Analysis: Notenstein maps out plan to become a European leader in sustainable investments

“We have the advantage of not being caught in second gear,” says CEO

“Watch your back, Bank J. Safra Sarasin.” That is the message to come out of Responsible Investor’s recent interview with Notenstein chief executive Adrian Künzi and Andreas Knörzer, the bank’s asset management head who had the same role at Sarasin.

Both men are committed to ousting Sarasin as the leading provider of sustainable investments for institutions in Switzerland, and by extension, one of the biggest in Europe.

The executives said as much during the interview at Notenstein’s base in St. Gallen. CEO Künzi: “We have no interest in being just a run-of-the-mill provider of sustainable investments. We want to go all the way to the top of the sustainable providers in Europe. And strategically speaking, we have the advantage of not being caught in second gear.”

Added Knörzer, with respect to achieving the CEO’s goal: “I don’t need to win over my previous clients (at Sarasin), as there already is a huge market in Europe for sustainable investments.” Citing an example of the potential, Knörzer said two-thirds of the requests for proposals (RFPs) from big European investors contained questions about the manager’s sustainable approach.

Knörzer left Sarasin for Notenstein last May amid the takeover of the former by Lebanese-Brazilian banking family Safra. His departure led virtually all of Sarasin’s sustainable investment team to follow him in his new role. Prior to this, Sarasin was the market leader in Switzerland with CHF14.5bn (€11.8bn) in sustainably managed assets from institutions.In Germany, it was said to manage another €2bn in this fashion. But since then, Basle-based Sarasin has neither disclosed any new figures nor provided any details about its sustainable strategy under new owner Safra. It has only said that most of the staff that went to Notenstein were replaced.

Notenstein, meanwhile, has gone on the offensive. As 2014 began, the private bank launched 10 sustainable funds, and Künzi told RI during the interview that Notenstein sought to manage CHF10bn in assets for institutions by 2017 alone (see earlier report). Notenstein currently looks after CHF3.5bn for institutions and another CHF18bn for private clients.

Asked how many of the CHF10bn would be sustainably managed, Knörzer replied most if not all of them. “It’s only fair to our institutional clients that we first explain our sustainable approach,” he said. “But as active managers we are not doing anything esoteric or religious. And as I’ve said before, the consideration of ESG (environmental, social and governance) criteria can positively affect the portfolio’s risk and return profile.”

While not yet a signatory to the Principles for Responsible Investment (PRI), Notenstein is active with FNG, the sustainable investment forum (SIF) for Germany, Switzerland and Austria. Said Knörzer: “As we become a leading provider of sustainable investments, we will consider signing up to the PRI. But just being a member is not enough. For us, it’s more important that the principles are implemented and that we as company can do our part to ensure this.”