Writing a new narrative for Sustainable Finance
In spite of these challenges, the current global context presents a decisive moment for sustainable finance. At its core, sustainable investing has always been about “investing in the future” in order to foster more resilient and predictable societies and markets for everyone. To fully unlock the potential of sustainable investment, it is essential to move away from a narrative that can be perceived as moralising and elitist.
It is high time to uphold a narrative that matches the scale of the challenges and opportunities that lie ahead.
In recent years the finance community has too often extolled the virtue of “doing well by doing good”. This oversimplification has raised concerns about greenwashing at the same time as it has downplayed the crucial role of public policy and public funding. It also fuelled the myth that private capital alone could catalyse the transition to a sustainable future (even though it does have an important role to play). It is now time to articulate this narrative with greater precision.
Investing for the long term
We need a unifying story, evidence-based and grounded in science, that highlights the role of every actor in this transition.
Investors must focus on their common objectives: generating returns based on the dynamics shaping the future, rather than on past results. To fully capture the sustainable investment opportunity, it is essential to refocus on a long-term investment approach. Sustainability is not an asset class, but rather a way of investing that prioritises data-based decisions in capital allocation to generate value over the long term.
Marie-Laure Schaufelberger, Chief Sustainability Officer.
To underpin this narrative, the financial community must commit to being transparent about the sustainability issues relevant to the sector, even when it is uncomfortable. This means, for instance, avoiding an excessive focus on operational greenhouse gas emissions, while minimising or omitting reference to the much more material emissions associated with investments in portfolio companies and assets.
The role of investors
Identifying and disclosing material information is critical, as this is where long-term risks and opportunities lie. As shareholders, investors also have the responsibility to elect the boards of directors in the companies in which they invest. It is within the boardroom that material environmental and social issues – those most likely to influence the company’s profitability – must be raised, and we have a duty to act if this is not the case.
In order to reimagine tomorrow’s mobility, public and private actors alike have every interest in collaborating and jointly identifying opportunities that benefit all.
Finally, this alternative narrative acknowledges that the transition to a sustainable economy is already underway, affecting various aspects of our daily lives. When these lines where written, air quality in Geneva showed concentrations of fine particles (PM 2.5) almost three times higher than the WHO threshold value — levels harmful to vulnerable populations such as young children and the elderly. The implementation of stricter differentiated traffic measures in August through the Canton of Geneva’s Stick’AIR badge, has significantly affected many motorists commuting to work.
In order to reimagine tomorrow’s mobility—just to cite this example—public and private actors alike have every interest in collaborating and jointly identifying opportunities that benefit all. And bringing these plans to life will require investors who can understand the opportunities this represents over the long term. It is high time to uphold a narrative that matches the scale of the challenges and opportunities that lie ahead.
