Making Sustainability an Investment Priority

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Credit Suisse

This is a sponsored article from Credit Suisse.

Credit Suisse is helping investors make a positive impact on society while generating competitive returns.

Heightened awareness of the economic impact of the climate crisis and the wide scale disruption caused by COVID-19 has accelerated interest in sustainable investing worldwide. Recognizing that sustainably-run businesses are generally better equipped to withstand market shocks, more investors are planning to integrate environmental, social and governance (ESG) criteria into their investment decision-making.

This desire to combine profits with ESG considerations has been transforming patterns of consumption, the political and regulatory landscape for businesses, and the world of investing. In response, businesses across all sectors are keen on creating more sustainable business models that address the risks and capitalize on the potential of this transformation.

Swiss bank Credit Suisse has a long-standing commitment to sustainable and impact investing. It strives to offer investment solutions that generate environmental and social benefits, as well as financial returns comparable to traditional investments. In 2002, for instance, the bank co-founded one of the world’s leading microfinance asset managers.

Benjamin Cavalli
Chief Executive Officer Singapore, Head of Private Banking South Asia and APAC Sustainability Leader, Credit Suisse

“Our emphasis on sustainable investing is rooted in the belief that the successful integration of ESG information in financial research and analysis can reduce investment risks and lead to improved investment outcomes over time. We believe that it is possible to have a positive impact on society and the environment, while generating competitive returns,” said Benjamin Cavalli, Chief Executive Officer Singapore, Head of Private Banking South Asia and APAC Sustainability Leader at Credit Suisse.

In 2020, Credit Suisse reviewed its policies and frameworks to better reflect the central role that ESG plays across all stages of the investment process, from exclusionary screens to high conviction impact investments (see sidebar). Cavalli adds, “Our framework focuses on how we apply ESG criteria and create transparency for our clients.”

Drawing on the strength of the framework, Credit Suisse offers a wide range of investment strategies and themes to achieve the double bottom line of profitability and social impact. Among others, these can include helping investors “decarbonize” their portfolios, and investing in sectors that are making a positive impact on society, such as education technology.

The decarbonizing portfolio

Climate change is one of the key risks facing investors and the global economy in the coming years. However, the ongoing transition to a low-carbon economy is bringing numerous opportunities. Industries ranging from green energy and smart cities to food and agriculture are expected to benefit from this period of transformation.

By making the most of these risks and opportunities, investors can construct a sustainable and impactful portfolio using institutional-quality strategies across almost all asset classes and investment approaches, and using both liquid and illiquid investments. Credit Suisse can help clients create portfolios that aim to provide financial returns while making a social or environmental impact.

Investors can also play a more active role in helping to drive the low-carbon transition by focusing on impact in part of their portfolios. This is achieved primarily through financing companies and projects in private markets and through active ownership in public markets. “A portfolio approach that takes into account all of these considerations should not only be able to reduce its own exposure to carbon risk, but also help to drive the carbon transition as well,” says Cavalli.

Impact through health and wellbeing investments

Beyond environmental issues, ESG investors are eager to make a positive impact by investing in health and wellbeing. Currently, fewer than half of the world’s population is covered by essential health services, according to the World Economic Forum.

Investors can map their portfolios against the UN’s Sustainable Development Goals (SDGs), including those related to health and wellbeing, and identify opportunities to allocate capital to companies whose products and services are helping to achieve these goals.

Salman Shah
Head of Alternative Fund Solutions and Private Banking Asia Pacific Sustainability Leader, Credit Suisse

Some of the subthemes to look out for under the broader health and wellbeing theme include: physical health and wellbeing; mental health and development; nutrition and resources; and financial health. “These four growth areas not only represent real problems in society, but also opportunities for investors in the long term,” said Salman Shah, Head of Alternative Fund Solutions and Private Banking Asia Pacific Sustainability Leader at Credit Suisse.

In the physical health segment, artificial-intelligence diagnostics, telehealth, vaccine development and medical devices are some sectors of interest for investors. The women’s health technology market, for instance, is expected to reach US$50 billion by 2025, up 207 times from 2019 levels (source: HTD Health, 21 Nov 2019).

“Private equity, venture capital and private debt are key to channelling capital to the SDGs. These private markets directly fund innovative companies’ balance sheets, empowering management teams to commercialize and grow business models faster than they otherwise could,” says Shah.

“Investing in these companies can contribute towards the long-term advancement and democratization of global health and wellbeing. As financial returns grow for investors, so too do the positive societal outcomes.”

Credit Suisse Sustainable Investment Framework

Credit Suisse’s updated framework outlines three primary approaches to sustainable investing:
1. Exclusions: The primary purpose of these strategies is to provide clients with investments that do not cause harm or that align with their values.
2. ESG integration: These strategies integrate material ESG factors into investment processes with the goal of delivering superior risk-adjusted returns.
3. Sustainable thematic and impact investing: The purpose of these strategies is to mobilize capital into companies that offer solutions to society’s challenges.

Thematic and impact-aligned: In recent decades sectors such as education, healthcare and clean energy have grown strongly, and fund managers have set up funds to invest in these companies, in both public and private markets.
Impact investing: Impact investments refer to a subset of sustainable investing strategies that have the intention to deliver measurable impact.

It is important to note there is no guarantee that investing with an ESG focus will provide superior returns to traditional investment strategies. In fact, investing in ESG products may result in lower returns compared to other investment strategies, and potentially even the loss of your invested capital.

 

The individuals mentioned above only conduct regulated activities in the jurisdiction(s) where they are properly licensed. Please contact your Relationship Manager for further information

This is a sponsored article from Credit Suisse.

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