dedican en particular a laproducción, el procesamiento, el abastecimiento y a la fabricación de maquinaria agrícola.El universo de inversión no se limita a una zona geográfica concreta.Fuente : Pictet Funds
RESULTADO vs. MSCI WorldFondo Indice Fondo Indice
AnualizadoAcumuladoYTD 6,65% 11,1% - -1 mes -2,13% 0,47% - -3 meses 4,56% 8,87% - -1 año 13,3% 17,2% 13,3% 17,2%3 años 21,9% 32,7% 6,82% 9,90%Desde inicio 61,6% 77,6% 13,0% 15,8%
Anual Abril a AbrilFondo Indice Fondo Indice
2012 14,3% 14,0% 13,3% 17,2%2011 -15,5% -2,38% -3,95% 6,90%2010 28,7% 19,5% 12,0% 5,98%Fuente : Pictet Funds
INFORMACIÓN TÉCNICAValor liquidativo EUR 161,58 Dividendos ReinvertidosPatrimonio (mio) EUR 227 Títulos en cartera 69Alza máxima 40,7% Baja máxima -27,8%Volatilidad 13,0% Tracking error 9,06%Sharpe ratio 0,45 Information ratio -0,31Alpha Jensen -2,59% Beta 0,97Correlación 0,72 R cuadrado 0,52Fuente : Pictet Funds
INFORMACIÓN GENERALGestor Gerardus van der Geer, Cédric LecampBanco depositario Pictet & Cie (Europe) S.A.Estatuto jurídico Compartimento de la SICAV de derecho luxemburgués
PictetLugar de registro AT, CH, CY, DE, ES, FI, FR, GB, GR, HK, LI, LU, MO,
NL, PT, SE, SGFecha de constitución 28 mayo 2009Cierre del ejercicio 30 septiembreMulticlase SíCálculo NAV Diario, "forward pricing"Comisión de gestión 0,80% p.a.TER 1,18% p.a.Com. máx. suscr. 5,00% A favor del distribuidorCom. máx. reemb. 1,00% A favor del distribuidorISIN LU0366533882Bloomberg PFLAGRI LXFuente : Pictet Funds
Datos a finales de abril 2013
Pictet-Agriculture-I EUR
1 / 2
RESULTADO INDEXADO
Fuente : Pictet Funds
RENTABILIDAD TRIMESTRAL
Fuente : Pictet Funds
REPARTO POR SECTORESEficiencia energética 58,2%Gas natural 32,2%Hidroelectricidad 2,9%Otros 2,3%Liquidez 4,4%Fuente : Pictet Funds
DISTRIBUCIÓN POR PAÍSESEstados Unidos 50,9%Francia 6,4%Taiwán 5,1%Gran Bretaña 4,6%Canada 4,6%Japón 4,5%Alemania 4,3%Italia 3,2%Otros 12,0%Liquidez 4,5%Fuente : Pictet Funds
LAS 10 POSICIONES MÁS IMPORTANTESITC Holdings 4,2%Praxair 3,3%Sempra Energy 3,2%Delta Electronics Industrial 3,2%ENN Energy Holdings 3,0%Spectra Energy 3,0%Linde 3,0%L'Air Liquide 2,8%Tokyo Gas 2,6%Williams Companies 2,5%Fuente : Pictet Funds
NIVEL DE RIESGORiesgo menor Riesgo mayor
Rentabilidad potencialmente menor Rentabilidad potencialmente más elevada
1 2 3 4 5 6 7Fuente : Pictet Funds
OBJETIVO DE INVERSIÓNEl compartimento tiene por objetivo el crecimiento del capital invirtiendo como mínimo dostercios de su patrimonio total en acciones de empresas del mundo entero que contribuyana y se beneficien de la transición a energías que generen menos emisiones de CO2. Elcompartimento se centra en empresas activas en el campo de los recursos y lasinfraestructuras más limpias, los equipos y las tecnologías que reducen las emisiones deCO2, la generación, transmisión y distribución de energía más limpia y la eficienciaenergética.Fuente : Pictet Funds
RESULTADO vs. MSCI WorldFondo Indice Fondo Indice
AnualizadoAcumuladoYTD 9,70% 11,1% - -1 mes 1,77% 3,15% - -3 meses 5,04% 5,74% - -1 año 7,47% 16,7% 7,47% 16,7%3 años -11,7% 31,6% -4,05% 9,59%5 años -40,0% 9,40% -9,72% 1,81%Desde inicio -27,1% 5,51% -5,12% 0,90%
Anual Abril a AbrilFondo Indice Fondo Indice
2012 4,36% 15,8% 7,47% 16,7%2011 -20,6% -5,54% -23,5% -4,63%2010 -7,85% 11,5% 7,41% 18,3%2009 48,4% 30,9% 31,3% 37,0%2008 -56,6% -41,2% -48,3% -39,3%Fuente : Pictet Funds
INFORMACIÓN TÉCNICAValor liquidativo USD 72,95 Dividendos ReinvertidosPatrimonio (mio) USD 297 Títulos en cartera 51Alza máxima 27,4% Baja máxima -34,1%Volatilidad 19,6% Tracking error 7,52%Sharpe ratio -0,23 Information ratio -1,77Alpha Jensen -14,1% Beta 1,09Correlación 0,93 R cuadrado 0,86Fuente : Pictet Funds
INFORMACIÓN GENERALGestor Luciano Diana, Xavier CholletBanco depositario Pictet & Cie (Europe) S.A.Estatuto jurídico Compartimento de la SICAV de derecho luxemburgués
PictetLugar de registro AT, CH, CL, CY, DE, ES, FI, FR, GB, GR, HK, LI, LU, MO,
NL, PE, PT, SE, SGFecha de constitución 14 mayo 2007Cierre del ejercicio 30 septiembreMulticlase SíCálculo NAV Diario, "forward pricing"Comisión de gestión 0,80% p.a.TER 1,07% p.a.Com. máx. suscr. 5,00% A favor del distribuidorCom. máx. reemb. 1,00% A favor del distribuidorISIN LU0280430405Bloomberg PFLCLNI LXFuente : Pictet Funds
Datos a finales de abril 2013
Pictet-Clean Energy-I USD
1 / 2
RESULTADO INDEXADO
Fuente : Pictet Funds
RENTABILIDAD TRIMESTRAL
Fuente : Pictet Funds
REPARTO POR SECTORESIndustrial 28,0%Servicios de utilidad publica 23,0%Materiales 18,0%Productos de consumo 9,5%Energía 5,6%Finanzas 4,7%Tecnología de la información 4,2%Productos de consumo no Básico 3,4%Liquidez 3,6%Fuente : Pictet Funds
DISTRIBUCIÓN POR PAÍSESEstados Unidos 46,4%Gran Bretaña 6,0%Canada 5,9%Brasil 5,7%Francia 4,4%Suiza 3,6%Japón 3,5%China 3,2%Otros 17,7%Liquidez 3,6%Fuente : Pictet Funds
LAS 10 POSICIONES MÁS IMPORTANTESAmerican Water Works 1,7%Danaher 1,4%ITC Holdings 1,4%Suez Environnement 1,2%Sabesp 1,2%Clean Harbors 1,2%Aqua America 1,1%Pennon Group 1,1%Praxair 1,1%Rayonier REIT 1,1%Fuente : Pictet Funds
NIVEL DE RIESGORiesgo menor Riesgo mayor
Rentabilidad potencialmente menor Rentabilidad potencialmente más elevada
1 2 3 4 5 6 7Fuente : Pictet Funds
OBJETIVO DE INVERSIÓNEl compartimento tiene por objetivo el crecimiento del capital invirtiendo como mínimo dostercios de su patrimonio total en acciones de empresas de acuerdo con las inversiones delos fondos de tipo abierto de Pictet especializados en temas medioambientales. Cada temaestá sujeto a ponderaciones fijadas estratégicamente y reajustadas cada mes. El universode inversión no se limita a una zona geográfica concreta.Fuente : Pictet Funds
RESULTADO vs. MSCI WorldFondo Indice Fondo Indice
AnualizadoAcumuladoYTD 9,90% 11,1% - -1 mes -1,71% 0,47% - -3 meses 7,73% 8,87% - -1 año 14,4% 17,2% 14,4% 17,2%Desde inicio 15,3% 32,6% 5,47% 11,1%
Anual Abril a AbrilFondo Indice Fondo Indice
2012 12,3% 14,0% 14,4% 17,2%2011 -11,6% -2,38% -2,63% 6,90%Fuente : Pictet Funds
INFORMACIÓN TÉCNICAValor liquidativo EUR 115,26 Dividendos ReinvertidosPatrimonio (mio) EUR 24,0 Títulos en cartera 229Alza máxima 41,2% Baja máxima -24,3%Fuente : Pictet Funds
INFORMACIÓN GENERALGestor Philippe RohnerBanco depositario Pictet & Cie (Europe) S.A.Estatuto jurídico Compartimento de la SICAV de derecho luxemburgués
PictetLugar de registro AT, CH, CY, DE, ES, FI, FR, GB, GR, HK, LI, LU, MO,
NL, PT, SE, SGFecha de constitución 10 septiembre 2010Cierre del ejercicio 30 septiembreMulticlase SíCálculo NAV Diario, "forward pricing"Comisión de gestión 0,80% p.a.TER 1,12% p.a.Com. máx. suscr. 5,00% A favor del distribuidorCom. máx. reemb. 1,00% A favor del distribuidorISIN LU0503631631Bloomberg PIEMSIE LXFuente : Pictet Funds
Datos a finales de abril 2013
Pictet-Environmental Megatrend Selection-I EUR
1 / 2
RESULTADO INDEXADO
Fuente : Pictet Funds
RENTABILIDAD TRIMESTRAL
Fuente : Pictet Funds
REPARTO POR SECTORESValor Madera Puro 29,9%Valor Madera Medio 27,0%Valor Madera Bajo 24,4%Valor Madera Alto 14,8%Liquidez 3,9%Fuente : Pictet Funds
DISTRIBUCIÓN POR PAÍSESEstados Unidos 47,9%Brasil 13,5%Canada 8,5%Suecia 5,5%Gran Bretaña 4,9%Chile 4,5%Japón 2,3%China 2,0%Otros 7,0%Liquidez 3,9%Fuente : Pictet Funds
LAS 10 POSICIONES MÁS IMPORTANTESRayonier REIT 6,6%Weyerhaeuser 6,6%Plum Creek Timber 6,4%Svenska Cellulosa 4,6%Potlatch Corp 4,4%Mondi (GBP) 4,2%Klabin PFD 4,1%Fibria Celulose 3,8%Deltic Timber 3,5%Duratex 3,1%Fuente : Pictet Funds
NIVEL DE RIESGORiesgo menor Riesgo mayor
Rentabilidad potencialmente menor Rentabilidad potencialmente más elevada
1 2 3 4 5 6 7Fuente : Pictet Funds
OBJETIVO DE INVERSIÓNEl compartimento tiene por objetivo el crecimiento del capital invirtiendo como mínimo dostercios de su patrimonio total en una cartera diversificada de acciones de empresas que sedediquen a la financiación, la plantación y la gestión de bosques y de zonas forestales y/oal tratamiento, la producción y la distribución de la madera y otros servicios y productosderivados de la madera. El universo de inversión no se limita a una zona geográficaconcreta.Fuente : Pictet Funds
