‘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. 

‘Tech­ni­cal 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 stiftungschweiz.ch 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. 

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