‘Collaborations are one key to success in the nonprofit sector’
Creating social value
Urs Baumann, CEO of Zürcher Kantonalbank, explains why impact investing is an ideal approach for foundations and what the bank is hoping to achieve through its involvement with StiftungSchweiz.
Answer us honestly – how sustainable are the investments at Zürcher Kantonalbank really?
Sustainability is dynamic. We keep it moving forwards and evolving. Our commitment to guiding our customers into a sustainable future is written into our business strategy. And we set ourselves high standards and ambitious targets in this area.
What does that mean exactly?
Zürcher Kantonalbank joined the Net-Zero Banking Alliance in December 2022, which means we’ve committed to the target of hitting net-zero emissions by 2050. As far as our active asset management investment solutions with traditional investments are concerned, we’re working in line with the Paris Climate Agreement and have adopted a binding quantitative reduction path. This means we’re contributing to climate-friendly financial flows.
So is your focus on climate action?
It’s certainly one of the areas we’re focusing on – but it’s not the only one. For example, we’re currently planning an investment solution focused on education as a sustainability goal in partnership with education foundations and the Swiss Agency for Development and Cooperation (DEZA). The returns from this sustainably managed fund, which foundations and private customers will be able to invest in, will be paid out to ‘Education Cannot Wait’, a fund dedicated to providing uninterrupted education during international humanitarian crises. In other words, private capital will be mobilised to solve sustainability problems.
How do you make sure that there’s no risk of false claims being made about sustainable investments at Zürcher Kantonalbank?
We systematically integrate ESG risks and opportunities into all our investment solutions. Given our bank’s pioneering position when it comes to sustainable investments, asset management for active investment funds is based on a binding quantitative reduction path as standard. This means that the CO2e intensity – CO2 equivalents – of portfolios is being reduced by at least 4 per cent a year. With direct investments, we focus on the dialogue with investing companies and call upon them to define and implement meaningful targets for reducing their carbon emissions. Our standing as one of the largest fund providers ensures that our voice can be heard. We publish regular reports to disclose how sustainable our investment funds are. And we were recently named the ‘Best Asset Management Company’ in the Swiss Sustainable Fund Awards for the second time. That’s verification that we’re on the right track.
innovation is incredible
when approached with
a commitment to social responsibility.’
Urs Baumann, CEO of Zürcher Kantonalbank
Does digitalisation help you explain the benefits of sustainable investments in a way that customers can really understand?
Digitalisation helps us to address our customers directly, improve the customer experience, such as through our consultations, and make our sustainable options accessible through digital channels like frankly. And then there’s data analytics. Our ESG Data Analytics Team has more and more organisational and national data to refer to, which means that the quality of ESG data analysis is constantly improving. Technical innovation is incredible when approached with a commitment to social responsibility.
Would you say you have a better understanding of your customers these days?
Running a business successfully is all about anticipating your customers’ future needs and developing the services to match. It’s so important to pick up on shifts in values and be attuned to the current problems being faced by society.
The canton’s performance mandate requires you to harmonise your business activities with the environment and society. How do you go about that?
We’re very conscious of the performance mandate and we make sure we’re reflecting it at all times. That applies to organised meetings and spontaneous conversations alike. Basically, it’s part of our DNA. What we all want is for the people who live in the canton of Zurich to be able to thrive as much as possible. And that’s why we’re involved with a wide range of sponsorship activities. As for society – we run the largest education institution in the canton of Zurich, support youth education and promote cultural diversity and equal opportunities. The fact that we receive more than 2,500 requests for our support every year says it all, really. Environmental issues have been part of our collective mindset for a long time now.
Is this work akin to corporate philanthropy?
Absolutely – even though we don’t have our own corporate foundation for it in place. A lot of our activities may be based on a give-and-take arrangement, but everything we do is deliberately aimed at making life better for the wider population of Zurich. And that involves a patronage aspect too.
Can you give us an overview of your wide-ranging activities?
Even before I started working at Zürcher Kantonalbank, I was aware of many of the bank’s commitments. Some examples include Zoo Zurich, the Schauspielhaus theatre, the Greifenseelauf run and the jazz festival. And I think everyone is familiar with our Nachtschwärmer night-time public transport offer for our younger customers.
The mandate means that Zürcher Kantonalbank is working in many of the same areas as nonprofit organisations. How do you work together?
