This article is Free, but to access more of our content, you can sign up for a no strings attached 28-day free trial here.
When Sandrine Salerno, ex-mayor of Geneva and recently appointed Executive Director of impact-focused network Sustainable Finance Geneva (SF Geneva), talks about sustainable finance two key themes emerge: patience and utopian ambition. Both are likely needed to meet SF Geneva’s mission to make sustainable finance “the new normal” in a market where investors have been fairly slow to embrace ESG and sustainability.
Salerno is just three months into her role at SF Geneva, but her political career – in which she’s been a long-time campaigner on social issues including gender equality, sustainable development and maternity rights – spans decades. Up until 2011, she had never heard of sustainable finance, she says. But ten years ago, when Salerno – who was in charge of the city of Geneva’s finances – was in the process of assessing how the city was managing its assets, she came across an article by Angela de Wolff, co-founder of SF Geneva. In the article, de Wolff was reflecting on her own career and on the state of sustainable finance. It piqued Salerno’s interest and she met with de Wolff to discuss how to reshape the city’s portfolio.
“Before that, I didn’t even know sustainable finance existed,” says Salerno. “I’ve been in politics since the age of 25 and it was the first time in my career that I discovered a new concept — it was a ‘wow’ moment.”
She embarked on reshaping the way the city managed its portfolio – for example, adopting a charter of sustainability-focused guidelines and a best-in-class approach – and subsequently undertook the same exercise for the pension fund for workers in the city and wider municipalities of Geneva in 2013. “The pension fund exercise was interesting because it was a different type of discussion where many parties were worried they would not get the same return if investing sustainably.”
After this, Salerno continued to follow SF Geneva’s work to “build an ecosystem” of asset managers, bankers, politicians, among others, to promote sustainable finance. “It was obvious to me that someone needed to help link the goals of the financial sector with how we need to act to shape the sustainable society we need.” SF Geneva, founded in 2008, now boasts hundreds of members. It has hosted major sustainable finance summits and initiated a proposal for a Swiss Social Stock Exchange to “address the inefficient impact investing market and the need for a dedicated liquid marketplace”. In March, it launched the Gender Lens Initiative for Switzerland to enhance the Swiss contribution to SDG 5 (gender equality) for example through public-private partnerships and the development of investment products.
Looking back to her sustainable finance ‘wow moment’ 10 years ago, Salerno believes many financial institutions and policy makers are still unfamiliar with the concept. “It would be a mistake to believe that everyone is aware that sustainable finance exists,” she says. “People don’t really understand what it means and regulatory instruments are very hard to understand. Sometimes the message gets lost in very technical discussions and we miss the bigger goal. We need to be utopian if we want to achieve the main goal and it needs to be understandable and digestible to everyone.”
What’s currently missing, she believes, is practical knowledge in the investor community on how to build the right products to meet, for example, the SDGs . “It’s not sufficient to do ESG integration. We have 17 SDGs — we know how to act on climate with a few products but they’re always the same. How do we imagine and invent products that can really support the other SDGs? We need to have different people – investors, scientists, politicians – at the same table so they can talk and invent products that serve a purpose.”
Salerno also calls for a rethink around return targets for investors, especially in order to invest to support developing and financially riskier markets in meeting the SDGs. “We have to be more patient in the way we look at returns,” she says. “We might need to accept a lower initial return and have a more patient perspective on income.”
When asked how conversations about rethinking returns play out with Swiss investors, she says that “it’s tricky, of course”. But she believes that with the right products and more knowledge building institutions will, eventually, line up to invest.
“In Switzerland, people are starting to think about impact more than they used to, but before they weren’t thinking about impact at all,” says Salerno. In terms of the prospect for Swiss pension funds becoming more active in impact investing, she says “I think not this year, and maybe not next but pretty soon – yes.”
To hear the latest developments on ESG and sustainable finance in Switzerland, register for the ongoing (26-30 April) RI Switzerland event here. Fabio Sofia, President of the SF Geneva Board, will be speaking on “Acting on the “S” in ESG and Human Rights” on Thursday 29 April