By Roberto Stefano
Sustainable or responsible investing? ESG or PRI? Integration or best-in-class? Anyone who wants to invest in sustainable investments has to acquire a new vocabulary. The differences between the terms are sometimes quite blurred, so that instead of creating clarity for investors, they only create more confusion - and thus also increase their uncertainty. "One trend we have noticed for a long time in the field of sustainable investment is that the industry itself is getting in the way with these terminologies," says James Purcell, Group Head of Sustainable Investment at Quintet Private Bank . After all, sustainable investment is no longer a niche product. Whereas this was, until recently, a fashionable trend among investors, it has now become mainstream.
Indeed, financial institutions have recognised the many positive aspects of the investment approach. This is also reflected in the choice of words used today. When talking to customers, the focus is no longer on exclusionary criteria or restrictive guidelines, but rather on positive elements. "Today, the opportunities and innovative capacity of sustainable investing are being highlighted," says James Purcell. He describes the technical jargon in the industry and the countless debates among the actors as to which approach would have the greatest impact in reality as a major shortcoming. "This means that the specialists are pushing the issue further and further away from ordinary people," says James Purcell.
But that need not be the case - at least not according to Quintet's sustainability experts. Founded in 1949, the private bank has its headquarters in Luxembourg and is represented in 50 cities throughout Europe, including Zurich as of this summer. Quintet deliberately uses simple language that is understandable to everyone. "We try to avoid technical terms and specific terminology and express ourselves in such a way that our customers actually understand us," explains James Purcell. The aim is to talk about topics that people know and care about. As an example, he cites discussions on climate change and CO2-dependent investments: instead of indicating CO2 emissions in tonnes and making complicated calculations, he prefers to calculate CO2 cuts using car journeys or the number of flights around the world - in other words, in such a way that all investors can imagine something concrete from the calculated values.
In view of this, it is hardly surprising that James Purcell recommends that when choosing an investment advisor, great importance be attached to the meeting with the customer and that special attention be paid to clear and transparent explanations. "Can the client advisor explain the investment to me in such a simple way that I really understand it? Am I able to comprehend what happens to my money? Or am I only being fobbed off with ratings, taxonomies and categories," says the Quintet sustainability expert. Furthermore, it is of course just as important that the proposed investment meets the actual expectations of the customers and that they achieve exactly what they really want with their money. Because: "Some financial institutions simply promise their customers too much in the area of sustainable investment," says James Purcell. After all, liquid shares, for example, do not generally have too great an impact on liquidity. "Unfortunately, it is not the case that an investment in renewable energies will directly benefit the company and thereby achieve an improvement for the environment," says the Quintet specialist.
Nevertheless, sustainability is now the basis for Quintet's actions. It is striving to make sustainability the standard in its multibillion-Franc customer portfolio. The clients are therefore generally recommended to adopt a sustainable investment approach. For the bank, sustainability is not only an instrument with which to get involved, but it also offers interesting investment opportunities - according to a principle-based approach that is understandable to everyone. "It's all about themes, leaders, improvers and dedicated assets," explains André Del Piero, Market Head Switzerland Domestic at Quintet Switzerland. ”Themes” are investments in companies that address relevant challenges in the area of sustainability. "Leaders" are companies that are already very well positioned in terms of sustainability, while the "improvers" are in the process of making significant improvements in this respect. And finally, Quintet also invests in "dedicated assets", i.e. assets that were explicitly created to promote sustainability.
Despite the focus on sustainability, Quintet naturally also focuses on returns for the private bank's clients. "With our investments, we want to help clients to increase their assets over the long term," says André Del Piero After all, today you no longer have to forego returns if you want to do good things, as many studies on the subject have confirmed.
Quintet offers its clients a discretionary asset management mandate, with broadly diversified investments in sustainable assets. "Strategic and tactical asset allocation is handled by the in-house Chief Investment Office," explains Cindy Eicher, Co-Head of the Family Investment Office Switzerland. This shows an advantage of the still young private bank in Switzerland. Here in Switzerland, the private bank operates as a lean and agile start-up company, with experienced client advisors and investment specialists and a management team that is personally invested in the company, while at the same time being able to draw on the resources of the parent company or on a broad network of third-party suppliers, including many industry leaders. “Our customers want a high degree of flexibility, which we can offer thanks to our lean structure," says Cindy Eicher. The company is thus well positioned to serve its demanding customers, most of whom, according to Cindy Eicher, have an entrepreneurial background or are looking for complex, cross-border solutions.
This article was created by NZZ Content Creation on behalf of Quintet and published in the NZZ on 3 December.
The statements and views expressed in this document are those of the author as of the date of this article and are subject to change. This article is also of a general nature and does not constitute legal, accounting, tax or investment advice. All investors should keep in mind that past performance is no indication of future performance, and that the value of investments may go up or down. Changes in exchange rates may also cause the value of underlying investments to go up or down.