In an age where financial success often overshadows our responsibility towards the environment and society, there is a growing need for investment strategies that align with our values and contribute to a sustainable future. Enter the terrAssisi Equity Fund, an investment initiative that draws inspiration from the timeless values of Saint Francis of Assisi, blending financial acumen with ethical considerations.
While Saint Francis, who lived in the 13th century, espoused a life of poverty and detachment from material possessions, his message continues to resonate even today. The Franciscan Mission Center in Bonn, Germany, established the terrAssisi equity fund in May 2009 to honor Saint Francis’ values and create an investment vehicle that reflects his commitment to nature, poverty, and sustainability. The fund is managed by German asset manager Ampega and benefits from the support of analysis firm ISS ESG, whose sustainability universe forms the basis for the selection process.
The terrAssisi Equity Fund can be seen as a pioneer in the realm of sustainable investing, integrating environmental, social, and governance (ESG) factors into its investment decisions. By diligently screening potential investments based on a rigorous set of ethical criteria, the fund aims to generate financial returns while also fostering positive change in the world. The terrAssisi equity fund incorporates ethical considerations rooted in the Franciscan Order, aligning with Saint Francis’ reverence for social justice and deep appreciation for nature.
With approximately 835 million euros in assets, the fund invests in 70 to 90 companies demonstrating a strong environmental, social, and governance (ESG) orientation. Investments in the fund are not only “absolute best-in-class” but must also meet strict exclusion criteria, guided by the ethical principles of the Franciscan Order.
The fund has received a “good” overall rating from Scope, a specialised rating agency, and has been awarded a top ESG rating of five globes and a sustainability score of 100 percent by Morningstar.
‘Article 8+’
These accolades position the fund as a potential impact investment vehicle and possibly eligible for classification under Article 9 of the EU’s sustainable finance disclosure regulation (SFDR). However, Sebastian Riefe, senior portfolio manager at Ampega, describes the fund as “Article 8+” due to its conservative approach, even though he said an Article 9 classification could be warranted.
Part of the management fee for the fund is shared with the German Franciscan order, which uses these proceeds for long-term projects across the world, including for example hospital ships on the Amazon river, heart surgery clinics in El Salvador and aid to refugees from Ukraine.
In addition to ESG and sustainability criteria, the terrAssisi fund employs further ethical exclusion criteria to guide investment decisions. These criteria are based on the ethical guidelines and fundamental values of Franciscan spirituality, emphasising justice, peace, and the preservation of creation.
The fund’s exclusion list includes fossil fuels, discrimination, abortion, and child labour, while nuclear energy is not considered sustainable regardless of any potential changes in the EU taxonomy. The preservation of creation, including unborn life, is given great importance, leading to exclusions for manufacturers of contraceptives and companies involved in stem cell research or genetic engineering.
Invested in the Benelux
In terms of historical performance, the terrAssisi equity fund (DE0009847343) during 2022 returned a negative 15.6 per cent, outperforming the Morningstar Global Markets Sustainability Index which lost 18.3 per cent. In 2021, it gained 35.1 per cent, compared to 20.8 per cent for the Morningstar benchmark.
The fund also has adopted transparency towards investors as one of its values. According to its 2022 annual report, the equity fund was also invested in the Netherlands and Belgium, holding shares in KBC Group, ABN Amro, Heineken and Royal DSM among others. The bulk of its investments, about 50 percent, is made in US stocks, with a clear preference for the technology and healthcare sectors.
In terms of greenhouse gas emissions, terrAssisi invests in companies that are actively working on decarbonisation and that that have aligned themselves with science-based targets for keeping global temperature rises limited for 1.5 degrees. The Science Based Targets initiative is a collaboration between Carbon Disclosure Compact, the United Nations Global Compact, World Resources Institute and the World-Wide Fund for Nature that defines and promotes best practice in science-based target setting and independently assesses companies’ targets.
Decarbonisation
The fund’s list of companies meeting these decarbonisation objectives is topped by French gas and chemicals specialist Air Liquide, its German competitor Linde AG, Waste Management Inc. of the US and three railway companies in North America.
The terrAssisi fund family also offers a dividend fund and a balanced fund, with the latter allocating 20 to 35 percent in equity. While primarily targeting investors in Germany and Austria, the funds are available to investors worldwide, reflecting a broader reach for those interested in aligning their investments with the values of Saint Francis.