rethink sustainability

    The CLIC® Chronicles: Sustainability grabs the headlines at leading Swiss news agency AWP

    The CLIC® Chronicles: Sustainability grabs the headlines at leading Swiss news agency AWP

    Since 2021, AWP – Switzerland’s leading financial news agency – has been offering readers dedicated sustainability news. We talked to the person leading this pioneering addition to the newsfeed, AWP’s sustainability editor Michael Bolzli, to find out what is currently top of the news agenda and which sustainability-focussed Swiss companies are gaining an international name.


    What sustainability news does AWP offer?

    Our feed is global but we have a particular focus on Switzerland – with business and political current events such as sustainability reports or parliamentary decisions. We have as many as ten sustainability news items every day. Our offering is unique in Switzerland, which is why it is of so much interest to private and professional investors.

    Sustainability is no longer a communication tool in the marketing department but instead it has shifted towards the finance department. Why? Because these figures are relevant for investors

    Has demand increased since the launch in November 2021?

    There is a lot of interest. This is because, today, almost all companies communicate on sustainability and often include it in their press conferences.

    This is becoming more and more important. In the past, companies often highlighted individual sustainability projects, such as offering their employees a day where they could participate in an activity such as waste collection. Today, companies communicate on broader sustainability topics and issues. Sustainability is no longer a communication tool in the marketing department but instead it has shifted towards the finance department. Why? Because these figures are relevant for investors.


    What sustainability issues are most important in Switzerland?

    Customer conversations and corporate communication show that climate change is the most important issue. In Switzerland, sustainability is often seen as a synonym for climate protection. And now biodiversity is garnering attention. However, companies see it as complex and less tangible than climate protection because biodiversity loss is harder to measure. With the Taskforce on Nature-related Financial Disclosures (TNFD), a reporting framework is now available for the first time. I believe that natural capital is the next big sustainable theme.

    I believe that natural capital is the next big sustainable theme

    Electrification was already high on the agenda before the Russia-Ukraine crisis. At the moment, it all boils down to the fact that we will use more electricity in the future, i.e. we will electrify more end-user applications. This does not happen overnight. In the case of electric cars, we will likely see a tipping point when the purchase price of electric cars equals the cost of combustion-engine vehicles.

    Last year, a study by SwissRe1 calculated that the global cost of achieving net zero by 2050 would be over USD 270 trillion. Almost half of this investment will go into infrastructure – for electric car charging, for example, or for infrastructure to deliver electricity to users. Switzerland is on track here but in other countries there is a lot of pent-up demand. There will be companies that can profit from this development – and offer intelligent solutions to the market to accelerate or simplify this transition.

    The topic of climate-friendly alternative food products will probably remain niche for the time being. Initially there was a lot of hype with vegan stocks. When Beyond Meat and Oatly went public, their performance went through the roof. Then they suffered share price losses as they were too hyped up – according to the Coop Plant Food Report2 sales of meat and dairy alternatives stagnated in 2022. At the moment, many companies are keeping their heads down. But still, numerous industry assessments anticipate gigantic potential for new food systems.

    Numerous industry assessments anticipate gigantic potential for new food systems

    Read also: Food systems under growing pressure to reform

    According to a report from the Federal Office for the Environment3, CO2 emissions across almost all sectors are shrinking. But there is hardly any progress in agriculture. There needs to be a clear explanation so that consumers understand why cows are a problem. Marketing messages always say: “Swiss agriculture is sustainable.” But that is not entirely true. Animals are fed imported concentrates and stables are heated with fossil fuels in winter. This has a negative effect on the climate.


    Which sustainability issues are more of an international concern?

    Plastic is a huge concern internationally. NGOs and politicians have been dealing with the plastic problem for a long time via many directives and bans in the EU. In Switzerland, we consume a lot of plastic and we do not have any plastic waste disposal sites. In fact, we burn about 80% of our plastic waste along with the rest of our rubbish and only recycle a fraction of our plastic waste. Evidently, this system is not perfect. Apart from PET recycling, we do not have a collection system for plastic. But this will change soon. Producers, retailers and recyclers want to launch a nationwide collection system soon. An exact date has not yet been set.

