On behalf of RS Group, we looked at different ways in which financial markets and investors can contribute to reducing the destruction of tropical forests and the unsustainable use of land and oceans, while helping to mitigate climate change and to provide a livelihood to local communities for them to become stewards of local ecosystems. Given our economic system does not allocate a value to natural capital, it is almost impossible to design investment structures that will be financially attractive for commercial investors, unless concessionary capital or grants are used to de-risk or enhance returns. This is exactly what blended finance structures (e.g. structured funds, bonds and other vehicles) aim for.
Together with RS Group we found that more innovation is needed in the field and on 11 November 2019 RS Group and Convergence (a think-tank specialised in the field) launched a US$3 million design funding window for innovative and catalytic blended finance solutions focused on natural capital in Asia. By supporting the design of new blended finance structures, the window will draw new investors into this critical, but underfunded development area. Asia’s enormous economic growth in the last few decades has come at a high cost to its environment, leading to deterioration of land, freshwater, and marine ecosystems and exacerbating water and food insecurity and climate vulnerability. Globally, it is estimated that there is a US$200-300 billion gap per year to preserve the world’s last healthy ecosystems.
Switzerland was in the 1990ies an early mover in the field of sustainable investing. Examples include some of the first environmentally focussed funds, the birth of microfinance investment managers, large banks integrating ESG criteria in their credit risk assessment, the advent of the first sustainable stock market indices and, with the Ethos Foundation, the launch of one of the first collaborative stewardship initiatives in Europe. A lack of leadership by the majority of asset owners in the country has slowed down this development until recently. But now, a new dynamism can be observed: sustainable assets under management are rapidly rising, with Swiss Sustainable Finance the sector has gained a strong voice and leading trade organisations including SwissBanking, Swiss Fund & Asset Management Association and Swiss Insurance Association now recognize that Sustainable Finance will be a key competitive advantage for the Swiss finance sector. This is well described in a recently published report by Swiss Sustainable Finance. It mentions onValues as one of the leading investment consultancies supporting the growth of the sector by advising asset owners in their implementation of investment policies and processes.
We are honoured to provide strategic support to the PeaceNexus Foundation through our founder’s role as trustee of the foundation. PeaceNexus provides key actors such as multilateral organisations, governments, non-profit organisations and business actors with expertise and advice on how they can make best use of their peacebuilding role and capacity to help stabilise and reconcile conflict-affected societies. Geographically it focuses on four regions – the Balkans, Central Asia, South East Asia and West Africa/the Sahel – where it supports both international and local peacebuilding organisations with strategy and organisational development advice. It also helps companies active in fragile states integrate a conflict-sensitive approach in their operations and in dealing with local stakeholders.
PeaceNexus is one of the few privately funded foundations fully dedicated to implementing the Sustainable Development Goal #16 aimed at “promoting peaceful and inclusive societies for sustainable development, providing access to justice for all and building effective, accountable and inclusive institutions at all levels”. It recently explored ways to use its capital in support of the mission and seeded a new investment fund aimed at positive peace outcomes through engagement with the companies it invests in. With this total portfolio approach, PeaceNexus is able to increase its impact in the field and to use synergies between the grant-making and investment side of the foundation.
For the second time, WWF Switzerland has released a detailed rating survey of Swiss pension funds’ policies and practices in the field of responsible investing. The analysis focuses on the 20 largest pension funds in Switzerland. Ivo Knoepfel of onValues was part of the panel of experts that provided guidance for developing the rating methodology.
The Swiss second-pillar pension system, representing around CHF 910 billion under management, or 133% of Swiss gross domestic product, carries enormous weight in further shaping the future of our economy. The rating survey is meant to encourage and promote dialogue with respect to pension funds’ fiduciary responsibility for taking into account environmental, social and governance issues in their investment decisions.
The rating was carried out by Inrate and its Managing Partner Beat Zaugg (also member of the Advisory Board of onValues) said: “Every investment also has indirect environmental and social effects. These do not always have financial consequences in the short term, for example in the area of air traffic, where the external costs of global warming are borne not by the producer but by the general public. However, if these costs are internalized in future, pension funds that invest in these sectors will be exposed to investment and reputational risks”.