RESULTADO vs. MSCI WorldFondo Indice Fondo Indice
AnualizadoAcumuladoYTD 11,3% 11,1% - -1 mes -1,04% 3,15% - -3 meses 3,93% 5,74% - -1 año 31,9% 16,7% 31,9% 16,7%3 años 32,7% 31,6% 9,90% 9,59%Desde inicio 51,7% 40,4% 9,52% 7,69%
Anual Abril a AbrilFondo Indice Fondo Indice
2012 30,6% 15,8% 31,9% 16,7%2011 -13,8% -5,54% -16,2% -4,63%2010 12,5% 11,8% 20,1% 18,3%2009 59,5% 30,6% 55,7% 37,0%Fuente : Pictet Funds
INFORMACIÓN TÉCNICAValor liquidativo USD 151,74 Dividendos ReinvertidosPatrimonio (mio) USD 706 Títulos en cartera 54Alza máxima 68,1% Baja máxima -33,8%Volatilidad 20,0% Tracking error 8,40%Fuente : Pictet Funds
INFORMACIÓN GENERALGestor Gabriel Micheli, Christoph ButzBanco depositario Pictet & Cie (Europe) S.A.Estatuto jurídico Compartimento de la SICAV de derecho luxemburgués
PictetLugar de registro AT, CH, CY, DE, ES, FI, FR, GB, GR, HK, LI, LU, MO,
NL, PT, SE, SGFecha de constitución 29 septiembre 2008Cierre del ejercicio 30 septiembreMulticlase SíCálculo NAV Diario, "forward pricing"Comisión de gestión 0,80% p.a.TER 1,17% p.a.Com. máx. suscr. 5,00% A favor del distribuidorCom. máx. reemb. 1,00% A favor del distribuidorISIN LU0340557262Bloomberg PFLTMBI LXFuente : Pictet Funds
Datos a finales de abril 2013
Pictet-Timber-I USD
1 / 2
RESULTADO INDEXADO
Fuente : Pictet Funds
RENTABILIDAD TRIMESTRAL
Fuente : Pictet Funds
REPARTO POR SECTORESAbastecimiento y tratamiento del agua 42,8%Tecnología relacionada con el agua 40,1%Servicios medioambientales 15,0%Liquidez 2,1%Fuente : Pictet Funds
DISTRIBUCIÓN POR PAÍSESEstados Unidos 44,1%Gran Bretaña 8,9%Brasil 8,4%Francia 6,7%Suiza 4,6%China 3,7%Canada 3,3%Japón 2,5%Otros 15,7%Liquidez 2,1%Fuente : Pictet Funds
LAS 10 POSICIONES MÁS IMPORTANTESAmerican Water Works 5,1%Sabesp 4,7%Danaher 4,3%Suez Environnement 3,6%Clean Harbors 3,5%Pennon Group 3,4%Aqua America 3,3%Roper Industries 3,1%Veolia Environnement 3,0%Xylem 3,0%Fuente : Pictet Funds
NIVEL DE RIESGORiesgo menor Riesgo mayor
Rentabilidad potencialmente menor Rentabilidad potencialmente más elevada
1 2 3 4 5 6 7Fuente : Pictet Funds
OBJETIVO DE INVERSIÓNEl compartimento tiene por objetivo el crecimiento del capital invirtiendo como mínimo dostercios de su patrimonio total en acciones de empresas del mundo entero activas en elsector del agua y del aire. El compartimento se centra en empresas que se dedican alabastecimiento de agua, los servicios de tratamiento, la tecnología del agua, así como a losservicios medioambientales.Fuente : Pictet Funds
RESULTADO vs. MSCI WorldFondo Indice Fondo Indice
AnualizadoAcumuladoYTD 10,5% 11,1% - -1 mes -1,23% 0,47% - -3 meses 8,40% 8,87% - -1 año 13,2% 17,2% 13,2% 17,2%3 años 38,1% 32,7% 11,4% 9,90%5 años 37,5% 29,2% 6,57% 5,26%Desde inicio 103% 4,08% 5,48% 0,30%
Anual Abril a AbrilFondo Indice Fondo Indice
2012 14,6% 14,0% 13,2% 17,2%2011 -2,18% -2,38% 13,2% 6,90%2010 23,4% 19,5% 7,82% 5,98%2009 21,3% 28,7% 31,8% 36,5%2008 -33,5% -38,9% -24,5% -28,7%Fuente : Pictet Funds
INFORMACIÓN TÉCNICAValor liquidativo EUR 202,81 Dividendos ReinvertidosPatrimonio (mio) EUR 2.362 Títulos en cartera 57Alza máxima 49,1% Baja máxima -17,8%Volatilidad 9,56% Tracking error 6,27%Sharpe ratio 1,05 Information ratio 0,21Alpha Jensen 3,26% Beta 0,78Correlación 0,79 R cuadrado 0,62Fuente : Pictet Funds
INFORMACIÓN GENERALGestor Hans Peter Portner, Philippe Rohner, Arnaud BisschopBanco depositario Pictet & Cie (Europe) S.A.Estatuto jurídico Compartimento de la SICAV de derecho luxemburgués
PictetLugar de registro AT, CH, CL, CY, DE, ES, FI, FR, GB, GR, HK, LI, LU, MO,
NL, PE, PT, SE, SG, TWFecha de constitución 19 enero 2000Cierre del ejercicio 30 septiembreMulticlase SíCálculo NAV Diario, "forward pricing"Comisión de gestión 0,80% p.a.TER 1,12% p.a.Com. máx. suscr. 5,00% A favor del distribuidorCom. máx. reemb. 1,00% A favor del distribuidorISIN LU0104884605Bloomberg PICWAIA LXFuente : Pictet Funds
Datos a finales de abril 2013
Pictet-Water-I EUR
1 / 2
Este documento comercial es una publicación de Pictet Funds (Europe) S.A. No va dirigido ni deberá ser distribuido a, ni utilizado por ninguna persona o entidad que sea ciudadano oresidente de o que se encuentre en algún lugar, estado, país o jurisdicción, en el que dicha distribución, publicación, disponibilidad o uso sea contrario a las leyes o normativas vigentes.A efectos de la toma de decisiones de inversión, sólo podrán considerarse publicaciones del fondo las últimas versiones publicadas del folleto, del reglamento y de los informes anual ysemestral del fondo. Estos documentos están disponibles en www.pictetfunds.com o en Pictet Funds (Europe) S.A., 15 Avenue J.F. Kennedy, L-1855 Luxemburgo.La información y los datos presentados en este documento no deberán considerarse como una oferta o una incitación para comprar, vender o suscribir valores o instrumentos financieros.La información, las opiniones y las estimaciones expresadas en este documento reflejan un juicio emitido en su fecha original de publicación y están sujetas a cambios sin previo aviso.Pictet Funds (Europe) S.A. no ha tomado ninguna medida para asegurarse de que los valores mencionados en el presente documento son adecuados para un determinado inversor, yeste documento no deberá utilizarse como sustituto del ejercicio de un juicio independiente. El tratamiento fiscal depende de las circunstancias particulares de cada inversor y puedecambiar en el futuro. Antes de tomar una decisión de inversión, se recomienda a todo inversor que verifique si la inversión en cuestión es apropiada, teniendo en cuenta en particular susconocimientos y su experiencia en materia financiera, sus objetivos de inversión y su situación financiera, o que obtenga asesoramiento profesional cualificado.En caso de que el fondo haya cambiado alguna vez de índice de referencia, se indicarán todos los índices de referencia históricos en el presente documento y la evolución del índicemostrada en el cuadro reflejará las sucesivas rentabilidades de todos los índices de referencia históricos del fondo. El valor y la renta de cualquiera de los títulos o instrumentos financierosmencionados en este documento puede aumentar o disminuir y es posible que los inversores recuperen un importe inferior al que invirtieron originalmente. Los factores de riesgo estánindicados en el folleto del fondo y el presente documento no tiene como propósito volver a exponerlos en su totalidad.Las rentabilidades pasadas no son una garantía ni un indicador fiable de los futuros resultados. Los datos relativos a la rentabilidad no incluyen las comisiones y los gastos cobrados en elmomento de la suscripción o amortización de las participaciones. Las estadísticas históricas se calculan sobre 3 años. Es posible que se publiquen aquí VIN relativos a fechas en las quelas participaciones no estaban emitidas o reembolsadas ("VIN no procesables”), los cuales se ofrecen únicamente a efectos de cálculo y medición de estadísticas de rentabilidad o decálculo de comisiones, y no podrán en modo alguno servir de base para realizar órdenes de suscripción o reembolso. Este material comercial no pretende sustituir la documentacióncompleta del fondo ni ninguna información que deban obtener los inversores de los intermediarios financieros que intervengan en relación con su inversión en los fondos mencionados enel presente documento. Solo se cubre la moneda de consolidación del subfondo en la moneda correspondiente a la clase de acciones; la exposición a la divisa puede permanecer si lacartera está invertida en activos denominados en otras monedas. Esto no se aplica a las clases cubiertas del fondo "Pictet CH Institutional - Foreign Bonds Tracker".
