Engagement

The global financial centre plays a key role in facilitating the implementation of the UN's 2030 Agenda (Sustainable Development Goals) and the Paris Climate Agreement. With CHF 8,83 billion in assets under management at the end of 2019, Switzerland ranks among the top financial centres in the world. These private, corporate, and pension fund assets give the Swiss financial industry significant leverage to make sustainable investing the industry norm.

The numbers published by Swiss Sustainable Finance (SSF) speak volumes: sustainability-related investments in Switzerland amounted to CHF 1,610 billion by the end of 2022.

The Geneva financial centre unanimously recognises the need to transition to a more resilient and sustainable economy. That means making sustainability part of business decisions at every level:

• Reducing the environmental impact of buildings: Sustainability is a key priority for the financial centre, leading several Geneva banks to invest in new, carbon-neutral headquarters. This trend is likely to accelerate, with several large projects currently under construction or in planning.
• Giving back to the community: Geneva banks and financial institutions boast a long philanthropic tradition rooted in the “Spirit of Geneva”. Their commitment to sustainability is evident in the range of causes they support, from the environment to health and social issues. Employees take an active part in corporate philanthropy and are encouraged to initiate charitable projects.

Although these corporate-led initiatives are both welcome and necessary, they go only so far. Where the financial industry can achieve real impact for a more sustainable economy is by mobilising the assets it manages on behalf of its clients, and by developing sustainable investment solutions and products.

Sustainability comes into play in every area of finance, from investment selection to credits and financing, and from capital markets to securities emissions. Environmental, social and governance (ESG) criteria are at the heart of the sustainable investment strategies developed by banks and financial institutions. These strategies deliver profits for clients and benefits for society.

• The best-in-class strategy consists in identifying the most sustainable and responsible companies in each sector.
• Inclusion or integration strategies invest in companies with a proven social or environmental impact.
• Impact investing directs capital to companies with products or services that aim to address social or environmental issues.
• Exclusion strategies remove companies that fail to meet certain ESG criteria from investment portfolios.

The Swiss Sustainable Investment Market Study 2023, published by SSF, offers some interesting insights on these sustainable investing (SI) strategies. Sustainable thematic investments (86%) and  impact investing (80%) have experienced the highest growth of all approaches, which reflects investor appetite for impact-related approaches.

Once again we see SI approaches applied across practically all asset classes, demonstrating that sustainability considerations play a role for both major asset classes and alternative assets. Equity (33%), corporate bonds (20%), sovereign bonds (13%) and real estate (12%) are the top asset classes.