Plenitude: Sustainability | Responsible Investing | Wealth & Pensions | UK
Saving For Our Future
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Green Finance Interview Series

Our Green Finance Interview Series brings you the leading voices of sustainability and responsible investment

Dr Dorothea Baur - Finance and Technology Ethics Expert - Baur Consulting

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Tell us about yourself and your organisation

I am a former academic who has been running her own boutique consulting firm, Baur Consulting, in Zurich, Switzerland, for about 4 years. I specialize in ethics consulting with a distinctive focus on sectors like finance and technology. I help my clients identify their values and align them with their business strategy. I put a lot of emphasis on knowledge transfer to my clients and I don’t sell any standard solutions, that is, I only do highly customized work. Besides that, I am also lecturing at universities and doing an increasing number of keynotes.

 

In your work with the varied array of Swiss asset owners, investors and stakeholders at large, what are the main challenges you face with regards to how they view ESG and also CSR? 

Those asset owners and investors who get in touch with me are typically looking for independent advice in order to start building their own ESG policy. For them, engaging in ESG is like learning a new language. They want to and need to widen their horizon beyond financial metrics. Often times, they are overwhelmed by the sheer amount of jargon in the field. So, they first need to establish an understanding of what sustainability means to them. They need to find an internal consensus on the key concepts before they can develop and then implement their ESG strategy. The lack of standards in the field of ESG means that every actor has to decide for themselves how they align the financial and the non-financial aspects of their investments.

 

How has the Swiss sustainable finance landscape evolved in the last 5-10yrs?

The number of asset owners and asset managers claiming to consider ESG in their investments in one way or another is mushrooming if we believe the annual market study which is conducted by Swiss Sustainable Finance. However, since there is no agreement on what counts exactly as ESG and since the study is based on self-reporting and only comprises approximately 70 respondents, this needs to be taken with a grain of salt. But in any case, the amount of ESG events from the finance sector, which are very well attended, makes it evident that there is strong interest. There are also new actors entering the scene, often in impact investing and/or in combination with fintech.

 

What differences do you see between the Swiss approach to sustainable finance and that of the EU? 

The fact that Switzerland is not part of the EU means that it can develop its own approach. But this is only true in theory. In reality, regulatory developments in the EU sooner or later also affect Switzerland. When I studied political science, my professor said, Switzerland was practicing a ‘pseudo-autonomous re-enactment’ of EU laws. We think we are doing it our own way when in fact we don’t have much of a choice because our biggest trading partner dictates the terms. What is striking is a strong reluctance towards any kind of ‘hard law’ on ESG here. Sometimes it feels as if the avoidance of regulation at all costs is what drives the financial sector. The EU is moving ahead with a very strong commitment to sustainable finance which is epitomized by their action plan for Sustainable Finance Action Plan, which among other things also contains regulation. So, there is a clear difference in the level of commitment and ambition between Switzerland and the EU for now.

 

Much of your work has to do with the important topic of ethical AI too. How does that marry with the other work you do in sustainable finance? 

Technology is a pervasive driver across all industries and topics. It’s only logical that finance in general and also sustainable finance in particular try to make use of the latest technological developments in order to make their work more efficient and enhance their offer to clients. By automating certain services AI can ‘democratize’ all kinds of financial services because they become accessible for a much wider range of people. This is certainly a good thing, especially also with regards to sustainable finance. Sustainable finance is not just for big investors; it should be an option for every client. At the same time, we need to make sure that we don’t fall prey to what is known as ‘technological solutionism’, i.e. the idea that we can resolve all of humankind’s problems with tech. No matter how much AI we use, we need to leave room for human judgment and for dialogue between people. So, AI-driven sustainable finance actors need to find a balance between maximizing efficiency with technology and keeping in touch with their clients.

 

What personally excites you about sustainable finance in general? 

I thrive on problems that defy a ‘quick fix’ but instead require interdisciplinary knowledge and the challenging of hitherto unquestioned assumptions. What better example for such a problem than sustainable finance? As said above, sustainable finance requires finance professionals to widen their horizon beyond financial metrics, it implies a new definition of key concepts like fiduciary duty, an extension of the time horizon etc. – and it takes a lot of persuading and overcoming of longstanding prejudice. This is exactly what I love – the trickier the better. And of course, the fact that sustainable finance is indispensable for achieving the SDGs, for mitigating climate change etc. further adds to my passion and motivation for the cause.

 

How do you see sustainable finance evolving in Switzerland?  

It is definitely picking up speed if we believe the market studies. However, we need to differentiate between quantity and quality: a lot of investors claiming to do ESG currently restrict themselves to the ‘low hanging fruits’ like the exclusion of controversial weapons, which is the bare minimum of any responsible investment strategy. But there are also an increasing number of investors (banks, insurance companies, asset owners and asset managers) who really go out on a limb by imposing more rigorous standards and, together with the growing pressure from the public, they inspire others to follow. So, all in all, I am hopeful that after waking up to sustainable finance, Switzerland is finally also getting up to it!

Geilan Malet-Bates