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Tel. 0041 58 323 30 00 - www.pictetfunds.com© Copyright 2013 Pictet Funds - Publicado en mayo 2013
2Pictet-Water For professional investors onlyPictet Asset
Management
Table of contents
1.
Investment case for Water
2.
Investment process & portfolio construction
3.
Portfolio positioning
4.
Current strategy and outlook
5.
Conclusions
6.
Technicals
Appendices
4Pictet-Water For professional investors onlyPictet Asset
Management
25%
45%30%
Water stress > 40%
Water stress 20 - 40%
Water stress < 20%
The water challenge
Increasing water stress
How scarcity will affect GDP by 2050 Water stress indicator: withdrawal to availability ratio
19%
22%
59%
%GDP by level of water stress today
%GDP by level
of water stress 2050 business as usual
1995
2025
0 0.2 0.4 0.8Source: GRID-A, Vital Water Graphics
2, 2009 Source: GWI, Growing
Blue Initiative
low
stress mid
stress high
stress
5Pictet-Water For professional investors onlyPictet Asset
Management
Why water ?
I. Challenge
An unsustainable statusquo…
•
total use of water increased 9X since 1900
•
driven by 3 very thirsty stakeholders
•
creating a water availability challenge
II. Industry
…leads to growth in water services industry…
•
Creating a USD 500bn market growing at 6% per year
•
Recycling a limited resource and protecting the environment
•
mostly owned and operated by public entities
III. Investment
…creating opportunities for equity investors
•
USD 1tr per year global investment needed
•
under improving political environment(s)
•
offering attractive risk adjusted returns
6Pictet-Water For professional investors onlyPictet Asset
Management
I. Total water use increased 9X since 1900 and it’s not over !
Population is projected to grow
World population and water use Consumption
per capita –
Paris area, 1800-1960
Sources: FAOSTAT UN and UNESCO & WSSCC, WASH Facts and Figures and Water Atlas
0
100
200
300
400
500
600
1800 1820 1840 1860 1880 1900 1920 1940 1960
Wat
er u
se (L
/ ca
p / d
ay)
Source: Hydrol. Earth Syst. Sci. Discuss, 2007
•
and to concentrate in urban areas… •
with increasing wealth driving demand per capita
7Pictet-Water For professional investors onlyPictet Asset
Management
I. Driven by 3 very thirsty stakeholders
Source: Pictet, United Nations Environment
Program (Vital Water Graphics)
Agriculture Industry Municipalities
Average water consumption breakdown 70% 20% 10%
Consumption range 60% -
80% 10% -
30% 5% -
15%
Consumption growth (2000-2050) 3x 2x 3x
Water quality (typical requirements) MinorPower: minor Process: customized quality
Drinking water
Cost of use Mostly subsidisedPower: none Process: high
Minor to high
(depending on subsidies)
Resource use Wasteful Efficient Variable
Demand efficiency technology (examples) Smart irrigationDry coolingWater recycling
MeteringLeak detection
8Pictet-Water For professional investors onlyPictet Asset
Management
I. Creating a water availability challenge
Unsustainable status-quo
Level of water tables* in the US Only a quarter percent of world water usable
* Water table: The level below which the ground is completely saturated with water
Source: US Geological Survey
Fresh Water30%
UsableWater25%Fresh Water
3%
PollutedWater75%
Glacier &Perma
Snow Cover70%
Salt Water97%
0%
25%
50%
75%
100%
Total World Water Supply Fresh Water Supply Accessible Fresh WaterSupply
•
Freshwater resources are limited (“bio”-
infrastructure)•
And even more so by pollution•
As well as by faulty or lack of infrastructure
Source: UNESCO, 2002
9Pictet-Water For professional investors onlyPictet Asset
Management
II. Creating a USD 500 bn
market growing at 6% per year
•
Water service providers offer:–
Treatment (disinfection, filtration…)
–
Delivery (via network)
•
The level of service depends on local circumstances:
–
Naturally sourced (green water)
–
Centralized (network and treatment)
–
Decentralized (network or treatment)
Fixednetwork
Mobilenetwork
Centrallymanaged
Utilities Packaged water
Tailored
(Point of use)Domestic/Commercial
Industrial
TreatmentDelivery
Irrigation equipment
2%
Point of use equipment
3%Industrial
Water5%
PackagedWater20%
Utilities70%
Global water market
$501bn in 2009
Source: Global Water Intelligence –
Water Technology markets 2010
Global water market overview
10Pictet-Water For professional investors onlyPictet Asset Management
II. Recycling a limited resource and protecting the environmentFour stages in the water value chain
Source: Sembcorp Industries –
Introduction to the Company -
2012
11Pictet-Water For professional investors onlyPictet Asset Management
II. Mostly owned and operated by public entitiesGrowth in water services market
•
Water utilities are a natural monopoly
•
With increasing private sector participation
NorthAmerica
23%
18%
Middle- &South America
21%
8%
WesternEurope
47%
9%
Central &Eastern Europe
11%
19%
Middle East& Africa
6%7%
South East Asia
17%
11%World
13%
8%
2011Estimated additional share by 2025
6’991m
462m
476m
35m
2’161m2’160m
1’295m
321m
402m
Oceania
33%
12%
Middle &South Asia
1%4%
Source: Dr. David Lloyd Owen, 2011
12Pictet-Water For professional investors onlyPictet Asset Management
III. USD 1 trillion per year Water infrastructure needed
Source: OECD / Morgan Stanley / Pictet Asset Management
USD 41 trillion needed in infrastructure over 2005-2030
57%
13%3%49%
34%
5%
12%
66%
14%1%
19%
56%
14%7%
23%
AfricaUSD 1.1trn
1%
Middle EastUSD 0.9trn
Asia/OceaniaUSD 15.9trn
EuropeUSD 9.2trn
Latin/South America
USD 7.5trn
North AmericaUSD 6.5trn
21%29%
49%
27%
26%
36%
17%
21%
13Pictet-Water For professional investors onlyPictet Asset Management
III. Under improving political environment(s)The risk adjusted return for water infrastructure investment has not always been attractive for investors
The decoupling of regulation schemes from politics has led to reduced uncertainties and tariffs subsidies
Source: World Bank PPI data, Credit Suisse research
Source: Global Water Intelligence / OECD Global Water Tariff Survey 2007
Global water tariffs (per cubic meter)
Private sector investment in emerging markets in water, telcos, energy and transport (USD bn)
Water
Telcos
Energy
Transport
14Pictet-Water For professional investors onlyPictet Asset Management
EU 27 water prices relative to total CPIEuro area water supply prices relative to total HCP
0%100%200%300%400%500%600%
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Water Oil
III. Offering attractive risk adjusted returns
Creating opportunities for equity investors
Water tariffs: beating inflation
Growth and low volatilitySource: Credit Suisse research
Source: American States Water Annual reports -
Pictet
US water and sewerage prices relative to total CPIUS water supply prices relative to total CPI
Canadian water prices relative to headline CPI
US water prices have outperformed headline CPI by
8% over the past 2 years
15Pictet-Water For professional investors onlyPictet Asset Management
Conclusion -
why invest in water ?
Water –
an attractive risk return profile
An unsustainable status quo
Leads to growth in water services market
Creating opportunities for equity investors
17Pictet-Water For professional investors onlyPictet Asset Management
Investment team
Periodic board to review industry developments
ADVISORY BOARD
Hans Peter Portner
Senior Investment Manager
Head of Sector & Theme Funds
Philippe Rohner
Senior Investment Manager
Arnaud Bisschop
Senior
Investment Manager
INVESTMENT MANAGERS
Daily meetings and exchange of ideas via internal chat system
PAM EQUITY RESEARCH
EMERGING MARKETSDEVELOPED MARKETS SMALL CAP TEAM
Scoring input UtilitiesKaren Kharmandarian
Hans Peter Portner
Water TechnologyPhilippe Rohner
Cédric Lecamp
Arnaud Bisschop
Environmental ServicesArnaud Bisschop
Hans Peter Portner
18Pictet-Water For professional investors onlyPictet Asset Management
Pictet-Water investment process
STRATEGIC DEFINITION OF INVESTMENT THEMES
Semi-annual advisory board meeting
-
Review of recent fund performance
-
Update of industry growth trends
-
Topical discussions related to the themes
IDENTIFICATION OF INVESTMENT UNIVERSE
Database screening-
Identification of companies with relevant theme-
related activities
-
One formal review of the investment universe each year
CREATION AND MAINTENANCE OF INVESTABLE UNIVERSE
c.120 stocks
MANAGEMENT OF INVESTMENT PORTFOLIO
Quantitative screeningScreen of the investment universe for net sales, EBIT, EBITDA to determine the percent enterprise value of the overall group related to the theme and thus creating the investable universe of stocks
Portfolio construction
and stock selection
-
Screen & calibrate investable universe for purity, trading liquidity and share price vol. to determine initial portfolio weights
-
Score all stocks with initial weight > 0
-
Screen top quartile, then score stocks with initial weight ≤
0
c.810 companies
€
2,080bn market cap c.340 companies€
460bn market cap c.50-80 stocks
PICTET-WATER FUND
19Pictet-Water For professional investors onlyPictet Asset Management
American Water stock examplePurity factor:
No deduction as 100% of AWK’s activity is water related
Portfolio construction factor:•
3.1% adjustment for liquidity, as % of fund bought in 15 days, at 20% volume is below 5% (roughly 2.5%)
•
No deduction as annualised volatility of 16.4% is lower than universe median of 29.2%
Company factor:
1.7 % due to good business franchise (score +1.1), strong management score (score 2.0) and strong attractiveness (score +2.0).
