Since 2012, LGT has been successfully managing a sustainable equity mandate for the largest pension fund in Austria. VBV - Vorsorgekasse AG is playing a pioneering role as the first company to establish an ethics committee and define clear criteria for sustainable investments. Heinz Behacker, Chairman of VBV - Vorsorgekasse in Austria, is seeking both performance and sustainability.
Retirement provisions are a key social issue in Austria. As in many other countries, they are built on a three-pillar principle. Within the second pillar – occupational pension provision – pension insurance funds have been managing and investing members’ contributions since 2003. Sustainability is an important part of this system: seven of the ten pension insurance funds always follow sustainable principles when investing the money saved with them. VBV – Vorsorgekasse AG is playing a pioneering role in this regard, as the first company to establish an ethics committee and define clear criteria for sustainable investments. It is also the pension insurance fund with the best returns on investment over the long term. Chairman Heinz Behacker does not see any conflict between ecological management and economic success: “Since the company’s inception, we have combined comprehensive corporate responsibility with maximum economic efficiency. This is also evident in our performance figures.”
VBV assigns specifically defined mandates to external asset managers for the majority of the money entrusted to it. While searching for a specialized asset manager for a sustainable, global equity portfolio, Heinz Behacker first became aware of LGT at an industry event in 2011: “The portfolio solution presented by LGT was not specifically focused on sustainability. However, I thought that their proactive approach to investment was innovative and
very interesting in the way it matched our needs,” says the head of VBV. With his interest piqued, he asked LGT’s Martina Meister, who is responsible for supporting institutional clients from Austria, whether LGT also managed sustainable portfolios. “Doing business with the largest pension insurance fund in Austria was a huge opportunity for us,” says Martina Meister. “I showed Mr. Behacker that we have gained significant experience in sustainable investment through managing other investment funds and man dates. In addition, our proprietary sustainability approach allows us to offer real added value.” This approach is based on a holistic consideration of sustainability criteria and fundamental data from conventional financial analysis, resulting in the evaluation of securities that are both financially successful and meet sustainability requirements. Heinz Behacker decided to invite LGT and other institutional asset managers to a pitch presentation. LGT’s investment style, which represented the perfect complement to the pension insurance fund’s existing equity portfolio, ultimately won over the ethics committee. “What tipped the balance for me were the team, LGT’s clear investment process and its many years of proven, relevant success,” says Heinz Behacker. LGT was given an equity mandate in excess of EUR 25 million, with the task of investing the capital safely and profitably in accordance with VBV’s ethical, social and environmental investment principles.
At LGT, Christian Scherrer and a team of five analysts took on the main responsibility for the VBV equity portfolio. Thanks to the clearly defined processes and criteria for sustainable investment to ESG standards, Christian Scherrer and his team were able to develop and implement a customized investment solution for VBV within a very short period of time. The partnership was productive for both parties: “Intensive dialog with the client and its advisers enabled us to consistently develop the mandate as well as our sustainability process. For example, we can now critically examine company supply chains in a much more systematic manner using defined sustainability criteria,” says Christian Scherrer.
Almost four years have now passed since LGT was given the mandate. The partnership with VBV is working out well, which has led to the portfolio being expanded. The investment volume now amounts to more than EUR 60 million. A high point – and a genuine challenge – for Martina Meister and Christian Scherrer came in 2014, when the fund being managed for VBV was certified with the Austrian Ecolabel. Heinz Behacker also extended his congratulations on this occasion, taking stock of the positive results: "The portfolio’s performance has met all our expectations, while our sustainability approach has been implemented successfully and is continually being improved. We are also very happy with the client care. To sum up: we feel taken seriously as partners."