Collaborations are one key to success in the nonprofit sector. Generally speaking, it’s only possible to do good in society when multiple stakeholders are on the same page. In that spirit, Zürcher Kantonalbank has a wide range of banking services that are aimed at nonprofit organisations and support every related aspect of financial management. In parallel to that, Zürcher Kantonalbank sponsors lots of events in the foundation sector, including Schweizer Stiftungstag, an annual event organised by proFonds. I also want to mention our involvement with the stiftungschweiz.ch philanthropy platform, which we’re hoping will enable all nonprofit stakeholders across Switzerland to collaborate digitally. Last but not least, lots of our employees volunteer for associations or foundations. As part of our corporate volunteering efforts, entire teams from our bank have already taken part in organised projects and initiatives to give back to society.
What is Zürcher Kantonalbank hoping to achieve through its involvement with StiftungSchweiz?
As a full-service bank operating nationwide, we have plenty of contact with nonprofit foundations. We understand the challenges involved with making the sector more public and more professional. Alongside Zürcher Kantonalbank, StiftungSchweiz has a broad-based consortium of grant giving foundations that came on board last year as stakeholders. To us, it’s clear that there’s going to be a growing need for transparency, impact-driven action and dialogue going forwards – both internally and externally. And that’s exactly why we’re working with StiftungSchweiz to achieve the goal of exploiting the potential offered by digitalisation to ensure philanthropy with an even greater impact.
Critics within the foundation sector are saying that StiftungSchweiz is a gold mine for ZKB. Are they right?
We became heavily involved in the platform in 2018 and we’ve been facilitating positive development consistently as a dependable partner ever since. It’s our aim for stiftungschweiz.ch to be able to sustain itself in the medium term. Any future profits made from running the platform will be invested back into its development.
‘It’s our aim for
to be able to sustain
itself in the medium term.’
Urs Baumann, CEO of Zürcher Kantonalbank
Before you took on the role of CEO at Zürcher Kantonalbank, you were working in impact investing. Would that not be an ideal approach for foundations too?
Absolutely. With impact investing, the financial return is used for a nonprofit purpose and the investment itself has social impact too. But there are different forms of impact investing. One key distinction is whether the priority of an investment is the impact or the financial return. Foundations in particular may find that they end up putting themselves at more risk as a result of their focus on social impact. But impact investment doesn’t always have to go through a foundation. Zürcher Kantonalbank has been investing in start-ups for over 15 years and supporting innovation in Switzerland that way. That’s an example of impact investing at its best.
ZKB has some foundations as customers. How big is the demand for sustainable financial products among this customer base?
Many foundations are considering taking a sustainable approach to their investments. At the most basic level, this involves a foundation applying exclusion criteria to its investments. But more and more foundations are taking it further than that by running an ESG analysis or using it as a way of reducing their carbon emissions or achieving the UN Sustainable Development Goals (SDGs). Sometimes, they even go as far as impact investing.
Are banks interested in foundations as customers?
The short answer is yes, absolutely. Expanding on that, I would say that foundations are among our most discerning customers. They often ask questions about ethical or social standards alongside environmental considerations. This makes these partnerships interesting. In our role as a pioneer in sustainable investments, we can deliver real added value through the advice we offer.
Zürcher Kantonalbank has created an index for classic philanthropic investments called SwiPhiX. Is it a contradiction to measure the performance of these investments in an index?
Not at all – it’s absolutely necessary. The better the assets perform in the long term, the more funds a foundation will have at their disposal. The SwiPhiX is a transparent indication of the return an average foundation managed to generate within a certain period. This gives all foundations a reference value they can use to benchmark the performance of their own investments. Having said that, a foundation’s investment strategy should be designed to fulfil that foundation’s purpose first and foremost. The investment aim is usually to generate enough returns to finance the foundation’s projects and cover its allocated funding as comfortably as possible.
There is often a focus on climate and carbon issues. How important are social concerns?
When talking about the climate issue, what really matters is the world we’re leaving behind for the next generation. But there are also plenty of opportunities to invest directly in social concerns. One good example is the fund I mentioned earlier that’s focused on education as a sustainability goal. As a bank with a comprehensive performance mandate, we consider it our responsibility to take both social and environmental issues seriously.
You have big plans ahead of you. Is the role of CEO at Zürcher Kantonalbank a dream job?
First and foremost, it’s a huge privilege. And a huge opportunity. We certainly have big plans. That’s one thing we have in common with StiftungSchweiz.