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In an interview with Acesparks, the CEO of bank giant Credit Suisse said the coronavirus pandemic had “significantly accelerated the ESG and stability trend” and sought to highlight investment opportunities within the overall space.
“We have a growing demand for ESG-compliant products from both private and institutional customers,” said Thomas Gottstein in an interview with Acesparks’s Geoff Katmor. “It’s clearly seen as an opportunity to improve revenue as well.”
“There is no contradiction between sustainable investment and sustainable income, and vice versa,” Gottstein added. “In many cases, sustainable investments bring more returns than unsustainable investments.”
The show seems to be happening. In February, the Morgan Stanley Institute for Sustainable Investment found that by 2020, “the U.S. equity fund’s average equity fund outperforms its traditional peer funds by 4.3 percentage points.”
“The U.S. Stable Bond Fund outperformed its traditional peer funds with an average yield of 0.9 percentage points,” it said.
A statement issued at the time by Morgan Stanley, CEO of Sustainability and its Director General of the Institute for Sustainable Investment, said: sacrifice is required to invest. “
The growing impact of ESG
The term ESG refers to environmental, social and management. In recent years, this has become a very topical issue, with a wide range of companies trying to increase their knowledge by developing business practices based on ESG-related criteria.
In an interview with Acesparks, Gottstein described the stability and ESG movement as a “global” movement.
As an institution, Credit Suisse has placed ESG integration within the “sustainable investment spectrum,” which also includes thematic investments, impact investments, and exceptions.
The bank, meanwhile, envisions a strategy in which investors “may choose to actively exclude businesses or industries in controversial areas – such as guns or tobacco,” for example.
Regulation and carbon taxes
Gottstein was also asked whether he felt he had to pay the heavy price of heavy issuers and mining industry capital if he saw the role of Credit Suisse in enforcing such a penalty.
“I think, to a certain extent, this is already happening,” he replied. “I think companies that are lagging behind in terms of sustainability are already having to pay a high price for capital, whether it’s for debt or the value of capital,” he added.
“So I’m not a big fan of regulating and forcing the high cost of capital from the outside, either unnaturally or through regulatory measures, because that’s what’s happening.”
The EU executive, the European Commission, is expected to draw up plans for a carbon border adjustment mechanism in the near future. According to the commission, this puts “the price of carbon in the import of certain goods outside the European Union.”
Gottstein was cautious about the idea of introducing a carbon tax on imports in Europe and using the tax system as a way to encourage behavioral change.
“I’m not sure about the carbon tax,” he said. “I think the market forces are so strong right now that I don’t feel the need to, because investor demand is so focused on sustainable products right now that I don’t think there’s a need for a carbon tax.”