Investors focus on sustainable finance


In Switzerland, the sector managed 1.163 billion francs in 2019, up 62% year-on-year - Stival: ‘Sometimes lax criteria are applied and a ‘light’ sustainability is achieved. We need to improve’

Investors focus on sustainable finance
38% of investment funds in Switzerland now meet sustainability criteria. © Shutterstock

Investors focus on sustainable finance

38% of investment funds in Switzerland now meet sustainability criteria. © Shutterstock

The issue of sustainability is becoming fundamental in the development of the financial industry. In fact, according to the latest market study by Swiss Sustainable Finance (SSF), CHF 1,163 billion (2019 data) are invested sustainably in Switzerland, equal to about one third of the assets managed locally, with a growth of 62% compared to the last year and in this trend, Ticino is no exception. It was discussed yesterday in a conference organised by Ticino for Finance in collaboration with Swiss Sustainable Finance.

In his introduction, Franco Citterio, president of Ticino for Finance, stated that the Federal Council hopes that Switzerland will become an important market in this area. Alberto Stival, of Swiss Sustainable Finance, voiced that so-called sustainable wealth management includes ecological, social and governance (ESG) considerations.

Increased demand

Stival specified that demand in this sector is increasing both at the level of private customers (millennials, women, and so on), and at the level of institutional customers (pension funds, insurance companies, foundations) ‘also due to an always greater intensification of laws and rules, which lead sustainable finance to almost become the norm’.

‘In the medium to long term - he noted - ESG investments tend to have a better risk-return ratio than traditional ones’.

The sector has experienced exponential growth. In fact, from the 71 billion managed in 2014, we have reached over 1,100 billion today. ‘In 2017 - he found - only 9% of investment funds were sustainable, while now we are at 38%’.

But not all funds are the same. In fact, there are eight ‘levels’ of sustainability, and those that follow rules less tools practice a ‘light sustainability.

Revision in sight

‘Many funds that we count - he explained - fall into this category. But we wonder if it is appropriate to remove them from our statistics starting from next year, given that sometimes you can review your investment portfolio on the basis of very light criteria, changing very little, and then making the fund fall into the category of sustainable investments. We instead aim to make the situation really improve’.

On the round table, Walter Lisetto of Axion Bank (a subsidiary of the BancaStato group) underlined that BancaStato, given its characteristic as a cantonal bank, pays particular attention to sustainability, and that for example it also publishes a social and environmental report. ‘We cannot improvise sustainability - he explained - just because it is now a sort of fashion, but you need to have skills. This is why we have been relying on Swisscanto for years, which has been active in this sector since 1996. Overall, 11% of the assets are managed according to ESG criteria. It may seem low, but ours is mainly a retail clientele. We are also working a lot on training’.

For his part, Simone Malnati, from Banca del Sempione, said that it is necessary to educate customers correctly explaining the risks involved in the two types of investment. In the conventional one, for example, there is a risk that CO2 taxation will be increased, which would cause taxes of 4 trillion dollars to companies, directly affecting the economic accounts. But there are also risks in sustainability. For example, in 2010 there was a great crisis that hit the solar sector, which caused a lot of losses.

Bad governance, more risks

For his part, Roberto Mastromarchi, from Banca Popolare di Sondrio (SUISSE), noted that many investors are entering the sector, and this is driving up the price of some shares. ‘We must realise - he said - that bad governance creates a business risk that translates into a bad performance on the stock market’.

Finally Fabio Poma, of WMM Group, commented that ‘for the same risk-return we favour ESG investments. In the EU there are more and more funds with ESG certification, and now they are about 1,800, about 50% of the total’.

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