Score = 1.1*30% + 2.0*20% + 2.0*50% = +1.7%
Industry factor:No discount as industry fundamentalsare positive
Investment process example
* Purity, liquidity, volatility and calibrated. The sum of initial weights is calibrated to 50% on a pro rata basis and is a function of the sustainable fund size and the structure of the investable universe
Source: Pictet Asset Management, as of 30/09/12
2.9
3.106.0
1.7 4.70.0
0
1
2
3
4
5
6
7
8
9
Star
ting
weig
ht
Purit
y fac
tor
Port
folio
co
nstr
uctio
n fa
ctor Initi
al
weig
ht*
Com
pany
fact
or
Indu
stry
fact
or
Port
folio
wei
ght
%
21Pictet-Water For professional investors onlyPictet Asset Management
Portfolio positioning (1)
Source: Pictet Asset Management, as of 30/04/13
Geographic breakdown Market cap breakdown
Market cap
Micro & Small < EUR 1 bn
Medium > EUR 1 bn
Large >
EUR 5 bn
22Pictet-Water For professional investors onlyPictet Asset Management
Portfolio positioning (2)
Source: Pictet Asset Management, as of 30/04/13
Sector segmentation Water Market segmentation
Water supply –
43%
Water Technology –
40%
Environmental Services –
15%
Supply –
11%
Demand Municipal –
61%
Demand Industrial –
26%
Demand Agriculture –
0.5%
23Pictet-Water For professional investors onlyPictet Asset Management
Recent significant actions in the fund (> I0.4%I)
Source: Pictet Asset Management, as of 31/03/2013
43% 41%
41% 40%
15% 16%
0%
20%
40%
60%
80%
100%
31.03.2012 31.03.2013
Cash
Environmental Services
Water Technology
Water Supply
49% 48%
26% 26%
3% 3%
21% 20%
0%
20%
40%
60%
80%
100%
31.03.2012 31.03.2013
Cash
Emerging
Japan
Europe
North America
Sector allocation
Geographic allocation
In the past year (31.03.12-31.03.13), we
Added to Clarcor (0.8%), Ecolab (0.4%), Waste Connections (0.6%), Pall (0.6%), Tetra Tech (0.4%), Aqua America (0.4%)
Started new positions
Alfa Laval (1.0%), Enel Green Power (0.8%), Metro Pacific (0.7%),AECOM (0.6%), Arcadis (0.4%),
Reduced CEMIG (-1.2%), Pennon (-0.9%), Donaldson (-0.5%), Danaher (-0.4%), Xylem (-0.4%)
Exited positions
Waste Management (-1.7%), Fortum (-1.3%), COPEL (-0.7%), Aegion (-0.6%), Rushydro (-0.6%), Toro (-0.6%), Valmont (-0.5%), Badger Meter (-0.5%), 2 non-meaningful positions in micro caps.
Corporate action
Take over of Elster (0.6%)
24Pictet-Water For professional investors onlyPictet Asset Management
Company Domicile % in fund
Sector Market cap (€
bn)% Water Water Market
USA 5.1% Water Supply 5.6 100% Regulated operator
Brazil 4.7% Water Supply 7.2 100% Non Regulated operator
USA 4.2% Water Technology 31.4 20% Industrial
France 3.6% Water Supply 5.5 85% Non Regulated operator
USA 3.4% Environmental Services 2.6 75% Industrial
UK 3.4% Water Supply 2.9 95% Regulated operator
USA 3.3% Water Supply 3.4 100% Regulated operator
USA 3.0% Water Technology 8.9 20% Infrastructure
USA 3.0% Water Technology 3.9 100% Infrastructure
France 3.0% Water Supply 5.3 80% Non Regulated operator
Pictet-Water portfolio top 10 holdings
Source: Pictet Asset Management, as of 30/04/13Pictet has not acquired any rights or license to reproduce the trademarks, logos or images set out in this document except that it holds the rights to use the Pictet and Pictet Funds trademarks. The trademarks, logos and images set out in this document are used only for the purpose of this presentation.
25Pictet-Water For professional investors onlyPictet Asset
Management
The performance disclosed in this document is net of commissions charged to the Fund. The data does not take into account the subscription and redemption feesthat can be charged by our intermediaries w ithin the limits set forth in the prospectus o f the Fund.Source: Lipper monthly data, c reated with MPI Stylus as of 30.04.2013
Review
of performance
26Pictet-Water For professional investors onlyPictet Asset
Management
Pictet-Water, an attractive risk/return profile
Source: Pictet Asset
Management, FactSet
since launch (Jan 2000 –
April 2013)
(*) Total return in EUR –
Dividend
reinvested
28Pictet-Water For professional investors onlyPictet Asset
Management
Water industry developments
End-Market Exposure Water Services Applications Key Growth and Return Drivers Trend Previous
Supply 10-20%
0-10% Storage Hydroelectricity Electricity tariffs (-) –
Coal & Gas prices (-)
0-10% Pollution Control Landfill Volume growth (0) –
CPI (+) –
Recyclates prices (0) (A)
Consulting New Regulation (0) –
Municipal & Federal Budget (-) (B)
Demand 80-90%
Municipal 15-25% Centralized Regulated operator Regulator (0) –
Water tariffs (+) –
CPI (+)
15-25% Non regulated operator Outsourcing (+) –
Competition (-) –
CPI (+)
10-20% Infrastructure components New Regulation(0) –
Replacing assets(0) –
Input costs(0)
0-5% Decentralized Packaged Water Drinking water quality (0) –
Local brand awareness (-)
5-15% Point of Use Home starts (0) –
Remodeling & Repair (+) (C)
Industrial 20-30% Treatment Heating and Cooling Industrial Production (0)
Wastewater treatment New Regulation (+) –
Outsourcing (+)
Agriculture 0-5% Irrigation Crops, orchards, plantations
Weather –
Farm income levels (+)
Landscape Water availability (+) -
Home starts (+) (D)
(A) Rebound of recyclates prices and bottoming of waste volumes in the US -
(B) Fiscal cliff deal in the US -
(C) & (D) Construction market rebound in the US
Source: Pictet Asset Management, as of January 2013
29Pictet-Water For professional investors only
0.0 0.5 1.0 1.5 2.0
Cashflow growth (FY0-FY2)
Price to Cashflow FY1
Price to Book
Div Yield FY1 (%)
0.0 0.5 1.0 1.5 2.0
Cashflow growth (FY0-FY2)
Price to Cashflow FY1
Price to Book
Div Yield FY1 (%)
0.0 0.5 1.0 1.5 2.0
Cashflow growth (FY0-FY2)
Price to Cashflow FY1
Price to Book
Div Yield FY1 (%)
Pictet Asset Management
Fund attractiveness vs world equity markets
Cash3%
Water supply41%
Water Technology40%
Environmental Services
16%
Source: Facset, Bloomberg,, Pictet Asset Management, as of 31/03/2013
Segment classification Water supply
Environmental services Water technologies
MSCIMSCI
MSCI
30Pictet-Water For professional investors onlyPictet Asset Management
Historic valuation –
Pictet-Water vs MSCI World (starting 2005)
Source: Facset, Pictet Asset Management, as of 31/03/2013
•
At the end of March, the fund is trading at 10.1x P/CF and 2.5x P/B, with a dividend yield of 2.5%
•
The fund is trading slightly below the MSCI World, with a wider difference on P/B.
•
Current valuation metrics are roughly in line with historic average.
7.08.09.0
10.011.012.013.0
Price to Cashflow FY1
1.5
2.0
2.5
3.0
3.5
4.0
Dividend Yields FY1
2.0
2.4
2.8
3.2
3.6
4.0
Price to Book
MSCI World Average Fund
32Pictet-Water For professional investors onlyPictet Asset Management
Conclusions
Water is a long horizon investment theme with above average visibility
Why Water?
•
Urbanization trends are increasing the demand for water related services
•
Over exploitation of natural water resources is turning water into a non-renewable resource
Why now?
•
Increased awareness of the need to invest in water related infrastructure
•
Increased willingness to outsource of an ancillary activities linked to water management
Why Pictet?
•
Unique investment universe and process
•
Extensive thematic fund experience
•
Proven track record
34Pictet-Water For professional investors onlyPictet Asset Management
Name:
Pictet-WaterLegal status:
compartment of the Pictet Luxembourg SICAV, UCITS compliantCurrency:
EURCalculation:
daily; settlement NAV + 3Inception:
20 January 2000Assets under mgmt:
EUR 2’362m as of April 30, 2013Dividend:
reinvested (I, P, R) or distributed (P dy)Benchmark:
MSCI World (net div reinvest)Share classes:
Technicals
* I-Shares: minimum investment EUR/USD 1’000’000Source: Pictet Funds as at 30/04/2013
Class ISIN MF*(%)Admin/
Custody TER
I EUR* LU0104884605 0.80 0.33 1.06I USD * LU0255980244 0.80 0.33 1.06P EUR LU0104884860 1.60 0.33 1.90
P USD LU0255980327 1.60 0.33 1.90
P dy EUR LU0208610294 1.60 0.33 1.90
R EUR LU0104885248 2.30 0.33 2.60
R USD LU0255980673 2.30 0.33 2.59
36Pictet-Water For professional investors onlyPictet Asset Management
Pictet-Water portfolio construction
6%
0%
-6%St
artin
g we
ight
Port
folio
co
nstr
uctio
nfa
ctor
Purit
y fa
ctor
Com
pany
fact
or
Initi
al w
eigh
t*
risk management active management
Port
folio
wei
ght
How do we determine the stock weight in the portfolio?
