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Swiss sustainability in Geneva
Appearing in the Spotlight column in Le Temps on Monday, 5 August 2019
Long supported by a handful of pioneering institutions, sustainable finance has accelerated dramatically over the past four years, to the point where it is now becoming the norm rather than the exception in a booming financial industry. Every financial centre is therefore looking to position and establish itself as a point of reference for sustainable finance in order to take full advantage of the sector's very strong growth.
Of course, not all financial centres are equal when it comes to sustainability expertise. Analysis of environmental and social impacts cannot be improvised, and asset managers need substantial investment – and often several years – to develop the tools, methodologies and expertise needed to compile these data precisely and ensure that they become decisive criteria in the decision to invest, on the same basis as risks and returns.
In this respect, the Geneva financial centre has undeniable advantages: the proximity of international organisations, UN agencies and large private foundations allows Geneva's banks and managers to develop their expertise by working alongside the international community which, on the other side of the lake, addresses the challenges of sustainable development on a daily basis, often in the field. This proximity, which is unique worldwide, has not always been fully exploited in the past. With the notable exception of microfinance, where the proactive collaboration of the various players in the ecosystem has given rise to what is now called impact finance, exchanges between the two shores have sometimes struggled to move beyond the stage of good intentions to concrete achievements.
Over the past two years, however, there have been improvements to structures and organisation, and Geneva and Switzerland are now fulfilling their role as laboratories and innovators in sustainable finance. Innovative projects involving international organisations and Geneva's banks are multiplying, such as the Humanitarian Impact Bond set up by the International Red Cross, with which Lombard Odier is closely associated. The Pipeline Builder, a platform developed on the initiative of the SDG Lab, is another striking illustration. The tool, currently under development, aims to accelerate the achievement of the Sustainable Development Goals by pinpointing the best investment opportunities from the various UN agencies and other partners in close collaboration with financial specialists.
The SwiSOX project, led by Sustainable Finance Geneva, involves setting up the "Nasdaq for social enterprises" in Geneva, and would not have been possible without the participation of the academic sector or that of a large Genevan private foundation with an environmental focus. We must also mention local fintech players, many of whom focus on sustainable finance or impact measurement. They help boost innovation and build the transformative solutions that will be used by the international financial community in the future. Finally, the establishment in Geneva of the sustainable financial centres network (FC4S) in 2018, which was a hard-fought deal, reaffirms its role as an international hub for sustainable finance.
All these new collaborations are a unique opportunity for the Swiss financial centre to further strengthen and deepen its expertise in sustainable finance. They also represent a huge responsibility at a time when funding needs have never been greater. Climate change, biodiversity, inequality: nearly USD 7,000 billion per year will need to be mobilised to achieve all 17 Sustainable Development Goals (SDGs) by 2030. Geneva will undoubtedly be at the epicentre of this immense challenge, and all players in the ecosystem will have to use the full extent of their expertise to bring finance and the SDGs together.
Next October will mark a new phase with the creation in Geneva of the very first "sustainable finance week", organised to bolster collaboration between institutions on both sides of the lake but also to strengthen the ties between the financial centres of Zurich and Geneva, all with the support of the federal, cantonal and municipal authorities. Several major events, traditionally organised separately, have therefore been brought together in an intense week of conferences, workshops and exchanges, which will help highlight the various components of the Geneva ecosystem as well as cross-fertilise ideas, enabling new projects to emerge.
This week will also be a real showcase for Geneva of the expertise developed in sustainable finance over many years. In fact, the know-how available in Geneva and Switzerland covers the entire range of solutions, from ESG exclusion to integration, impact investment or thematic funds. Large companies or specialist boutiques, generalists or "pure players"... the map drawn up by Sustainable Finance Geneva, which lists nearly 150 institutions involved in the field, shows the full richness of our financial centre.
This unique expertise (savoir-faire) struggles to gain recognition outside Switzerland, partly because of the limited resources devoted to publicity (faire-savoir). Many other financial centres, which are objectively less advanced than Switzerland in these areas, have developed communication and marketing tools that position them positively among the general public and investors. Let's hope that this sustainable finance week helps to fill this recognition gap and becomes a permanent feature of the landscape as the sector's flagship international event. In any case, it is the only one capable of bringing together such a variety of institutions, working together towards the same goal: to create a more ecological, prosperous and equitable world today and for future generations.
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