CleanTechnica keeps on publishing some of The Beam interviews and opinion pieces twice a week. The Beam magazine takes a modern perspective on the energy transition, interviewing inspirational people from around the world that shape our sustainable energy future.
This week, Anne-Sophie Garrigou, journalist at The Beam, interviewed Sabine Döbeli, CEO of Swiss Sustainable Finance, an association that was founded in 2014 with the objective of promoting sustainability in Swiss finance.
Hello Sabine Dobeli and thank you for taking the time to answer to The Beam today. I have the feeling that today’s financial system does not reward long-term thinking. But when we talk about sustainability, we’re talking about the future of the planet. So what makes sustainable finance possible?
Sustainability indeed has a lot to do with a long-term perspective. When assessing the sustainability of investments, criteria relate to environmental challenges, to the interactions with different stakeholders as well as to questions on good governance. All of these factors are based on a more long-term view. Reducing the environmental footprint of a company takes more than a year, improving customer loyalty needs a good product strategy and the creation of a customer-oriented culture. If analysts take such factors into account they by definition focus on a longer term.
But I agree that many mechanisms prevalent in the financial industry today, make it difficult to keep this long-term perspective. There are discussions around how to increase holding periods of shares, which have continuously decreased over the past decades. Also, it’s not easy for a company to plan for investments that only pay off after 3–5 years. So we definitely need clearer signals from long-term investors that are willing to reward long-term behavior.
In terms of global investments, how much does sustainable finance represent?
Globally, there are now USD 22.89 trillion of assets managed using responsible investment strategies, an increase of 25.2% since 2014. If we talk of responsible investments, this is quite a broad definition, including sustainable funds in a stricter sense, as well as funds applying just a few exclusion criteria (i.e. sin stocks). From 2014 to 2016, the fastest growing region was Japan, due to greater reporting and sustainable investing activity by institutional asset owners, followed by Australia, New Zealand and Canada.
Is this a global movement?
We can definitely talk of a global movement. In terms of assets, the largest three regions are Europe, the United States and Canada, respectively. Within Europe, France is the country with the highest volumes, followed by Germany, the UK and Switzerland.
In all the regions except Europe, where the definition of sustainable investing has recently become more stringent, the market share of sustainable investing has grown. In relative terms, responsible investment now stands at 26.3% of all professionally managed assets globally.
Globally as well as in Europe, which holds 52.6% of the global SRI assets, negative/exclusionary screening is the largest sustainable investment strategy (USD 15.02 trillion and USD 11.06 trillion, respectively.), followed by ESG integration (USD 10.37 trillion) and corporate engagement/shareholder action (USD 8.37 trillion).
What are the benefits of investing in sustainable companies and projects?
The most important benefit when investing sustainably is that your investment not only provides a financial return but at the same time contributes to supporting a sustainable economy. Furthermore, studies show that sustainable companies often have better employee retention, customer loyalty and face less accidents or lawsuits, all factors which can also result in a better financial performance. Generally, studies show, that the performance of sustainable investments is on average the same as that of regular investments, if not better, and beneficially often carry lower risks. Specifically, one can point out microfinance investments, which can be an interesting addition to a portfolio, changing the risk return profile for the better.
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