From an alternative angle into the focus of pension funds and insurance companies: Sustainability is becoming the new investment standard for institutional investors. Many private investors also prefer to invest in companies, which assume ecological and social responsibility. However, integrating ESG-criteria in the investment process is not quite so trivial:
How do we implement sustainability effectively?
Which environmental, social and gov-ernance (ESG) criteria do we ap-ply and how strictly?
In addition, there is the question of return worrying foundation boards and pension funds. After all, there is empirical evidence that so-called “sin stocks” belonging to companies in socially controversial areas, such as the weapon, alcohol or tobacco industry, are regularly more profitable than the market index (or are they not? More about it in our OLZ Research Note 1.2018). Is sustainability therefore at the expense of return? This is something that hardly any pension funds can afford, faced with low interest rates. OLZ talked to Sabine Döbeli, CEO, Swiss Sustainable Finance about these issues.
Institutional assets as growth drivers
Sabine Döbeli is convinced that sustainable investment is more than a new fashion trend in the finance industry. It was not triggered by banks offering high returns, but influenced by environ-mental organisations, the media and the public. In several European countries, changes in regulations also played a role. In Switzerland the sharp in-crease in sustainable investments is attributed to institutional investors: a total of CHF 266 billion is invested sustainably (status 2016). Switzerland has, however, not taken a pioneer role and decided to pursue a voluntary approach, as opposed to France and Great Britain. The transition to sustainability is also appreciated by the pension funds. According to a survey, they would even be prepared to sacrify returns for sustainability. “They lack the platform to exert influence”, Döbeli however declared.