•
High degree of thematic related activities (purity)
•
High trading liquidity
•
Low price volatility
•
Attractive company fundamentals
•
Attractive industry fundamentals and market(s) dynamics
6%
From
0%
to 6
%
From
-3%
to
+3%
From
0%
to
+9%
Indu
stry
fact
or
Portfolio characteristics relative to MSCI World
* Purity, liquidity, volatility and calibrated. The sum of initial weights is calibrated to 40-60% on a pro rata basis and is a function of the sustainable ($500m) fund size and the structure of the investable universe
Max
. -6% M
ax. -
3%
Max
. -6%
37Pictet-Water For professional investors onlyPictet Asset Management
Theme funds –
Management of investment portfolio
We prefer stocks with •
High thematic purity
•
High trading liquidity
•
Low price volatility
•
Attractive company fundamentals
•
Attractive industry and favourable market(s) dynamics
Portfolio weight •
= 6% -
adjustments for purity, liquidity, volatility = initial weight* +/-
company factor -
industry factor
Risk management •
Purity: limit -6% as a function of the size of theme-related exposure in each company
•
Portfolio construction: limit -6% as a function of the trading activity and stock price volatility
Active management •
Company: +/-
3% as a function of management, business franchise, equity attractiveness
•
Industry: limit -6% as a function of industry fundamentals / market(s) dynamics
Portfolio weight of each stock of the investment universe floats
between 0% and 9%
* The sum of initial weights is calibrated to 40-60% on a pro rata basis and is a function of the sustainable ($500m) fund size and the structure of the investable universe
38Pictet-Water For professional investors onlyPictet Asset Management
Theme funds –
Company and industry factors
Company factor Decision weightings
Blue Chip* Opportunity
**
Management 20% 50%
Business franchise 30% 30%
Attractiveness of equities
–
Valuation
–
Momentum
50% 20%
* Initial weight > 0; ** Initial weight ≤
0
Growth at reasonable price
Industry factor
Industry fundamentals Input cost pressures
Capacity utilization
Pricing power erosion
Barriers to entry
Industry consolidation
Market(s) dynamics Supply / demand imbalances
Regulatory / political environment
Systematic risk aversion
We look for•
Solid management track record
•
Franchises with secular growth drivers
•
Attractive risk-adjusted return
39Pictet-Water For professional investors onlyPictet Asset Management
Theme funds –
Company factor screening / scoring
We score the whole blue chip universe (initial weight > 0) for:
We screen the opportunity universe (initial weight ≤
0)for scoring:
•
Management ability to deliver•
Sustainability of the franchise associated with the investment theme•
Attractive equity valuation and share price momentum
•
Using a mix of financial metrics (which are theme specific)•
Selecting top quartiles stocks for further company factor analysis •
Scoring the stocks not currently in the portfolio (buy, “challenges”)
The process for screening and scoring ensures that the company factor for the entire investable universe is monitored systematically
40Pictet-Water For professional investors onlyPictet Asset Management
Pictet-Water investment processFrom theme definition to investment portfolio
* The ‘Opportunities’
in the fund may include stocks that are not top quartile and may exclude top quartile names
MUNICIPAL -
INDUSTRIAL OUTSOURCING
WATER INFRASTRUCTURE INVESTMENT NEEDS
DECENTRALIZED WATER SERVICES ALTERNATIVES
DEFINITION OF INVESTMENT THEME
(Periodic Board meeting)
IDENTIFICATION
OF WATER
UNIVERSE
Database screening
Qualitative screening of world equity database of 40’000 companies
c.810 companies
€
2,080bn market cap
CREATION & MAINTENANCE OF INVESTABLE
Quantitative screening
20% of Water related Sales, EBITDA, or Enterprise Value
c.340 companies
€460bn market cap
RISK MANAGEMENT
Purity & portfolio construction factors Investable universe screening & calibration
c.340 stocks
ACTIVE MANAGEMENT
Company factor &industry factorInvestable universescoring•
Management•
Business franchise•
Attractiveness of equity
•
Industry fundamentals•
Market(s) dynamics
c.120 stocks
PICTET-WATER
c.50-80stocks
c. 30 Blue chip
c. 35* Opportunities
DETERMINATION OF
INITIAL WEIGHTS
ESTABLISHING OF
ACTIVE WEIGHTS
INDIVIDUAL
PORTFOLIO
WEIGHTS
MANAGEMENT OF INVESTMENT PORTFOLIO
Initial weight Stocks
> 0 ~ 35 Blue chip
≤
0~ 305Opportunities: screening of top quartile
Scoring ~ 35 stocks
Scoring ~ 85 stocks
41Pictet-Water For professional investors onlyPictet Asset Management
From investment universe to investment portfolio
Source: Pictet Asset Management, January 2013
# of companies 11 46 22 106 41 60 69 45 76 75 101 108 - 14 10 27
Market Cap in Bn € 17 € 260 € 16 € 184 € 16 € 37 € 52 € 9 € 96 € 252 € 593 € 81 - € 217 € 94 € 156
Total # of companiesTotal Market Cap in Bn
# of companies 2 26 12 65 9 9 22 8 31 40 57 47 - 3 4 6
Market Cap in Bn €2 €69 €10 €109 €2 €4 €42 €6 €19 €50 €112 €25 - € € €9
Total # of companiesTotal Market Cap in Bn
# of companies - 8 4 8 - 1 7 - 2 8 15 6 - - - -
Market Cap in Bn - €44 €9 €21 - 1 €21 - €3 €30 €91 €6 - - - -
Total # of companiesTotal Market Cap in Bn
Water Exposure 811 Companies
Water Supply Environmental Services Water Technology Packaged WaterDevelopped Markets
Emerging Markets
Developped MarketsEmerging Markets
Developped MarketsEmerging Markets
Developped MarketsEmerging MarketsAsia
North America
EuropeNorth
AmericaAsia Europe Asia Europe
North America
185 215 360 51
North America
Asia Europe
€ 477 € 114 € 1,022 € 466
Water Universe 341 Companies
Water Supply Environmental Services Water Technology Packaged WaterDevelopped Markets
Emerging Markets
Developped MarketsEmerging Markets
Developped MarketsEmerging Markets
Developped MarketsEmerging MarketsAsia
North America
EuropeNorth
AmericaAsia Europe Asia Europe
North America
105 48 175 13
North America
Asia Europe
€ 191 € 53 € 206 € 10
WaterFund Holdings 59 Companies
Water Supply Environmental Services Water Technology Packaged WaterDevelopped Markets
Emerging Markets
Developped MarketsEmerging Markets
Developped MarketsEmerging Markets
Developped MarketsEmerging MarketsAsia
North America
EuropeNorth
AmericaAsia Europe Asia Europe
North America
20 8 31 -
North America
Asia Europe
€ 74 € 22 € 130 -
42Pictet-Water For professional investors onlyPictet Asset Management
Biographies
Hans Peter PortnerHead & Senior Investment ManagerSector & Theme Funds team
Hans Peter Portner joined Pictet Asset Management in 1997 and is Head of the Sector & Theme Funds team and also a Senior Investment Manager.
He began his investment career in 1992 with UBS Brinson in Basel as Portfolio Manager for international equities, where he managed single country funds and capital preservation funds. In 1997 he joined Pictet Asset Management in Geneva as Senior Investment Manager for international equities, role he pursued in London from 1999 to 2001.
Hans Peter is a Chartered Financial Analyst (CFA) charterholder and holds a Master’s degree in Economics from the University of Bern.
Philippe RohnerSenior Investment ManagerSector & Theme Funds team
Philippe Rohner joined Pictet Asset Management having originally joined Pictet & Cie in 1998 as an equity analyst with responsibility for the Swiss Chemicals sector. He is a Senior Investment Manager in the Sector & Theme Funds team.
Before joining Pictet, he worked in the Oil & Gas and later in the Chemicals industries with Texaco and Ciba-Geigy respectively, having held various operational and corporate level positions in Switzerland, the US and UK.
Philippe holds a PhD in Industrial and Applied Chemistry from the Swiss Federal Institute of Technology and an MBA specialising in Finance from the University of Strathclyde. He also completed a programme in Environmental Engineering at the University of Texas.
Arnaud BisschopSenior Investment ManagerSector & Theme Funds team
Arnaud Bisschop joined Pictet Asset Management in 2007 as an Investment Manager in the Sector and Theme Funds team. Before joining Pictet, he worked for Lyonnaise des Eaux (Suez Group) as a project leader in the Sales Department and previously was a Senior Consultant in the Sustainability Services Team of Ernst & Young in Paris.Arnaud graduated as an Engineer from the Ecole Polytechnique (Paris) and the Ecole Nationale du Genie Rural, des Eaux et des Forêts (Paris), holding Master of Science degrees.
43Pictet-Water For professional investors onlyPictet Asset Management
Water markets are split over several MSCI sectors
MSCI Classification Sector segmentation Supply
Demand
Municipal Industrial AgricultureUtility
•
Water Utility
•
Electric Utility
Water supply
• Asset Sale UK / US
• Concessions
• Hydroelectricity X
X
X
Industrials
•
Capital Goods
•
Commercial& Professional Services
Materials
Cons Staples
Water Technology
• Filtration
• Components
• Engineering
• Chemicals
• Air filtration
• Measurement
• Irrigation
X
X
X
X
X
X
X
X
X
X
XIndustrials
Commercial Services
Environmental Services
• Consulting
• Solid Waste Management X
X
Financial Market Segmentation
Water Market Segmentation
44Pictet-Water For professional investors onlyPictet Asset Management
Pictet-Water fund –
MSCI breakdown
Portfolio characteristics relative to MSCI World
Source: Pictet Asset Management, as of 30/04/2013
46Pictet-Water For professional investors onlyPictet Asset Management
Water yesterday, today and tomorrow
EconomicsAgriculture
Water & sanitation
goals
Climatechange
2000–
World Water Vision –
universal access to water and sanitation (‘watsan’) by 2025 and even consider wastewater treatment
–
UN Millennium Development Goals –
Halve the numbers without access to safe watsan by 2015
2010–
World Water Vision –
Not mentioned anymore –
UN MDGs –
Partial progress
(problems in Sub-Saharan Africa and South Asia)
2020–
World Water Vision –
Ripe for revival, from sanitation to sewage treatment
–
UN MDGs –
Done, but need a new initiative
2000–
‘Water is free’
is the dominant mantra –
Minimal data
on water economics outside some OECD countries
2010–
Improved data availability (OECD, GWI, IB-Net, etc)–
Water financing problems become more pressing2020
–
Full cost recovery gains improved acceptance –
Proper comparative economic data is available
2000–
Subsidies encourage over-use of water –
Drip irrigation2010–
Water rights in Australia commoditize water –
Micro monitoring2020–
The Water Framework Directive –
everybody pays –
Water harvesting
2000–
Just starting to appreciate linkage between climate change and water
resources (lower availability and higher demand)
2010–
Security of supplies and storm water management become
real issues
2020–
Reconciling the EU Water Framework Directive with
climate change
–
Storm and foul sewers separated –
Water efficiency and reuse necessary for
security of supplies
–
Demand management a driver Politicalenvironment
Source: Dr David Lloyd Owen, Envisager –
03/2010
47Pictet-Water For professional investors onlyPictet Asset Management
Water yesterday, today and tomorrow
Waterrights
Privatesector
IndustrystructurePlayers
2000–
6% served by the private sector (15% in China)–
Protests at the 2000 and 2003 World Water Forum2010
–
12% served by the private sector (38% in China)–
Dialogue at the 2009 World Water Forum2020
–
18% served by the private sector (50% in China?) –
Can NGOs and the private sector pull together?
