Private investors are slowly jumping on the bandwagon
The financial sector is becoming more sustainable. Olivier de Perregaux, CFO of LGT Group, explains why this is the case and what the path to greater sustainability looks like.
Mr de Perregaux, the topic of sustainability is becoming increasingly important in the financial sector. Why?
Environmental pollution, climate change, growing social imbalances, and political polarisation present us with major challenges. The financial industry is also becoming increasingly aware that it has to make a contribution to the solution of these problems. And the industry is well positioned for that.
What do you mean by this?
As intermediaries between investors and capital-seeking countries, organisations, and businesses, financial institutions have a great influence on where the money flows: whether investors buy shares in a coal company, for example, or instead prefer to buy shares in a company that manufactures wind turbines, or whether they should really invest in a country that tramples on human rights. If capital flows are channelled in a more sustainable direction, it makes a huge difference.
What is happening in practice? Is the market going in this direction?
Yes, it is. Institutional investors, such as pension schemes, have been dealing with these questions for many years and are now convinced that sustainable investment not only makes sense for the reasons outlined above, but is also very interesting from a risk/return perspective. This is why more and more money in the institutional sector is being invested sustainably. Private investors are still somewhat more cautious, but here as well, we are noticing an increase in interest.
What about Liechtenstein banks?
The orientation of the Liechtenstein financial centre is becoming increasingly sustainable. This can be seen in the banks‘ offers, in the initiatives of the individual stakeholders, and in the discussions in industry bodies and at events. The 5th Conference of the Associations of Foreign Banks organised by the Liechtenstein Bankers Association at the end of November was also held under this motto.
Are events like these useful?
Yes, definitely. We are still far from where we want to be and need to be in the area of sustainability. It is extremely important for decision-makers, specialists, and industry experts to deal intensively with the topic at such events, to seek out opportunities for change, and to discuss their experiences. Because in the end, we can only make a difference if we embark on the path together.
What role does sustainability play at LGT?
At LGT, sustainability is an integral part of our corporate culture. We have launched numerous initiatives in recent years and have already achieved a lot, but we also want to do much more.
In which areas have you already made progress?
On the one hand, we have taken operational measures to strengthen sustainability, such as installing photovoltaic and solar thermal systems and offsetting our CO2 emissions. But we can achieve much more in our core business. Here again, we started early. Since 2003, a clause on responsible and sustainable investment has been an integral part of many of LGT’s investment programmes; in 2009, we launched our first sustainable bond and equity funds; and since last year, we have had our own rating to show our private clients how sustainable their portfolios are. This creates transparency and helps our clients to make their investments more sustainable.
And what else would you like to achieve in the future?
We want to make an active contribution to the UN’s Sustainable Development Goals (SDGs). These goals are our guiding principles. Just recently, we adopted a new sustainability strategy, the goals and measures of which should help us to implement sustainability in an even more binding way in all our business areas and to take sustainability into account across our entire product range. The next step is to develop concrete initiatives, to establish the right intermediate goals, and to implement them properly. It won’t be easy to get everything right. But we're convinced that we're on the right track.
Olivier de Perregaux is CFO of LGT Group. He gave the keynote speech at the Fifth International Conference of the Associations of Foreign Banks on 30 November 2018. The conference took place for the first time in Vaduz and was organised by the Liechtenstein Bankers Association together with the associations of foreign banks from Switzerland, Germany, the Netherlands, and the UK.