Sustainable investments in Switzerland at a new all-time high

Sustainable investments showed a striking growth of +147 percent, according to the study prepared by SSF in collaboration with the Center for Sustainable Finance and Private Wealth (CSP) at the University of Zurich. At CHF 470.7 billion, they accounted for 38 percent of the Swiss fund market at the end of 2019. Sustainable mandates have grown even more, by 195 percent, meaning that CHF 208.9 billion in assets are now managed in this area. Sustainably managed assets of institutional investors amounted to CHF 483.7 billion at the end of 2019, representing around 30 percent of their assets under management. Sustainable investment solutions are therefore highly favored by investors - also because they are more cost-effective than conventional financial products.

Private customer share almost doubles
79 percent of the total volume of sustainable investments is held in the portfolios of institutional customers, while 21 percent is held by private customers. The latter have almost doubled their share compared to the previous year (2018: 12 percent) and significantly expanded thanks to an overall growth in investment volume of 185 percent. "This confirms the growing interest of private clients, but also the fact that many financial service providers are newly adopting sustainable investment approaches for classic funds," Sabine Döbeli, CEO of SSF, is pleased to report.
 
Shareholders increasingly seek a say
Sustainable investment volumes increased across all investment approaches in 2019. ESG integration ranks first, followed by exclusion criteria and newly by ESG engagement, which now ranks third. Strikingly, both ESG Voting and ESG Engagement show significantly higher growth rates compared to the other investment approaches. "More and more shareholders are seeking dialogue with their companies so that they align themselves sustainably. And they are apparently being heard," explains Prof. Timo Busch, Senior Fellow at CSP, who provided scientific support for the study. Also noteworthy is the doubling of impact investing volumes - although a large part of this growth is not in the traditionally used asset classes of private debt and private equity, but in listed equities - an area where experience shows that direct impact is more difficult to achieve.

Climate protection becomes more important for asset managers, but reporting still needs to be improved
At 34, significantly more asset managers indicated this year than last year (25) that they pursue a specific investment approach for climate-friendly investing. They most frequently report the climate footprint of portfolios, followed by investments in climate solutions and active engagement and voting rights for more climate protection at companies. This is an important development, as both politicians and investors are increasingly calling for investments to become climate-friendly. However, the fact that only around one third of all asset managers (15) state that they provide information on the climate compatibility of their investment products shows that there is still a need for optimization in this area. "SSF is working on concrete recommendations on metrics by means of which investors should be informed about climate compatibility and generally about the sustainability of portfolios," adds Jean Laville, Deputy CEO of SSF.

EU sets binding guard rails
The European Union (EU) has gone on the offensive and has defined and largely implemented practically all the legislative proposals on sustainable finances that were initiated a year ago. In the so-called taxonomy, the technical expert group (TEG) has set out on several 100 pages which economic activities deserve the label "environmentally friendly". This much-cited compendium forms the basis for the definition of green financial products that live up to their designation. This is accompanied by a comprehensive information obligation that will also be relevant for many Swiss financial service providers.

But the EU is going one step further and has already announced a new Sustainable Finance Strategy to mobilize more funds for the Green Deal. It is also discussing its standards with other countries as part of the newly created International Platform on Sustainable Finance. Since March 2020, Switzerland has also been a member of this platform and can contribute its perspective there.

SSF is working intensively on an action plan for Switzerland

The Swiss financial center is well advised to consistently continue on its chosen path toward a sustainable financial industry, especially as international competition is likely to intensify further. "Only if the Swiss financial industry continues to be agile can it expand its leading role in the area of sustainability and thus make a significant contribution to achieving the international climate targets and the Sustainable Development Goals. We are therefore working intensively on an action plan to show how the Swiss financial center can build on existing strengths and develop further in the topic in a forward-looking way," Sabine Döbeli concludes.

The study was supported by the six main sponsors Basellandschaftliche Kantonalbank, BearingPoint, INOKS Capital, Pictet Asset Management, RobecoSAM and Swisscanto Invest, as well as the six secondary sponsors Berner Kantonalbank, ECOFACT, Inrate, OLZ, Swiss Life Asset Managers and VERIT Investment Management. SSF would like to take this opportunity to thank all sponsors for their valuable support.