Sustainability rating: Switzerland among the top three
The asset management of Zürcher Kantonalbank has once again rated almost 200 countries for sustainability. There has been much movement in the top ten - and in some cases emerging markets have made up a lot of ground.
Authors: Fabio Pellizzari, head ESG strategy & development, and Dominik Neukom, portfolio manager global fixed income
Switzerland has made a leap forward in terms of sustainability: in the latest Swisscanto sustainability country rating, which is carried out annually by the asset management arm of the Zürcher Kantonalbank, the Swiss Confederation came third (see table below). This follows last year's fifth place.
This puts Switzerland in a leading position among no fewer than 197 countries that issue government bonds and were assessed in the areas of environmental, social and governance (ESG) (see box below). The Swiss political system scored particularly well in the S and G dimensions, which include criteria such as living standards and financial stability.
Meanwhile, lower-ranked countries such as Luxembourg (8th) scored significantly better on the environmental dimension (E).
Around 80 ESG factors monitored
The sustainability country ranking is based on an evaluation of around 80 ESG factors. The environmental dimension primarily assesses values relating to resource consumption and resource efficiency, such as water and waste, climate change, mobility, but also biodiversity (nature conservation and agriculture). The social dimension assesses indicators related to the standard of living and health of the population, as well as gender equality. Finally, the governance dimension looks at indicators of a country's international engagement, human rights record, security and stability (e.g. civil rights and voting behaviour). The data come from a variety of independent sources, including the WHO, the World Bank, UNEP and the OECD.
Setbacks at a high level
In the overall ranking, only the Nordic countries of Denmark and Iceland are ahead of Switzerland, with the Danes knocking Norway off the sustainability throne. The latter has fallen from first to fifth place. In general, however, Northern Europe remains the leading region in terms of sustainability and ESG criteria.
German-speaking countries, on the other hand, have suffered setbacks at a high level. Germany, for example, has dropped one place but is still one of the ten most sustainable country issuers. Austria, on the other hand, has dropped out of the top ten. Spain ranks 27th, France 31st and Italy 39th. This positioning is partly due to the governance dimension.
However, it also shows that the world is changing in terms of sustainability and that emerging markets have also improved significantly since last year. Four of them are already in the top 20. Estonia ranks 11th, followed by Uruguay at 17th, the Czech Republic at 18th and Chile at 20th.
On the other side of the world, New Zealand and Australia have made it into the top ten. In the case of Australia, where fossil fuels have traditionally played a major role, it is mainly the S and G dimensions that are responsible for the good ranking.
Place |
Country |
ESG overall rating |
Rating E |
Rating S |
Rating G |
1 |
Denmark |
100 |
80,42 |
90,32 |
98,77 |
2 |
Iceland |
98,6 |
98,34 |
94,18 |
93,65 |
3 |
Switzerland |
98,46 |
69,09 |
92,40 |
97,7 |
4 |
New Zealand |
97,62 |
60,97 |
83,39 |
100 |
5 |
Norway |
97,34 |
77,37 |
86,63 |
96,69 |
6 |
Netherlands |
95,41 |
71,63 |
87,10 |
94,82 |
7 |
Sweden |
95,22 |
44,85 |
91,19 |
96,94 |
8 |
Luxembourg |
95,03 |
78,33 |
84,58 |
94,12 |
9 |
Germany |
94,32 |
67,98 |
89,88 |
93,14 |
10 |
Australia |
93,89 |
52,31 |
85,28 |
95,81 |
11 |
Estonia |
93,73 |
59,59 |
86,13 |
94,44 |
12 |
United Kingdom |
92,52 |
70,97 |
90,85 |
90,19 |
13 |
Finland |
92,11 |
34,44 |
87,39 |
95,26 |
14 |
Austria |
91,71 |
68,94 |
89,45 |
89,77 |
15 |
Liechtenstein |
89,24 |
66,72 |
85,40 |
87,92 |
16 |
Canada |
89,18 |
64,78 |
81,99 |
88,98 |
17 |
Uruguay |
88,65 |
93,54 |
70,24 |
87,65 |
18 |
Czech Republic |
87,29 |
54,40 |
84,03 |
87,35 |
19 |
Ireland |
86,69 |
89,86 |
81,08 |
82,77 |
20 |
Chile |
86,67 |
55,35 |
69,45 |
86,73 |
A central role for future creditworthiness
Swisscanto's active bond funds invest according to a sustainability framework that includes not only companies but also sovereign issuers. Our sustainability rating is used in the ESG analysis for countries. We believe that framework conditions such as legal certainty, property rights, education and good governance play a central role in long-term economic growth and thus also in the future creditworthiness of countries.
Our data also show a clear correlation between sustainability ratings and economic factors such as GDP per capita and creditworthiness. They are also a relevant source of information for assessing economies and their productivity. Our sustainability rating of countries thus complements the economic analysis of rating agencies and serves as an additional indicator in the assessment of sovereign debtors.
We therefore invest continuously in our sustainability expertise and communicate it to the outside world - not only annually in the form of the country rating, but also in the form of transparent sustainability profiles of our fund solutions and quarterly in the form of the respective sustainability reports.
The sustainability reports of our active funds with government bonds
Fund |
Annualised 3-year gross outperformance in basis points (bp) |
Sustainability report |
Swisscanto (CH) Bond Fund Responsible Global Rates |
+46 bp |
|
Swisscanto (LU) Bond Fund Responsible Global Rates (since repositioning October 2023) |
+41 bp |
|
Swisscanto (CH) Bond Fund Responsible Global Aggregate |
+35 bp |
|
Swisscanto (CH) Bond Fund Responsible Global Aggregate (ex CHF) |
+65 bp |
|
Swisscanto (CH) Bond Fund Sustainable Global Aggregate |
+27 bp |
|
Swisscanto (LU) Bond Fund Sustainable Global Aggregate |
+52 bp |
|
Swisscanto (LU) Bond Fund Responsible Emerging Markets Opportunities |
+162 bp |
