The Princely Family’s long-standing commitment to sustainability has shaped LGT’s approach for more than a decade. Ursula Finsterwald, Head of Group Sustainability Management at LGT, and Christopher Greenwald, Head of Sustainable Investing at LGT Private Banking, on how business and investors can wield their influence to generate a measurable, lasting impact.
Why is sustainability such a strong trend in finance and banking right now?
Ursula Finsterwald: Sustainability isn’t a trend. It is a topic the entire economy needs to address head-on due to the climate crisis. In response, regulators such as in the European Union have introduced requirements for the financial industry to align its investments with a more sustainable economy.
What differentiates LGT with regard to sustainability, if requirements apply to the overall financial services industry?
Ursula Finsterwald: Sustainability is core to LGT’s identity. The wider and long-term impact of our investments matter as much as financial returns. LGT recognized this topic early on when it was still at the fringes of finance some 15 years ago. In 2021, we committed to lowering our net greenhouse gas emissions to zero by 2030. And of course, it is important to take clients with us on this journey, by raising awareness.
How is LGT building on this legacy on the investment side?
Christopher Greenwald: LGT’s positioning of forward-looking for generations refers not only to the transfer of wealth for the next generation but, crucially, also to the environment and society we want to leave for the next generation. Investing for the future involves not only a long-term time horizon, but also ensuring that our investments have positive impacts for future generations. Sustainable investing is a means to combine financial and sustainability goals to address global challenges such as biodiversity loss and climate change. Our clients’ investment strategies can contribute to the world we want our children to inherit.
What is the role of business in the Paris Agreement’s commitment to limit global warming to 1.5°C.
Ursula Finsterwald: Business has enormous leverage to act, independent of regulation or geopolitics. Financial services firms, as the linchpin between companies seeking capital and investors who can provide it, have a particular responsibility in this respect. We need to leverage this considerable potential to act as a conduit for awareness and, ultimately, change.
Christopher Greenwald: There are a host of issues inextricably linked to climate change: for example, the loss of biodiversity is a threat related to the climate crisis that is equally important. These are not merely political issues but also economic ones that both companies and investors must address.
Creating transparency for our clients and stakeholders on the sustainable quality of their investments is key.
The glut of information on sustainability can be overwhelming and gloomy. How can non-experts make sense of the subject?
Ursula Finsterwald: Creating transparency for our clients and stakeholders on the sustainable quality of their investments is key. This means the measurement and reporting of environmental, social, and governance issues will play an even greater role. The quality of data must improve. With it, the quality of reporting we can provide for clients and stakeholders improves as well.
Yet there is currently no standard for sustainable frameworks that is applied globally?
Ursula Finsterwald: That’s why transparency is essential in this respect. Our sustainability framework relies on the standards set by UN-led initiatives such as the UN Global Compact and the United Nations Principles for Responsible Banking. We are also clear on the investments we exclude, namely controversial weapons and thermal coal.
Christopher Greenwald: As a wealth manager, LGT doesn’t have the myriad conflicts which may arise through corporate or capital market activities such as financing companies. This, together with the unwavering and long-standing commitment of the Princely Family to sustainability, lends credibility to our efforts.
Is it productive to discuss sustainability globally given vast differences in approaches and definitions?
Ursula Finsterwald: Certainly there are considerable differences among regions and nations when it comes to sustainability. This shouldn’t prevent us from tackling the issue proactively by taking leadership in highlighting potential solutions.
Christopher Greenwald: The agreement reached at the UN Climate Change Conference COP27 is a good example: with developed nations agreeing to provide funding for countries more vulnerable to the effects of climate change. It is about sharing the burden with regions and countries who are more affected and less equipped to cope with the climate crisis.
Sustainability has focused largely on climate change. What other issues are part of LGT’s Sustainability Strategy 2030?
Ursula Finsterwald: LGT is putting great emphasis on equal opportunity. This is an issue of sustainability as much as it is smart business: Abundant academic research shows us that diverse teams produce better outcomes than homogenous ones. Improving the diversity of our own ranks forms an essential part of our Sustainability Strategy 2030. LGT aims to have its senior management comprised of at least 30 percent women by then.
Christopher Greenwald: Beside the academic findings, there is growing evidence from the investment side as well that speak for the importance of diversity for investment strategies. We are currently examining how gender diversity can be effectively integrated into a compelling investment strategy.
What distinguishes LGT as an early mover on sustainability?
Ursula Finsterwald: The Princely Family’s long-standing commitment to sustainability forms the bedrock of LGT’s conviction to be a responsible corporate citizen. This was perceptible and unwavering long before the trend. The values of long-termism and being a responsible steward are anchored in the Family’s identity. This carries over to LGT, which takes its role in ensuring a more sustainable future very seriously.
Do you have some examples?
Christopher Greenwald: LGT contributes ten percent of its annual dividends to strategic philanthropic activities. Also, consistent with LGT’s co-investment philosophy, the Princely Family is the anchor investor in the impact funds of our partner company Lightrock, a global impact private equity platform that invests in sustainable companies. And LGT Capital Partners – the investment manager of the portfolio of our owner family, the Princely House of Liechtenstein – began integrating environmental, social and governance (ESG) criteria into its investing nearly two decades ago. These are strong differentiators for LGT.
Ursula Finsterwald: LGT’s willingness to “walk the talk” is another strong differentiator. We must – and are – acting on the pressing challenges by reducing our emissions, diversifying our ranks, seeking to make an impact with our investments, and discussing with clients how we can help them in their journey. Only through collective action can we make a genuine, lasting difference for future generations.