Swiss finance leaders to set out new 'impact investing' roadmap

Actors in the Swiss sustainable finance sector will take part on 7 October in the Swiss Impact Roadmap 2021 sessions at Hôtel d’Angleterre, in Geneva. Photo: Hôtel d’Angleterre

Actors from Switzerland’s finance sector, the Swiss government, and the United Nations will meet on Wednesday to set out a new plan for accelerating investment next year in the sustainable development goals (SDGs).

Why is it important? The all-day industry event, being held in Geneva, will be the first time representatives from finance and international development communities have met since the Building Bridges Summit in October last year.

Hosted by Swiss impact investment firm AlphaMundi, founder and managing director Tim Radjy told Geneva Solutions that, despite many meetings being held virtually, Covid-19 overall had “slowed down the pace of collaboration”.

“The 7 October is an opportunity for actors in the sustainable development and sustainable finance ecosystem to get together and share what they have been working on this year as well as what they are planning to do next year. It is a chance to identify collaboration opportunities and work on a common agenda for 2021.”

Representatives from UN Development Programme, the Swiss Agency for Development Cooperation (SDC), Symbiotics, Phenix Capital, Gender-smart investor Catalyst at Large, and Lombard Odier are among those attending.

Getting out of the comfort zone. Switzerland wants to take the lead as a global hub for sustainable finance.  For years, the country has argued that the presence of international organisations and NGOs in Geneva, combined with its financial sector and long history in microfinance and impact investing, make it well-placed to lead the conversation on sustainability issues.

But Radjy says the Swiss finance sector, because of its long leadership, “maybe grew a little bit too comfortable”.

Over the last few years, financial institutions and industry associations including Swiss Sustainable Finance and Sustainable Finance Geneva have held dialogues and launched a series of initiatives to set the agenda on sustainable investing, including the Building Bridges Summit.

This culminated in a declaration signed by some 50 representatives from the development finance private sector, which called on the Swiss government for help scaling up investment in the SDGs. Radjy, who was recently appointed to the board of Sustainable Finance Geneva, says this week’s event is another opportunity for a collective effort by the industry to try and accelerate progress towards the 2030 agenda.

No more excuses. Impact investing, where fund managers seek to both make money and have a measurable positive impact on society and the environment, has grown rapidly from a niche practice a few years ago to a $715bn market in 2019.

The coronavirus pandemic has also provided fresh impetus, with banks and other investors, previously criticised by campaigners over their questionable ethical investment decisions, now also launching impact investment products.

“There was this incredible outpouring of commitment from the impact investing industry to try to mobilise capital for the Covid-19 recovery,” Rady said. “But I think that more broadly, a lot of institutions and governments have come to realise that you have no choice but to accelerate the shift to a more sustainable economy, across all sectors health, and education.”

He adds that the prevailing questions of the last decade, namely whether impact investment can deliver attractive risk-adjusted returns, have now been replaced “with how fast can the industry achieve scale?”:

“The burden of proof has shifted now in favour of sustainability, and that's a quantum shift in the mindset of the financial industry. The issue is that you need now to implement that paradigm shift in operations, processes and structures.”

Following the green brick road. To “implement that paradigm shift” there are a few things that Radjy hopes the Swiss finance sector will set in motion, starting on 7 October:

  • Create an “impact investing roadmap” of what the industry will aim to achieve in 2021.

  • Step up focus on gender lens investing: a two-hour session will be held on the day focusing on gender lens investing. Radjy said the plan “is to create a community of stakeholders in Switzerland that are willing to come together to present a country-wide response and commitment to gender and diversity issues.”

  • Launch discussions on the production of a country and industry-wide survey that will set the benchmark on where different companies stand on both gender lens investment and impact investing more generally.