Forward-looking investors don’t just invest in today’s sustainability champions, they also invest in sustainability laggards. Markus Werner, Head Intermediary Business at LGT Private Banking, reveals why and explains how in the future, LGT will support external asset managers even more effectively in the area of sustainable investing.
Markus Werner, LGT has a new offering for external asset managers, the LGT Sustainability Universe Pro...
...exactly. It includes new services that support external asset managers in offering interested clients attractive, sustainable investment opportunities and advising them competently in this regard.
Can you elaborate on that a bit more?
The new Sustainability Universe Pro offering includes a lot of new services, such as detailed sustainability reporting, access to our in-house sustainability rating, the calculation of a portfolio’s environmental footprint, the preparation of a detailed ESG report and additional sustainability research.
These services make it easier for external asset managers to provide clients who are interested in sustainability with competent advice.
Looking at your research department’s list of recommendations, there’s something that’s not clear to me. Why would a sustainability-oriented bank like LGT recommend investing in an oil company?
(laughing): We’re not recommending that investors invest in fossil fuels. We’re recommending that they invest in companies that are currently showing enormous potential for development in terms of sustainability – and will realize that potential in the near future.
That sounds complicated.
It’s actually pretty straightforward. For example, the oil company that you’re referring to is pursuing one of the most compelling decarbonization strategies in the entire sector. Its ambitious goal is to become one of the world’s five largest generators of electricity from wind and solar power over the next few years.
That makes the company attractive both from a sustainability perspective and in terms of returns. We call companies like this, with an attractive investment case and a lot of potential for a standout future sustainability profile, «LGT ESG Rising Stars».
How do you find these «rising stars»?
Our investment experts who specialize in sustainability identify them through comprehensive, detailed and time-consuming research. Many of these companies operate in industries that aren’t currently known for their sustainable practices – but that’s soon likely to change.
We need to move away from preconceptions and look closely at how companies are behaving. The world is changing. It’s only logical that it is the ESG laggards that hold the greatest potential on the path to a more sustainable society.
So forward-looking investors should start investing in these «stars of tomorrow» today?
Exactly. Investing in today’s sustainability champions is no longer enough. They are well-known and everyone wants to invest in them. But companies that are elevated into the circle of sustainability pioneers gain momentum in the form of positive market sentiment – and therefore also see further inflows of money.
And they have something else that plays into their hands: there is increasing consensus among investors as to what constitutes good and what constitutes bad ESG practices. This is leading to more and more transparency.
And greenwashing is becoming more difficult.
Exactly. That’s why capital is increasingly concentrated in truly sustainable companies. All this means that investors have to be quick to invest in the stars of tomorrow – before they become the stars of today.
We have explicitly expanded our offering for our intermediaries business in this area so that our external asset managers can also create the necessary transparency for their clients.
Markus Werner has been a member of the Executive Board of LGT Bank since 2011 and Head Intermediary Business of the banks in Switzerland and Liechtenstein since 2018. He has been with LGT Bank since 1996, and is a Swiss certified banking expert and a Swiss certified finance and investment expert AZEK.
