share this article!

Getty Images | Mischa Keijser | Cultura Credit Suisse’s CEO told CNBC that the coronavirus epidemic had “significantly accelerated the trend toward ESG and sustainability,” and he aimed to highlight the investment opportunities within the entire market. “The demand for ESG compatible solutions that we see — both from our private clients and institutional clients — is ever increasing,” Thomas Gottstein told CNBC’s Geoff Cutmore. “It’s definitely recognized as a way to boost returns as well.” “There is no conflict between ecological investments and sustainable returns, on the contrary,” Gottstein said. “Sustainable investments, in many situations, yield larger returns than non-sustainable investments.” There appears to be a shift in the air. The Morgan Stanley Institute for Sustainable Investing discovered in February that “US sustainable equity funds beat their regular peer funds by a median total return of 4.3 percentage points in 2020.” The report also stated that “US sustainable bond funds beat their typical peer funds by a median total return of 0.9 percentage points.” “Sustainable funds’ strong risk and return performance during an exceptionally turbulent year further erodes the persistent misconception that sustainable investing requires a performance sacrifice,” Audrey Choi, Morgan Stanley’s chief sustainability officer and CEO of its Institute for Sustainable Investing, said in a statement at the time. ESG’s burgeoning influence Environmental, social, and governance (ESG) is an acronym that stands for environmental, social, and governance. In recent years, it’s become a hot topic, with a wide spectrum of businesses striving to improve their reputations by creating business practices that align with ESG-related criteria. Gottstein called the sustainability and ESG movement as “global” in an interview with CNBC. Credit Suisse considers ESG integration to be part of their “sustainable investment range,” which encompasses thematic investing, impact investing, and exclusion. The latter refers to a strategy in which investors “may opt to actively avoid sectors or firms in contentious business areas — for example, guns or cigarettes,” according to the bank. Carbon pricing and regulation Gottstein was also questioned if he thought heavy emitters and extractive companies should pay a higher cost of capital, and if he thought Credit Suisse could help enforce such a penalty. “I believe it is already happening to some extent,” he responded. “I believe that organizations that are behind the curve in terms of sustainability are already being forced to pay greater costs of capital, whether it’s for debt or equity,” he added. “So I’m not a huge fan of regulation and driving greater cost of capital externally, or unnaturally, or by regulatory measures, because it’s already happening.” In the near future, the European Commission, the EU’s executive branch, is likely to lay out ideas for a carbon border adjustment mechanism. This would impose “a carbon price on imports of certain commodities from outside the EU,” according to the commission. Gottstein was cautious when asked about Europe imposing a carbon price on imports and his thoughts on utilizing the tax system to try to inspire a change in behavior. He stated, “I am not convinced about the carbon tax.” “I believe the market forces are so strong now that I’m not convinced it’s essential, since investor demand is so heavily bent toward sustainable products that a carbon tax, in my opinion, is unnecessary.”/nRead More

share this article!