2000–
‘70% of PSP customers served by the ‘big five’–
Suez / Veolia / RWE / SAUR / Agbar2010
–
37% of PSP customers served by the ‘big five’–
RWE a local player again and SAUR split up –
Agbar absorbed into Suez –
New regional players (SABESP, Manila Water and JUSCO)2020
–
30% of PSP customers served by the ‘big five’–
Aqualia’s growth strategy–
Emergence of major Chinese players
2000–
70 companies–
Almost all in OECD countries2010–
157 companies –
Even balance between OECD and rest of the world –
China the major driver2020–
157 companies –
Even balance between OECD and rest of the world –
China the major driver
2000–
Some trading in the US–
Start of the Murray Darling markets2010–
Security of supplies and storm water management become
real issues
2020–
Water regarded as a commodity in appropriate
circumstances
–
Need to segregate investments from
applications?
Privateparticipation
Source: Dr David Lloyd Owen, Envisager –
03/2010
48Pictet-Water For professional investors onlyPictet Asset Management
Water yesterday, today and tomorrow
Engery Desalination
Waterscarcity and
management
Wastewatertreatment
2000–
Leakage management (targets in the UK) –
Supply management (reservoirs and desalination)2010
–
Smart / automated metering emerging2020
–
Demand management (tariffs and white goods) –
Water recovery and recycling –
Grey and rain water harvesting
2000–
Multiple Stage Flash distillation is the norm–
Cost $1.00-1.50 per m3 (low cost energy)2010
–
Reverse Osmosis and membrane bioreactors find favor –
Cost $0.45-0.80 per m3 (energy efficiency & recovery)2020
–
Waste heat condensers –
energy intensity is the issue –
Cost $0.40-0.80 per m3
2000–
Low energy costs and low need -
a relatively
low priority
2010–
Energy costs have tripled –
and more treatment
and pumping
–
Energy use monitoring & more efficient pumps2020–
Water management and climate change –
6% of UK’s greenhouse
gasses via methane, treatment and pumping
–
Sludge to energy & distributed sewage treatment
Industry developments
2000–
Membrane bioreactors emerging –
Secondary –
tertiary treatment is the norm (UWWTD)2010–
MBRs commoditized –
need more energy efficiency –
Tertiary –
advanced treatment becoming the norm2020–
Waste heat condensation –
optimize energy
efficiency
–
Specialist applications –
removal of drugs,
hormones etc
Source: Dr David Lloyd Owen, Envisager –
03/2010
49Pictet-Water For professional investors onlyPictet Asset Management
Top 10 global water trends in 2020
Major trend 2010 2015 2020
1 Drinking water & sanitation needs
Driven by new build in Asia Pacific, Middle East, North Africa and Latin America
China, Latin America nears completion of basic sanitation infrastructure
India drives the global momentum of meeting millennium linked drinking and sanitation needs in developing countries
2 Water reuse & recycling Water stress driving water reuse in Middle East, Australia and US
Spain water reuse & recycling catalyses growth
China & India boost momentum Industrial sector, esp Power closing in municipal sector for water reuse
3 Biogas from wastewater Carbon footprint drives energy recovery particularly in industrial
Bio-solids concerns in municipal sector catalyse growth in Europe & US
Sludge generation in developing countries triggers biogas market
4 Bio-solids management Bio-solids steeps up concern in EU
Incinerators gain in popularity in Central Europe
Sludge dewatering continues to be the choice for developing countries
Asia Pacific emerges as the strongest market opportunity for bio-solids
5 Resource & nutrient reovery
Closed loop systems gain popularity particularly in sectors such as PV
Produced water sector for oil & gas establishes presences
Mines and minerals cement market opportunity for sustainable business models for recovery
6 Public health & water security
Concerns on chlorine by-products benefits non-
chlorine disinfectants such as UV
UV joined by Ozone, advanced oxidation as well as chlorine alternatives
Complex contaminants such as endocrine disruptors gain focal point
7 Smart water grids Leakage prevention and identification gains prominence with utilities
Smart meters and monitors deployed to secure better integration of performance
Smart water grids move East
8 Water trading Water stress drives water trading market in Australia and North America
Municipalities establish commercial links of selling treated wastewater to industry
Marketplace established for water trading between municipalities and commerce
9 Decentralized integrated sys
Decentralised systems’
market heats up in Southern, Central & Eastern Europe
Rainwater harvesting systems emerges strong market in Asia Pacific
Utilities begin to opt decentralised units in mega cities
10 Storm water management Europe & North America evaluate best options to tackle extreme weather events related flooding
Utilities opt for streamlining collection and storage/treatment/reuse/disposal; of storm water
Storm water management emerges as integral part of water resource management plans
Source : Frost&Sullivan, World‟s Top Global MegaTrends To 2020 and Implications to Business, Society and Cultures –
10/2010
50Pictet-Water For professional investors onlyPictet Asset Management
Water and wastewater treatment technology
1980 1990 2000 2010 2020
Water & wastewater treatment
Water management
Water re-use & recycling
Sustainable solutions & services
Drinking water Municipal Wastewater
Bio solids management
Material, resource & energy recovery
Advanced WW treatment (ex. nutrient removal)
Water needs of developing countries
Turnkey
solutions
Storm water management
Re-use & recycling
Retrofit, replacement & upgrading
Membrane technology
Service outsourcing
Chemical free treatment
RO desalination Ballast water treatment
Sewerage
connection
Worldwide sanitization
Treatment systems for small communities
Source : Frost&Sullivan, World‟s Top Global MegaTrends To 2020 and Implications to Business, Society and Cultures –
10/2010
EVOLUTION OF WATER MANAGEMENT TECHNOLOGIES AND SOLUTIONS In
tegr
ated
wat
er m
anag
emen
t & s
ervi
ces
Top global sustainable trends in 2020
51Pictet-Water For professional investors onlyPictet Asset Management
Emerging technologies in selected growth markets
Energy & resource recovery from ROdesalination plants-
ERI PX Pressure Exchanger
Biogas generation from wastewater
treatment-
Anaerobic digesters
Water reuse & recycling systems
market-
Membrane bioreactor systems
Chemical free water & wastewatertreatment-
UV & ozone
Source: Frost & sullivan, world‟s top global megatrends to 2020 and implications to business, society and cultures –
10/2010
52Pictet-Water For professional investors onlyPictet Asset Management
5% 0.1%19%
17%
6%33%
2%
17%
Western Europe Eastern Europe/Central AsiaMiddle East/North America East Asia PacificSouth Asia North AmericaLatin America & Caribbean Sub-Saharan Africa
Water infrastructure market
We focus on services more than equipments
Rehabilitation and new resources development… Breakdown of infrastructure market by region
… more than new networks
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
50000
40000
30000
20000
10000
$m
New wastewater networksWater resources developmentWastewater network rehabillitationNew water networksWater network rehabillitation
Total Infrastructure
Market $935bn2010-16
Source: Global Water Intelligence –
Water Technology markets 2010
53Pictet-Water For professional investors onlyPictet Asset Management
Environmental regulation
US
Safe Drinking Water Act
Clean Water Act
Coal ash treatment
Water intake for cooling water
Europe
Water Framework Directive
Urban Wastewater Treatment
Lead connections to be replaced
No landfill policy in UK
China
12th 5-year plan focus on water resources and irrigation
Document N1
Increased targets for Wastewater treatment rates
Governments continue to show strong support to water preservation
Sample of Policies in major Economies
54Pictet-Water For professional investors onlyPictet Asset Management
Municipal water value chain
c.4,000 companies around the world
CONSUMABLE
SUPPLIERS
c.250,000 entities, mostly public
OPERATORS
c.4,000 entities
SYSTEMS INTEGRATORS
c.20,000 entities
EQUIPMENT SUPPLIERS
Source: Pictet, Global Water Intelligence –
Water Technology markets 2010
The core of our portfolio and our investment case
Segment Sub-segment Positioning
Water supply Regulated operators We look for stable regulation, attractive returns and sustainable yield
Non-reg. operators We look for track record and close relationship with municipalities
Water technology Systems integrators We look for track record and IP
Equipment suppliers We favour high margins company and growing end markets suppliers : monitoring, metering, filtration
Consumable suppliers We look for service oriented company vs commodity suppliers
55Pictet-Water For professional investors onlyPictet Asset Management
M&A –
Sector attractiveness
Foreseeable M&A opportunities:
•
Accrued interest from Private Equity / Infrastructure funds in water assets (regulated utilities)
•
Multi-industry groups consolidate water assets
•
New players enter the water market
ConsolidatorsDanaher
General ElectricITT Corp.PentairSiemens
Potemtial takeout candidates
Treatment/Filtration Infrastucture Equipment
Pall (PLL, $6.4bil)
Nalco (NLC, $4.0bil)
Clarcor (CLC, $2.1bil)
Calgon Carbon (CCC, $1.0bil)
Tetra Tech (TTEK, $1.5bil)
Insituform (INSU, $1.0bil)
Badger Meter (BMI, $0.5bil)
Energy Recovery (ERII, $0.15bil)
56Pictet-Water For professional investors onlyPictet Asset Management
M&A –
Valuations
Valuation multiples are drivenby the level of technologyinvolved
Water is a strategic defensivegrowth sector•
Relatively secular / low cyclical demand
•
Forecasted supply/demand imbalances
•
Quality pressure
Encourages consolidationin all sub-segments
Higher margins, higher barriers to entry, higher growth…
Water M&A valuations
Source graph: Citi Group «
Water sector handbook
»
57Pictet-Water For professional investors onlyPictet Asset Management
M&A –
History
Source : Global Water Intelligence, January 2013
58Pictet-Water For professional investors onlyPictet Asset Management
Regulation for ballast water treatment
•
International Maritime Organization (IMO) adopted International Convention for the Control and Management of Ships’
Ballast Water and Sediments (BWMC)
–
Sets framework for legislation for 169 Member States
–
With latest ratification, current parties to the BWMC total 33 representing 26.5% of the world’s tonnage
–
Ratification of the BWMC is pending, needing to reach 35% of the world’s tonnage (country threshold of 30 reached)
•
U.S. Coast Guard adopted the rule in March 2012
:
–
Phase 1 similar to the IMO standard
–
Phase 2, more stringent, will be evaluated as an option later
Issue: transfer of invasive species through ship ballast water
59Pictet-Water For professional investors onlyPictet Asset Management
Ballast water treatment market
Total ballast water treatment systems market: compliance timeline of the IMO conventionProgressive Implementation from newly built to existing ships
Resulting in a 53% CAGR opportunity from 2009 to 2020
(world), 2009-2016
Total ballast water treatment systems market: revenue forecasts
(world), 2009-2020
Note: all figures are rounded; the base year is 2009Source –
Frost & Sullivan –
Ballast Water Market analysis
Source: The 5th annual ballast water management conference, London, 10 December 2009
60Pictet-Water For professional investors onlyPictet Asset Management
Ballast water competitive landscapeTotal ballast water treatment systems market: competitive overview (world), 2009
COMPETITIVE ENVIRONMENT
Opportunityseekers <10 companies
Ship owners and ship builders4 companies
W&WW industry suppliers<10 companies
Start-ups dedicated to BTW<10 companies
Marine industry suppliers>10 companies
Industrial groups5 companies
Source: Frost & Sullivan
•
Small R&D initiatives focusing on development of BWT systems to sell it later on.