    Read also: Eradicating plastic waste

    Another issue of international concern is carbon offsetting. At the beginning of the year, research by The Guardian and die Zeit4 found that Verra, one of the big issuers of CO2 offset credits on the voluntary market, had overestimated its climate protection projects. This led some commentators to question whether it is useful to buy credits at all, because many companies rely on CO2 credits for their emissions reduction. A recently published study by the ETH and the University of Cambridge confirmed these doubts. According to the study, only 12% of the certificates lead to the promised CO2 reduction.

    …many companies rely on CO2 credits for their emissions reduction

    SMI companies and sustainability: What is the focus?

    On our AWP newswire, we report on all Swiss companies that are listed on the stock exchange and publish a sustainability report. But we also report on other interesting Swiss companies that are not listed: I have reported on Lombard Odier’s sustainability report and also on Coop and Migros, for example. As of this financial year, sustainability reporting will be mandatory for all larger companies.


    Which Swiss start-ups are developing sustainable solutions with international reach?

    Switzerland benefits here, of course, from its universities. World-renowned start-ups are created here. An internationally known example is Climeworks, a company that, to put it simply, “hoovers” CO2 from the atmosphere. I’m also excited by the meat substitute manufacturer Planted. The company managed to build an attractive brand in a short time and now exports to several countries.

    Read also: Climeworks: combatting global warming by sucking CO2 out of the air | Lombard Odier


    What does it take for the market to accept a sustainable product, and which Swiss companies have succeeded?

    The regulator has a major influence on demand. For instance, where regulators say that buildings must be constructed in a climate-friendly way, then investors and construction companies adapt. The same applies in other areas. What is important here is that companies are prepared. Holcim and Nestlé – two of the largest CO2 emitters on the Swiss stock exchange – have launched products in recent years that reduce greenhouse gas emissions. Holcim now has a type of concrete in its product range that emits up to three quarters less CO2 than conventional alternatives. Nestlé, for example, is starting with plastic packaging and coffee cultivation.

    Other SMI companies are involved internationally in sustainable development, such as ABB with its mobility offerings for sustainable drive technology – for electric buses, rail-based transport, and also for the electrification of private transport.

    The European financial industry has quite a few sustainable products overall but banks cannot make the change alone – they need regulators and the real economy

    What about the demand for sustainable investments?

    Figures from SSF show that there is still a high level of customer interest in sustainable investments. So, there needs to be a wider range of green bonds. Most impact products are, at the moment, investments in low-energy real estate. Green bonds could also be used to finance the construction of electric car infrastructure, for example.

    The European financial industry has quite a few sustainable products overall but banks cannot make the change alone – they need regulators and the real economy. The industry can exert independent pressure on invested companies or business customers through commitment. However, it is difficult to measure this effect. One thing is clear: we need to go beyond ESG as it was formulated 10-15 years ago. It’s no longer enough to use these ESG metrics to simply exclude companies from funds.


    How can we compare sustainability reports?

    ESG reporting has changed drastically but the topic is still new. Like Lombard Odier’s report, most of today’s sustainability reports are structured according to the GRI standard. This, in turn, is based on other sets of rules, e.g. the Greenhouse Gas Protocol for CO2. With this protocol, companies become comparable.

    The difficulty for banks is that their Scope 1 to 35 emissions are less meaningful. How they invest their money is more relevant. But the industry is lacking in standards which makes it hard to compare. This is why there are efforts by the competence centre for global reporting standards XBRL6 to standardise climate reporting and make it more transparent. Banks, regulators and UN bodies are currently developing a platform for this.


    How does AI affect the issue of sustainability?

    AI will make our work more efficient. At the same time, I fear that we will be confronted with even more misinformation because of artificial intelligence. Journalism remains important for recognising the context of reported data, and for ensuring reliability.


    1 a study by SwissRe
    2 Coop Plant Food Report
    3 report from the Federal Office for the Environment
    4 research by The Guardian and die Zeit
    5 Scope 1, 2 and 3 emissions refer to direct emissions from owned or controlled sources (Scope 1), indirect emissions from the generation of purchased energy (Scope 2,) and all other indirect emissions in a company’s value chain (Scope 3).
    6 Einsatz heute | XBRL

    Important information

    This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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