“Breaking down sustainability at product level”
Development of a system for the sustainability classification of investments for a Swiss bank
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A Swiss bank commissioned us to develop a system for classifying the securities it sells according to ESG criteria – which is also intended to help the bank’s customers. The background to this was the Swiss Bankers Association’s voluntary commitment to take the sustainability preferences of all customers into account when providing investment advice. “The bank wanted to classify its products in order to immediately be able to offer appropriate securities to customers who want to invest sustainably,” explains Daniel Härter, Manager at zeb. “So, we had to break down the complex concept of sustainability at product level.”
To this end, we defined basic criteria: A security or bond can only be classified as sustainable if it does not run counter to the bank’s sustainability goals – such as the promotion of clean and affordable energy – and if it is proven to actively contribute to both mitigating harm and driving sustainability, for example by reducing emissions. These criteria are then substantiated as a large number of indicators for each asset class; an acceptable minimum value is defined for each of these components.
“The system had to be market-compliant and communicable in order to be accepted by the bank’s customers,” says Härter. This is another reason why we have drawn on readily available sustainability data provided by rating agencies. Moreover, this best-practice approach was essential for our solution with regard to the bank’s employees:
“We asked ourselves about every criterion and every key figure: Does it make sense for the bank? Can the institution itself deal with the classification in the long term?” says Daniel Härter. “It is always particularly important to us to find simple and practicable solutions for our clients.”
Daniel Härter, Senior Consultant, zeb
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