« It's up to investors to make efforts to favor assets with a high ESG score »

This December is shaping up to be the month of "green" finance. This theme is at the heart of Building Bridges in Geneva, a major event that brought together speakers from around the world this week. The 2024 edition took place in a particularly complex reality, because green finance is not very popular these days. Behind the fine words, actions sometimes appear less glorious.

After a decline in sustainable investments observed in the United States at the beginning of the year, Switzerland is facing a similar slowdown. A finance research institute based in Zug found that the growth of financial flows in favor of investment funds that meet environmental, social and governance (ESG) criteria is currently no longer sufficient to catch up with that of traditional funds. During the autumn, the specialised platform Hazeltree also revealed that the world's largest hedge funds preferred to bet against "green" technologies and sustainable development, while investing long-term in fossil fuels.

Given the context, we thought it appropriate to question the actors - small and large - of finance about their relationship to sustainable investing. The answers from Marc Bürki, CEO of Swissquote.

What is your approach to so-called green finance?

Our work on ESG is multifaceted. For more than a year, we have been providing ESG scores for all tradable securities on Swissquote, as illustrated by the example of Tesla below. These scores allow our clients to make informed investment choices. In addition, within our banking group, we are carrying out numerous projects aimed at improving our own ESG performance.

What is your reaction when you hear that a large majority of hedge funds prefer to short their positions in renewable energy in favor of fossil fuels?

Faced with some hedge funds' preference for short positions on renewable energy in favor of fossil fuels, I feel a certain ambivalence. While I understand the short-term financial logic that motivates them, I am concerned about the consequences of this strategy on the energy transition. Indeed, favouring fossil fuels, despite their negative environmental impact, can slow the development of sustainable alternatives and worsen climate change.

Fortunately, this is not a global trend. Indeed, some hedge funds adopt the opposite strategy. Ultimately, it is up to the investor to choose the funds that implement an effective sustainability strategy.

As a publicly traded company, we note that environmental and social requirements are strengthening year after year, which is a good thing.

How should investments be adapted in such an ambiguous reality?

Precisely by being selective with one's investments, it is entirely possible to combine stock market performance and a high ESG score. Swissquote is a good example of this.

This news raises a fundamental question: is the financial sector truly ready to sacrifice part of its profitability for the good of the planet?

The financial sector will, in the end, adapt to the desires of clients. It is up to civil society and especially investors to make the necessary efforts to systematically favour companies and financial products with a high ESG score. As a publicly traded company, we note that environmental and social requirements are strengthening year after year, which is a good thing.

ESG criteria are increasingly struggling to convince; is there an urgent need to establish new standards?

Yes, it is true that there is a sense of a certain backward movement, a form of disillusionment regarding the efforts required and the results measured. ESG criteria, with their lack of standardisation, difficulty of measurement and sometimes excessive focus on the environment, raise criticisms. An evolution of the standards is necessary for greater clarity, comparability and integration of social and governance dimensions. New standards, more precise and harmonised, would allow better evaluation of ESG performance and would encourage a strategic integration of these criteria within companies.

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