Hubert Keller will become senior partner at Lombard Odier at the start of 2023, but as partner heading up the bank's fund business he is already supervising all the Geneva-based private bank’s sustainability initiatives.
Lombard Odier’s top fund manager likes his investments «on the rocks». «We like ice cubes», Hubert Keller told finews.asia at a recent event with top bankers and journalists.
In the world of sustainable finance «ice cubes» are those companies likely to gain the most from the transition to a carbon-neutral economy.
«Dirty Men» in Demand
Keller said his fund managers were combing the financial markets for ice cubes. «It’s not that easy,» he said. He said he would also class so-called «dirty men» such as oil majors and heavy industry as ice cubes, adding that a steelwork which was successfully decarbonizing was taking more effective action against climate change than companies in sectors that created little pollution.
Lombard Odier also regarded banks as potential ice cubes. By investing in rapidly transforming sectors, financial institutions could become decarbonization accelerators. Regrettably, not all banks behaved like this, but some had taken initiatives on making their businesses carbon neutral and, as a result, had themselves become worthwhile investments, Keller said.
Political, Regulatory Pressure
The financial sector’s efforts on climate change were also being supported by regulators and society in general, he added. On June 13 Switzerland will hold a referendum on the so-called CO2 law, which also involves stricter banking regulation.
On top of that, from July 1 new reporting obligations from Swiss financial regulator Finma will come into force. These relate to climate-change risks on banks’ balance sheets and initially will only apply to the major banks. However, Finma has hinted at an extension to smaller institutions, probably including private banks.
Buses instead of Limos
Were this to happen, Lombard Odier would be well prepared. The 200-year old bank is keen to stress its sustainable credentials and has been using them as a unique selling point. It has joined more than 20 national and international initiatives on fighting climate change and promoting sustainability.
Lombard Odier also applies this philosophy to its operations. All the electricity at its headquarters is renewable, the warm air from the server rooms is used for heating and when they travel on business the well-heeled private bankers have to use public transport wherever possible, head of operational sustainability Ebba Lepage said.
Sustainability Comes from The Top
Keller is responsible for all of the bank’s sustainability initiatives and will remain so when he takes over at the top of the bank when he replaces Patrick Odier at the start of 2023 as senior partner.
From this summer Odier will be president of the Swiss Sustainable Finance (SSF) association, making him Switzerland’s top sustainability banker.
Two Thirds of New Inflows Going into ESG
Keller said that between March 2020 March 2021 over 60 percent of all fresh inflows into the asset management unit went into funds meeting ESG criteria.
Lombard Odier’s head of sustainability for research and investment in the funds unit, Christopher Kaminker, said the bank was going full steam ahead with transforming its range of funds in line with the requirements of the net-zero initiative.
He added that this was challenging in real estate, the private funds market and alternative investments but that this could change quickly.
Green New Headquarters
The bank’s new headquarters on Lake Geneva will be a sustainable real estate investment, bringing workers from five sites in Geneva under one roof. It is due to be opened officially in 2024.
However, the mammoth project will have a low carbon footprint, Lepage said.
It will have solar panels on the roof, and Lake Geneva will provide air conditioning via the Genilac Project which envisages heating and cooling buildings using water from the lake.