•
Small companies offering innovative technologies looking to apply them in the BWT systems market.
•
Competences in many industries (including marine) and market segments.
•
Continuous portfolio expansion and entries into new attractive markets like BWT.
•
International and regional (Asian) participants.
•
Providers of equipment/system and services for the marine industry.
•
Small and medium sized companies.•
Originate from various countries.
•
Large ship owners and ship builders from Asia that aim to omit intermediaries (independent BWT suppliers) and gain the market share alone leveraging their existing position in the industry.
•
Establish suppliers of the equipment/system and services for the water and wastewater industry.
•
Originate from various countries.
•
Small start-up’s established over the lat decade to develop BWT systems. Supply of BWT is the only/core competence.
•
Some already acquired by larger companies.•
Originate from various countries.
61Pictet-Water For professional investors onlyPictet Asset Management
Shale gas development
Shale Gas resources change the Energy picture in the US Fracking is a water intensive process
Source –
Heckman Corporation, Company presentation
62Pictet-Water For professional investors onlyPictet Asset Management
Shale gas regulation opportunities
Produced water are trucked-in to disposal wellsRegulation on water will offernew opportunities
•
Need of water for the whole well’s life :
–
Clean water to drill the well
–
Flowback Water (20% of the flow) in the first month
–
Produced Water (80% of the flow) over the whole life
•
Opportunities for :–
Infrastructure development,
–
Treatment technologies,–
Recycling services
Source –
STW Resources, Company presentation
64Pictet-Water For professional investors onlyPictet Asset Management
Three levels of sustainability
EXCLUSION INCLUSION
ACTIVE
OWNERSHIP (engagement)
65Pictet-Water For professional investors onlyPictet Asset Management
Exclusion
Avoid investments in companies that constitute unacceptable risk
of contributing to violations of fundamental humanitarian principles, serious violations of human rights, gross corruption or severe environmental damage
Maintenance of Blacklist with controversial companies, based on the most authoritative sources in the field, such as the Council on Ethics for the Government Pension Fund of Norway
Regular review and update of Blacklist by Pictet Sustainable Investment Board (SIB)
66Pictet-Water For professional investors onlyPictet Asset Management
Inclusion
Invest only in companies with clear and strategic exposure to one of Pictet’s themes derived from the environmental megatrends -
Water, Clean Energy, Timber, Agriculture
Minimum exposure of 20 to 50% to particular theme required to be
eligible for inclusion in underlying theme; average exposure on underlying strategies goes up to 80%
Pictet’s investment management teams incorporate environmental, social and/or corporate governance issues and controversies, which may negatively impact a companies’
business franchise (long-term ability to generate cash flow) as part of investment process
67Pictet-Water For professional investors onlyPictet Asset Management
Active ownership
•
Voting rights will be exercised selectively by Pictet, based on best corporate governance and sustainability practices
•
Engage companies in a dialogue with the aim to improve business standards and best practices in a particular industry
•
In the field of sustainability, Pictet cooperates with Geneva-based Ethos Foundation, a pioneer in Corporate Governance with a long-standing track record in this area. Ethos has been mandated to engage selected companies on behalf of Pictet
Voting rights and engagement are the two instruments used by Pictet to exercise active ownership
68Pictet-Water For professional investors onlyPictet Asset Management
Ethos engagement process
ESG MONITORING
BEST PRACTICE AND
IMPROVEMENT
REQUIREMENTS
DIRECT CONTACTS WITH COMPANY
ETHOS RECOMMEN-
DATIONSENGAGEMENT EVALUATION
69Pictet-Water For professional investors onlyPictet Asset Management
Ethos fund engagement overview
Examples of monitoring of ESG issues •
Child labour and health issues
•
Pollution and waste management
•
Controversial dam projects
•
Anti-competitive practices
•
Labour rights
Engagement objectives •
Focus on most exposed companies to ESG controversies
•
Engagement planned on at least a two years horizon per company
•
Stand-alone or collaborative initiatives (letters, visits, resolutions)
•
Voting rights used accordingly to engagement objectives
Ethos engagement recommendations •
Proposition of strategies to improve management of controversial
issues
•
If no reaction, disinvesting could be a way to protect value and
reputation of the fund according to its objectives
For further information, please visit our websites
www.pictet.com
www.pictetfunds.com
Pictet Asset Management
This marketing document is issued by Pictet Funds (Europe) S.A. It is neither directed to, nor intended for distribution or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Only the latest version of the fund’s prospectus, regulations, annual and semi-annual reports may be relied upon as fund the basis for investment decisions. These documents are available on www.pictetfunds.com
or at Pictet Funds (Europe) S.A., 3 Boulevard Royal, L-
2449 Luxembourg.The information and data presented in this document are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments.Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to change without notice. Pictet Funds (Europe) S.A. has not taken any steps to ensure that the securities referred to in this document are suitable for any particular investor and this document is not to be relied upon in substitution for the exercise of independent judgment. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Before making any investment decision, investors are recommended to
ascertain if this investment is suitable for them in light of their financial knowledge and experience, investment goals and financial situation, or to obtain specific advice from an industry professional.The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested. Risk factors are listed in the fund’s prospectus and are not intended to be reproduced in full in this document.Past performance is neither guarantee nor a reliable indicator of future results. Performance data does not include the commissions and fees charged at the time of subscribing for or redeeming
shares. This marketing material is not intended to be a substitute for the fund’s full documentation or for any information which investors should obtain from their financial intermediaries acting in relation
to their investment in the fund or funds mentioned in this document.
www.ethosfund.ch
info@ethosfund.ch
Ethos
Case postale
CH - 1211 Genève 1
T +41 (0)22 716 15 55
F +41 (0)22 716 15 56
January 2012
REPORT ON THE SUSTAINABILITY
DIALOGUE WITH FIBRIA
Author
Simon Perrin, Senior Analyst
® © Ethos, January 2012. Any reproduction, in full or in part shall be subject to the prior consent of Ethos.
Any text quoted must reference the source.
Disclaimer
This report has been drawn up by Ethos Services based on information gathered from sources accessible to
investors and the general public, such as company reports and internet sites, as well as information
submitted directly by the companies. Despite multiple checks, the accuracy of this information cannot be
certified. Ethos Services shall not be held liable for the accuracy of the information published.
| 3
Pictet Asset Management (PAM) started to invest
in environmental themes in 2000, when it
launched the Pictet-Water investment fund. Since
then, it has launched three more environmental
theme funds, Pictet-Clean Energy (2007), Pictet-
Timber (2008) and Pictet-Agriculture (2009). In
2010, PAM launched the Pictet-Environmental
Megatrend Selection, which offers access to all
four themes in one single investment fund.
Fibria was included in the investment universe.
Pictet Asset Management has entrusted Ethos
with establishing a dialogue with the company on
environmental, social and governance (ESG)
issues that may possibly affect the investee
companies. Ethos proposed the two following
topics for dialogue, which Pictet Asset
Management then approved:
Human Rights and Security Policy: Fibria’s call
on private security forces in politically
sensitive regions where business activities are
conducted.
Supply Chain Management and Fibria’s
commitment to suppliers’ development.
The following document is a report dedicated to
the engagement activities Ethos has been
conducting with Fibria in 2011. It presents key
findings of Ethos’ assessment on Fibria’s
management of these two issues at stake.
For each of these topics, the report also includes
Ethos’ short global assessment, as well as key
recommendations to Pictet Asset Management
concerning the follow up of the dialogue with
Fibria. This first report is publicly available on both
Ethos’ and Pictet Asset Management’s websites.
Human Rights and Security Policy
In its first part, the report assesses the way Fibria
manages conflict issues when such problems
occur between security providers and local
communities. Ethos also highlights how the
company proceeds to prevent the occurring of
conflicts by easing tensions with local
communities.
Overall, the measures established by Fibria are
adequate to the difficult environment in which the
company operates. The assessment confirms that
Fibria is able to manage security issues as they
occur. Its responses have shown that the
company is making efforts to prevent security
issues. Its social inclusion approach, that still
needs to be fully implemented, is a very good
illustration of its commitment to developing and
maintaining good relationships with local
communities.
