Sustainable investing is in vogue. In the search for new markets and returns, many financial institutions are "greenwashing" their products. The LibertyGreen 3a Pension Foundation is fighting back against this.
1. Mr. Florinett, you are the managing director of LibertyGreen 3a Retirement Savings Foundation. What prompted Liberty to create "Switzerland's first sustainable pension foundation"?
Roman Florinett: Most providers of 3a retirement solutions only focus on the respective product. There is no overriding goal. However, we at LibertyGreen have not only launched a new product, but have also set up a completely new pension foundation that is dedicated to pension provisions and sustainability.
2. The Swiss financial center wants to take a leading role in sustainable investments. Politicians are therefore appealing to the financial industry to promote sustainable development with their billions. Where do you see Liberty's role in this?
Our goal is to play a leading role in the Swiss market as a provider of sustainable pension solutions. We want to become the market leader in sustainable pillar 3a investing. In doing so, we are transparent in that we only use direct investments. This makes us flexible and independent, enabling us to consistently pursue our vision of climate neutrality in the portfolio.
3. How would you qualify LibertyGreen's leadership?
We want as many investors as possible to invest sustainably. This happens partly through the pricing. With an 0.00%-0.38% all-in fee, we offer the lowest fees in the Swiss market. By using direct investments, expensive fund fees are avoided and transparency in the portfolio is increased. In the reporting, all shares are listed individually, which makes it possible to track every change in the portfolio composition.
4. LibertyGreen claims to pay special attention to environmental, social and governance (ESG) issues. How do you do that?
We source our sustainable investment data from MSCI ESG Research. MSCI ESG is the world's largest provider of environmental, social and governance sustainability analysis and ratings. We carefully select equity investments through a standardized investment process. The focus is on sustainability. However, other selection criterias are also applied to ensure that expectations in terms of security and returns are met. Currently, the LibertyGreen portfolio has an MSCI ESG top rating of "AA".
5. You invest the funds that customers invest in your 3a products, i.e. sustainably. Do you do this yourself or through an external asset manager?
We do this ourselves. This ensures that transparency and independence are fully preserved. The investment process is specified by the Board of Trustees and then systematically implemented. The foundation board and management review the key figures of the portfolio development once a month. The Board of Trustees meets once a quarter. At this meeting, the most important topics such as vision and implementations in the portfolio are discussed, and the course is monitored.
6. How do you go about selecting investment?
The validation process starts with a so-called negative screening, based on value- and ethics-based as well as standards-based exclusions. This is done according to at least three criteria. If these are not met ("negative"), the investment is not included in the portfolio. This also comes into play if CO2 emission limits are exceeded - entire industries are therefore not permitted in LibertyGreen. Conversely, positive screening identifies the positive ratings that a company achieves in terms of ESG performance. LibertyGreen does not invest in anything below an A rating. The company to be invested in must also have sufficient market capitalization, in order to guarantee stable securities trading.
7. LibertyGreen has a calculator on their website, to show customers what difference their investments can make.For example, how much C02 they can save with their investment, compared to an investment in the world stock index. How can you provide such values?
We obtain the sustainability data for the calculator from MSCI ESG Research. We then compare the corresponding emissions of the companies in the MSCI World Index and the companies in the LibertyGreen portfolio.
8. LibertyGreen offers clients six broadly diversified investment strategies. The higher the risk tolerance, the higher the proportion of equities in the portfolio. Conversely, the lower the risk, the lower the proportion of equities. How can the investments then still be sustainable?
In fact, we do not use bonds as an asset class because the expected return on bonds is negative. Instead, we hold this proportion in customers' accounts free of charge. The equity investments - currently 30 equities - are the same at each risk level, but their proportion can vary. We control the risk via the cash quota. For example, a risk level 2 has a cash ratio of 75% and an equity share of 25% of the portfolio value. A risk level 6, on the other hand, has a cash ratio of 5% and an equity share of 95%.
9. You also offer advice to customers. A recent study showed that the advice on sustainable investments provided by many Swiss financial institutions is inadequate. Are you a sustainability expert yourself, or how can you guarantee competent advice?
Our parent company Liberty is entrusted with pension assets of almost CHF 4 billion. Across Switzerland, around 80 employees provide first-class, tailor-made services for our clients and cooperation partners. LibertyGreen benefits from this extensive level of know-how.
10. Where do you see LibertyGreen in five years?
At LibertyGreen, we want to encourage as many people as possible to invest their retirement savings sustainably. Because LibertyGreen is the price leader, there is the greatest possible likelihood of outperformance. It is our goal to outperform all competitors with sustainable investing.
