Anyone who knows the OLZ investment philosophy knows that we do not normally comment on individual securities. But: no rule without exception. Novartis is one of the heavyweights in the Swiss equity market, alongside Nestlé and Roche. Together, the "Big 3" account for around half of the market capitalisation of the SPI. It is well known that we have a maximum position weighting and these stocks are already underweighted for regulatory reasons. When MSCI ESG Research put the stock on the "red list" in spring 2018 due to serious controversies, Novartis thus violated our clearly defined sustainability criteria and was excluded from the investment universe.
But what does "serious controversies" mean in the case of Novartis? The company or its subsidiaries have been accused of bribing employees of state hospitals in Greece and doctors in the US. The aim was to ensure that more Novartis branded medicines were prescribed. In addition, books and records were falsified to disguise the bribery. As a result, charges were brought in both the US and Greece. This summer, Novartis reached an out-of-court settlement with the state authorities. The two settlements in the US cost the company approximately USD 700 million.
However, the settlement of the dispute alone is not enough to remove the case from the "red list". MSCI ESG Research also requires that these companies take the necessary measures to counter future misconduct. Here, too, Novartis has done its homework. New ethical standards, strengthened compliance, stricter rules to prevent bribery and greater accountability of superiors point the way forward. MSCI ESG Research also acknowledged these corrections in the corporate governance of the pharmaceutical multinational and removed Novartis from the "red list”. As a result, the stock is now back in our investment universe and can be included again in the portfolio of our Swiss equities fund.
ESG / NZZ (02.07.2020)
Das Flaggschiff unter unseren risikooptimierten und nachhaltigen Aktienstrategien: Nicht nur der Anlagefonds mit dem längsten Track Record von bald 10 Jahren, sondern auch mit dem grössten Volumen von über 1 Mrd. CHF. Die Resultate zeigen, dass dank dem OLZ Minimum-Risiko-Ansatz langfristig eine Mehrrendite gegenüber dem kapitalgewichteten Index erzielt werden kann. Und dies wohlbemerkt bei gleichzeitig tieferem Risiko (Volatilität).