Patrick Odier on why the sustainable finance community is gathering momentum in Geneva

 

Finance.swiss: The banking sector is undergoing the biggest transformation in
history. How can financial institutions adjust their business model so they’re not seen
as part of the problem but instead as good, responsible corporate citizens?

Patrick Odier: I think we should remind ourselves that the role of banks is twofold mainly:
One, to insure the irrigation of the economy at all times; and two, to protect savings, make it
grow, transfer it, etcetera. When you look at the huge transformation that is taking place
today throughout the world, it concerns every sector, and in this respect capital can help a lot
as can many other factors. If you take consumption, behavior would help the transition. If
you take technology, technology would help with new solutions. If you take regulation,
regulation is what puts a frame around the activities. And capital will encourage the right
directions to be taken by industries. And in this sense, banking is, in this situation, even
more a part of the solution than it has ever been.

 

Global challenges such as climate change, changing regulatory framework, and a
demand from younger generations to earn market-conform returns through
sustainable solutions are just some of the drivers for responsible investing. But there
are still voices claiming that profit and purpose are conflicting goals. How do you
answer those critics?

I think in this respect we’ll have to look at the fiduciary responsibility of the intermediaries,
such as the banks, asset managers, the wealth managers, which have to guide capital and
savings into a certain direction because those directions offer the best opportunities for
investments and/or because those directions allow to mitigate risk at best. In this respect,
there’s full alignment between the interest of the banking sector and of the clients and
investors. It’s the same with credit: Credit is the most risky financial activity, and this risky
activity has to do with managing the risk correctly. If you don’t see a transformation into a
sector correctly, you’re going to take a big risk lending to the wrong counterparties.

 

You’re the president of Building Bridges, a groundbreaking event that will include
politicians, the financial sector, and NGOs from November 29 to December 2 in
Geneva, supported by Swiss public authorities. What’s the idea behind this event?

The idea behind Building Bridges is really to make sure that all parties involved in the
sustainability transition will find themselves around the same table to set the agenda
correctly—what are the themes that deserve collective initiatives, and what are the individual
ideas that are worth exchanging so that acceleration can take place. That’s why Building
Bridges will exist, and that’s why we hope to make it a big success.

 

You also claim that Building Bridges is not just an event, but a movement. What does
that mean? How can you achieve that?

Building Bridges will be composed of a big summit that will be the lighthouse of the week, if
you wish. But it is a week, meaning that there will be 77 events this year that will address all
kinds of issues that are spontaneously generated by different constituencies that come to the
table. We will also make sure that out of these discussions some work streams can be
defined so that in the continuity of one week the discussion continues and perhaps initiatives
can start.

 

Do you also check back to see if those initiatives are put into place?

Of course! We check back, and we also encourage everyone around the table to focus on
this part of the year to make sure they come up with the announcement of the initiatives so
that it gives a sort of momentum for everyone to encourage those initiatives to take place.

 

There are several urgent challenges of advancing sustainable finance. Which one is
Building Bridges addressing?

This year, with input from the community, we have decided to direct the reflections around
three main themes. The first theme is about matching demand and supply of capital. There
is a lot of demand for certain types of projects, there is a lot of capital. How come there’s still
a mismatch? The second theme has to do with the means to do that correctly, i.e.
transparency about what is being done—and data and information. What kind of information
should be available to anyone to make a right decision, including the financial sector. And
the final work stream that has been established, and will be the subject of a main focus
during the week, is the role of technology to accelerate the sustainable transition.

 

Why have you chosen Geneva to be the hub for the sustainable finance community to
come together?

Geneva and Switzerland benefit from a unique advantage. All the international organizations
are present at the same place: the NGOs, industry, finance, academia, as well as the Swiss
government. The contact between Geneva and Zurich, Basel and Lugano is as fluid as it
should be. So in this respect, I think it would have been a mistake not to use Switzerland and
Geneva to try to develop this Building Bridges initiative.