Sustainable Finance in Switzerland

When I was living and working on my PhD in Scotland, I was pleased to know that I lived in one of the world’s hubs of Socially Responsible Investments [1] (SRI). At the time (early 2000s), the institutional investors (pension or life assurance companies) were key players and as you all know Edinburgh is the northern home of pension houses. Companies such as Standard Life, Scottish Widows, Baillie Gifford all had some form of SRI fund in their portfolios to keep their ethical investors happy. These included churches, university superannuation funds [2] and charitable trusts. These SRI funds generally were “ethical funds”, that is to say they used exclusion criteria. They excluded “sin stocks” such as tobacco, alcohol, gambling, nuclear energy, or weapons manufacturers from their portfolios.

When I moved to Singapore, there was slightly less of this sort of activity in evidence, though I did manage to get myself onto the advisory board of the UOB Asset Management UNIFEM fund [3]. This SRI fund invested in companies that were either pro-women or at least not anti! At this time (mid 2000s), SRI was moving away from purely exclusion of sin stocks to “best in class” practices. This means that depending on the clients’ wishes, the portfolio could include the best of a “bad lot”, the most socially and environmentally responsible tobacco company as well as the most financially performant might be included. A diversified company that included weapons manufacture as a small part of its overall structure might be included.

I came to Switzerland in 2008 and since then have kept my eye on the evolution of SRI. For a start SRI is no longer the only fish in the sustainable finance pond. Impact investing, ESG investing, social venture capital, triple bottom line investments and others have joined it. There are different kinds of responsible investing for different kinds of investor. Sustainable Finance Geneva brings together this community of investors in Suisse Romande. From institutional investors who can invest in a traditional “screened portfolio” to the impact investors who are socially responsible business angels or venture capitalists or HNWI who invest in companies that can demonstrate a positive social or environmental impact. The nature of Geneva as the home of private banking means there are a number of boutique asset managers engaged in impact investing. In Zurich and Basel on the other hand sustainable finance is to be found within the private banks themselves such as at Safra Sarasin Bank [4]. Zurich is also home to ratings agencies [5] that provide data to the SRI fund managers. These small research companies assess hundreds of companies world-wide using a range of proprietary criteria on their environmental, social and governance performance.

Last but not least in the family of sustainable finance come the microfinance [6] institutions. Geneva is home to Swiss Microfinance Platform and the World Microfinance Forum.

So for those of you with a passing interest in corporate social responsibility and finance, the marriage of these has led to the golden child of sustainable finance and its many siblings SRI, impact investing, microfinance, ESG ratings. You can find out more about all of these from the links in the footnotes and by attending events organised by Sustainable Finance Geneva.

[1] http://www.unpri.org/introducing-responsible-investment/

[2] http://www.uss.co.uk/UssInvestments/Responsibleinvestment/RIObjectivesStrategy/Pages/default.aspx

[3] http://www.uobam.com.sg/uobam/html/pf_unifem.html

[4]

http://www.jsafrasarasin.ch/internet/ch/en/ch_index/ch_sustainability/ch_sustainable_investment.htm

[5] http://www.robecosam.com/

[6] http://www.sfgeneva.org/index.php/focal-points/microfinance/

Dr. Marina Curran, Professor at BSL

Dr-Marina-Curran

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