Impact Investing in Switzerland

Sabine Doebeli, CEO, Swiss Sustainable Finance, and participant in the panel ‘What is next for the Swiss Impact Investing Field’ on the Impact Investing Congress on 24 January in Zurich gives some insights about Impact Investing in Switzerland.

Sabine Doebeli is the CEO of Swiss Sustainable Finance, an association founded in 2014 with the objective of promoting sustainability in finance in Switzerland. Previously, she was Head of Corporate Sustainability Management at Vontobel. At the Zuercher Kantonalbank she built up the sustainability research unit within the financial analysis department and was involved in the launch of various sustainable investment products. Sabine holds a Masters in Environmental Sciences from the Swiss Federal Institute of Technology (ETH) Zurich and a postgraduate degree in Business Administration from the University of Basel.

Where is Switzerland standing in regard to impact investing, in the developing world as well as in the developed regions?

Switzerland has a leading role in the field of investments for development, a term referring to investments which involve a clear intention to improve the social, environmental and/or economic situation within developing and emerging countries while aiming for a market return. According to a study by Swiss Sustainable Finance, Switzerland manages close to a third of global investment products in this segment and therewith is the largest player in this field. This can be partially attributed to the role that Switzerland played in the development of the microfinance market with three large Swiss institutions leading the way and developing diversified products. Impact investing in developed countries is yet less prominent in Switzerland, mainly based of the fact that the Swiss public sector manages to provide solid social services and therefore there is less need for private investments in this field.

Which role play the different actors, e.g. the financial institutions, the corporate and the public sector entity?

The main players in this segment are specialised asset managers which built up encompassing know-how in evaluating and structuring investment opportunities with a social benefit in developing countries. It is often their role to attract necessary funds from the public and private sector to channel investments through their products along value chains to improve the social, environmental and/or economic situation of investee areas. With SIFEM the Swiss government has established its own vehicle for investments for development to complement its activities in development cooperation. Public private partnerships are of growing importance in investments for development. The public sector acted as seed investor for some of the private investment funds but it also offers technical assistance and contacts to foster such investments. As for corporates, some of them have charity programs in place that also use investments to support development. In addition, corporates must also be fully aware of their activities on the ground to make sure their activities are positively impacting areas in which they operate. This is, in particular, something that impact investors will take notice of.

What are the challenges to position Switzerland as one of the leading countries in impact investing?

I would say Switzerland already has a leading role in this field. If more of the many foundations based in Switzerland would discover impact investing as a tactic to leverage the effect of their charitable activities this could further strengthen its position. In the latest Swiss foundation code, sustainable investing and impact investing are specifically named as a way to align a foundation’s purpose with its investments and to increase the impact of a foundation. I expect that such approaches will gain importance for foundations as they offer an ideal combination of investment and impact.

Furthermore, banks could increase cooperation with existing specialists and create impact investing offerings for their private clients. Some players already have such services in place but we see room for further products and services in this field.

Of course we also have to keep in mind that in general defining and standardizing how specific impacts are measured pose some challenges to further fostering this market. Public and private investors alike need to be able to compare both the financial as well as the social/environmental/economic impact of their investments as a basis for their investment decision. Developing fair and easy performance indicators is therefore key for further growth.

Last but not least, talking about existing strengths also helps to promote Switzerland as a leading centre for sustainable investment in general and impact investing specifically. Swiss Sustainable Finance laid a foundation by illustrating Swiss capacities in its “Swiss Investments for a Better World report” published in spring last year. Furthermore, we were a member of the official Swiss delegation at the first UN conference on Sustainable Development Goals (SDGs) in July last year and presented a private sector view on the Swiss strategy for the SDGs. This was an excellent opportunity to promote Swiss capacities to an international audience. I am sure there will be further chances to highlight Swiss strengths at other similar occasions.