Ethos has made some key recommendations,
including the following:
The company should further enhance its
sustainability reporting, whose content is
considered very relevant, and focus more on
accidents and non-compliance cases that are
being investigated.
The company should report on data that
demonstrate the progress achieved in easing
tensions and having better relationships with
local communities.
Supply Chain Management
The second part of the report, dedicated to
Fibria’s supply chain management, assesses the
companies’ global policies in a first part. It then
focuses on the way Fibria deals with suppliers
who do not fully comply with the sustainability
requirements set out by the company.
Fibria has taken a severe stance against suppliers
who are found guilty of violating basic human
rights standards, such as child and forced labor. It
however recognizes the difficulty for small
suppliers to ensure the application of the
sustainability requirements. In order to maintain
long-term relationships with these suppliers, Fibria
is committed to helping them develop their
competencies so that they can get a higher
income and enjoy better living and working
conditions.
Ethos has made some key recommendations,
including the following:
Fibria should communicate more openly on its
supplier requirements and formalize them in a
single supplier code of conduct document,
publicly accessible on the corporate website.
The supplier code of conduct should then be
distributed to all the company’s suppliers.
Fibria should improve its communication on
remediation and action plans submitted to
non-compliant suppliers. It should give further
information that confirms its commitment
towards suppliers’ socio-economic
development.
Executive Summary
| 4
Conclusion
At this stage of the engagement with Fibria, it
appears to Ethos that the company is fully aware
of the remaining sustainability challenges lying
ahead and is fully committed to respond to them
with innovative and ambitious measures.
The steps taken so far are deemed credible and a
good number of them may be viewed as best
practices.
In spite of this comprehensive sustainability
strategy, in the short tem, some social problems
may still occur either among local communities or
along the supply chain. However, it is Ethos’
perception that Fibria is ready and equipped to
prevent and manage the occurrence of social
risks.
Moreover, given the openness to dialogue
demonstrated during the engagement, Ethos is
confident that Fibria is willing to consider
implementing the recommendations that have
been formulated in this report.
Ethos would recommend terminating the
engagement in 2012 with the company on these
two specific themes. However, it would be
relevant to have a further contact with the
company in 2013 to get a follow up of the projects
that are being implemented by the company.
Engagement Report: Executive Summary
Paraquat toxicity
www.ethosfund.ch
info@ethosfund.ch
Ethos
PO Box
CH - 1211 Geneva 1
T +41 (0)22 716 15 55
F +41 (0)22 716 15 56
REPORT ON THE SUSTAINABILITY
DIALOGUE WITH SYNGENTA 2012 APRIL
Author
Simon Perrin, Senior Analyst
® © Ethos, April 2012. Any reproduction, in full or in part shall be subject to the prior consent of Ethos. Any
text quoted must reference the source.
Disclaimer
This report has been drawn up by Ethos Services based on information gathered from sources accessible to
investors and the general public, such as company reports and internet sites, as well as information
submitted directly by the companies. Despite multiple checks, the accuracy of this information cannot be
certified. Ethos Services shall not be held liable for the accuracy of the information published.
| 3
In 2009 Pictet Asset Management launched a
thematic Agriculture Fund and included Syngenta in
the investee companies’ universe. Pictet Asset
Management has entrusted Ethos with establishing
a dialogue with the company on some sensitive
issues that may possibly affect the reputation of the
fund.
The three following topics for dialogue were
proposed by Ethos and then accepted by Pictet
Asset Management:
• Syngenta’s supply chain management: child
labour among seed suppliers in India;
• Human security policy: Syngenta’s call on
private security forces in politically sensitive
regions where business activities are operated;
• Health and Safety: crop protection product
paraquat (Gramoxone) and damages caused to
users’ health in developing countries and is the
third report dedicated to the engagement
activities Ethos has been conducting with
Syngenta since 2009. It specifically focuses on
the paraquat theme.
The document is an update of Ethos’ first
engagement report on paraquat1.
A negative environment for the production and
marketing of paraquat
The report explores how several groups of
stakeholders, including states, corporations,
international organizations, are organizing
themselves to respond to the toxicity risks
associated with the misuse of paraquat.
Major recent trends, such as tougher international
rules and voluntary standards, actually demonstrate
that Syngenta’s license to operate is being more
and more questioned when it comes to the
production and marketing of paraquat in developing
countries.
In Ethos’ view, global context and the last
developments reflect a very unfavorable
1www.ethosfund.ch/e/inc/download.asp?folder=pub
lication&codefile=p335e_
environment for the further production and
marketing of the Gramoxone, especially in
developing countries where conditions are rarely
met for a safe use of paraquat.
The need of a new corporate strategy towards
paraquat
Syngenta has initiated comprehensive stewardship
programs all over the world. These programs,
designed for growers and conducted with the help
of expert partners, aim at educating them on the
best manner to safely handle the pesticide
products.
It is Ethos’ assessment that this stewardship
approach has so far failed to effectively address the
issue, in particular in developing countries, where
small farmers use paraquat under hazardous
conditions.
Therefore Ethos proposed that Syngenta rapidly
adopts an ambitious strategy that pursues a “zero
misuse” objective. Such a strategy would mean the
enforcement of a restricted access to paraquat
(Gramoxone). The access should actually be limited
to those users who can show evidence they are
fully protected, equipped and duly trained on the
use of the herbicide.
Ethos’ recommendation
Ethos recommends Pictet Asset Management to
continue the engagement with Syngenta provided
that:
• Syngenta considers an innovative approach
with regards to Gramoxone that is aligned on a
global “zero misuse” objective;
• Based on the restriction access model
developed in the United States, in a next
engagement round with Ethos, Syngenta
makes concrete proposals to initiate a new
strategy that deals with paraquat toxicity in
emerging countries.
Executive Summary
Engagement report
Themes: Sourcing of natural resources from Western Sahara
Company: Potash Corporation of Saskatchewan Inc.
ETHOS ENGAGEMENT –
PICTET ENVIRONMENTAL
MEGATREND SELECTION
www.ethosfund.ch
info@ethosfund.ch
Ethos
PO Box
CH - 1211 Geneva 1
T +41 (0)22 716 15 55
F +41 (0)22 716 15 56
2012 OCTOBER
Author
Sybille Gianadda, Senior Analyst Joana de Brito, Analyst
® © Ethos, October 2012. Any reproduction, in full or in part shall be subject to the prior consent of Ethos. Any text quoted must reference the source.
Disclaimer
This report has been drawn up by Ethos Services based on information gathered from sources accessible to investors and the general public, such as company reports and internet sites, as well as information submitted directly by the companies. Despite multiple checks, the accuracy of this information cannot be certified. Ethos Services shall not be held liable for the accuracy of the information published.
Context
In December 2011, the Government Pension Funds of Norway decided to disinvest Potash Corporation of Saskatchewan Inc. (PotashCorp) over ethical concerns. The recommendation issued by the Council on Ethics points out two important conclusions on which the decision was based
1:
• The sourcing of phosphate from Western Sahara, in it current form, does not serve the socioeconomic interests of the Saharawi people.
• This sourcing support Morocco’s presence in the territory.
PotashCorp is included in the investment universe of the Pictet-Agriculture and the Pictet-Environmental Megatrend Selection funds. Pictet Asset Management has mandated Ethos to engage a dialogue with the company on environmental, social and governance (ESG) issues. Together with Pictet Asset Management, it was decided that Ethos would engage PotashCorp on the controversy related to phosphate sourcing from Western Sahara.
The following document is dedicated to the engagement activities that Ethos has been conducting with PotashCorp in 2012. It presents key findings of Ethos’ assessment on PotashCorp management of this issue at stake. The assessment is based on the material publicly disclosed by the company and on additional information that the company gave to Ethos via emails and during a conference call that took place in July 2012.
The report also includes Ethos’ key recommendations to Pictet Asset Management with regards to the continuation of the dialogue with PotashCorp. The executive summary of this engagement report is publicly available on both Ethos’ and Pictet Asset Management’s websites.
Issue at stake
In October 1975, Morocco invaded Western Sahara, a former Spanish colony, despite the International Court of Justice’s rejection of Morocco’s territorial claims over the territory. The UN Security Council strongly deplored this occupation and asked for an immediate withdrawal.
1www.regjeringen.no/pages/36470734/Rec_phospahte_ENG.pdf
The United Nations and the vast majority of States, including the United States, Canada and the EU, still do not recognize the Moroccan sovereignty over Western Sahara and have been urging for the right to self determination of the Saharawi people. Over the past decades, many UN resolutions have been strongly reaffirming the necessity to abide by this basic human rights principle.
Western Sahara is very rich in phosphate rocks, a natural resource that is exploited by a state-owned company, the Office Chérifien des Phosphates (OCP). PotashCorp currently purchases phosphate rock from this company.
Engagement
Ethos believes that PotashCorp’s sphere of influence extends to its suppliers, including OCP. It is thus the company’s responsibility to ensure that that the wishes and interest of Western Sahara’s local population are being respected.
PotashCorp acknowledges that the controversy creates a reputational risk for the company, but considers that OCP’s activities are undertaken in compliance with the applicable national and international laws.
The company has taken some steps to deal with the controversy over the sourcing of natural resources from Western Sahara. In particular, it has initiated a dialogue with OCP on the sustainability risks linked to its operations in the region. In addition, PotashCorp has started managing sustainability risks along its supply chain. Nonetheless, the company falls short of a formal management system to deal with sustainability issues in its supply chain in a systematic and transparent manner.
In light of this assessment, Ethos recommends that PotashCorp strengthen its supply chain management system. Ethos also recommends that PotashCorp further engage OCP on the development of credible and transparent Key Performance Indicators (KPIs) to measure the impacts of its operations in Western Sahara and on the disclosure of existing report which allegedly susbstantiate OCP’s positive impact on the region. Finally, Ethos recommends that PotashCorp establishes a common dialogue with OCP, together with other companies facing the same controversy.
At this stage of the engagement, it appears to Ethos that PotashCorp has demonstrated its openness to dialogue on the issue of sourcing
Executive Summary
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