Alberica Brivio Sforza: flexibility and sustainability are Lombard Odier’s trump cards

Interview published in ESG News, 14 September 2022

Alberica Brivio Sforza took the reins of the Italian office of Bank Lombard Odier at an unusual time, with an Italian government in crisis and geopolitical tensions adding to market volatility. Brivio Sforza, who has been Managing Director in Italy of the prestigious Swiss private bank for a year now, is nevertheless convinced that the outlook is promising. Despite today’s difficulties, she believes the Group is well-placed to grow its activity in Italy.

“What characterises Lombard Odier is that we are the size of a boutique and completely focussed on the client, with the flexibility to define tailor-made solutions – something only the most specialised banks are able to offer. At the same time,” the director notes, “our 226-year history has created such a deep-rooted solidity that our clients place the utmost trust in us.”

Read also: Private Banking Italy

Brivio Sforza has extensive experience in the investment and private banking sector, having held the positions of Head of Wealth Management and Key Client Group at BNP Paribas Private Banking and Managing Director of JP Morgan Private Banking in Italy. As of mid-2022, Lombard Odier manages EUR 309 billion in assets and employs 2,675 people, with a global presence that takes in major European cities, Hong Kong and Singapore in Asia, the UAE and South America. The Bank is owned and run by seven Managing Partners, two of whom are descendants of the founders’ families.

Lombard Odier is also a leader in sustainable investing, a sector in which the Bank has invested for years, enabling it to present cutting-edge solutions in terms of portfolio choices. “For the bank, sustainability represents the second industrial revolution. It is therefore the lens used for the selection and analysis of all securities,” the banker explains in this interview with ESG News in which she outlines the Group’s strategies in Italy.

Your arrival, whilst coming at a complex moment for the markets, coincided with Lombard Odier’s determined entry into the Italian market. What are your ambitions and plans for growth in the country?

If I may make a joke, there are those who claim that asset management initiatives that started during the worst periods have always gone well. As far as Lombard Odier is concerned, the Bank has always served an Italian clientele, yet the opening of the Milan branch is fairly recent. My arrival affirms the Bank’s desire to enter Italy with a strong conviction and therefore with dedicated capital and resources.

I presented a business plan for growth, which included new hires. The first was Manuela Maccia as Head of Investments for the Italian branch. It is important that clients can interact with a senior profile, who manages their portfolio. We are also hiring high-profile private bankers.

Read also: Plans for Private Banking growth in Italy

Is the role of financial advisors important to you?

For us it is fundamental. In our service model, the private banker is the one who creates the relationship with the client, who seeks answers from the manager, someone who can explain financial market trends and propose ideas and opportunities. The objective of the Italian branch is to serve a high-net-worth clientele by providing advice through a direct relationship between bankers, employees and the client.

In the Italian market, there is increasing competition from foreign groups. What distinguishes you?

In our business model, the client is truly at the centre. Many banks cater to high-end clients, but the real difference today is the increasingly marked distinction between the large universal banks, now true giants, and the focussed private banks. Since the 2008 financial crisis, large institutions have had to adapt to increasingly stringent regulation; consequently, the solutions they propose to their clients risk being overly rigid and standardised.

In contrast, and thanks to their smaller size and entrepreneurial management, specialised banks such as Lombard Odier are able to serve clients with fewer restrictions and to tailor this service to individual needs. We are also able to do this thanks to our strong foundations based around three pillars: people, technology and sustainability.

We start with people and technology…

The Group has always invested in its investment expertise, i.e. the more than 400 professionals dedicated purely to portfolio analysis and selection, who are distinct from the professionals dedicated to the relational aspects. This is a very powerful investment engine made up of high-profile teams of professionals, with all the skills to best manage our clients’ different asset classes and portfolios.

A significant portion of our investments are made through independent, direct stock selection, although we also include third-party products and, if relevant, those of our own asset management company, which focusses on specific thematic areas. Another very important aspect is technology, which must be state-of-the-art. The Bank has invested heavily in its integrated, proprietary, advanced system, to the extent that it is also used by third-party banks. We have a single platform that allows us to manage operations from profiling to reporting.

The third pillar is sustainability. How do you incorporate environmental, social and governance factors into your portfolio analysis?

Before many others, as early as 1997, Lombard Odier sensed that sustainability would become what we now call the ‘second industrial revolution’. The basic idea is that either you invest according to sustainability criteria, or your portfolios will not achieve the expected returns.

An internal team of specialists was set up, many from the University of Oxford, with whom we also have the first academic partnership for sustainable finance. Today, the team comprises around 30 professionals, who have scientific expertise on numerous topics. They work to assess companies’ current and future environmental impact, and to implement proprietary, science-based analysis frameworks, so as not to rely solely on backward-looking metrics. This Sustainable Investment Research, Strategy & Stewardship (SIRSS) team is extremely innovative – it is no coincidence that we were the first global wealth and asset manager to obtain B Corp certification in 2019.

What is your approach with regard to sustainability issues? What weight can sustainable investments carry in portfolios?

We do not offer specific sustainable management for the reason that sustainability is already embedded in everything we do. This is a real evolution of the approach. At Lombard Odier, there is no trade-off between sustainability and returns; we only invest in those companies we believe to have a sustainable future.

We have created an analysis model summarised in the acronym CLIC®, which stands for Circular, Lean, Inclusive and Clean; the economy towards which we must transition. This conviction underpins our investment strategy, targeting companies with business models aligned with the SDGs and the European taxonomy.

Companies are examined from three perspectives: those that reduce environmental impact, those that are neutral and those that increase it.

Among the various CLIC® tools we have, a very strong one is LOPTA, Lombard Odier Portfolio Temperature Alignment tool, which allows us to measure how closely the trajectory of a company aligns with the targets of the Paris Agreement.

You have developed an approach that values Natural Capital in investments. What does it consist of, how does it translate into portfolio selection and how do you measure the impact?

Protecting nature is crucial for the future of humanity. Natural Capital focusses on the preservation and low-impact use of natural resources. We focus on the four most important themes: the circular bio-economy, effective use of resources (technology and innovation), efficient resource management and zero waste. We seek companies that foster these transformations, from biomaterials to Industry 4.0, and from changing consumption patterns to eliminating waste entirely – all of which means rethinking the supply chain, aiming to create one which is more circular.