Berner Kantonalbank: Sustainability as a basic principle of investment advice

Banks can make a significant contribution to sustainable development. The Berner Kantonalbank (Cantonal Bank of Berne, BEKB) takes its economic, ecological and social responsibility seriously in accordance with its principle “Hüt für morn” (Today for Tomorrow). Thanks to the dedicated ESG functionalities of Finfox, BEKB’s sustainability approach has been integrated into its investment advisory processes in an efficient and regulatory-compliant manner.

Sustainable investing – what does that mean?

Responsible management of investments is important. The way how and in which assets investors invest money can make a substantial difference to a more sustainable future.

Sustainability criteria introduce a new aspect to the assessment of investments in addition to the classic risk-return analysis. For example, there are numerous types of investment now that explicitly exclude investments in climate-damaging coal-based power generation, questionable supply chains or the arms industry. With some investments, investors can even specifically achieve a social or environmental impact, such as the promotion of sustainable energy, or the fight against hunger and poverty.

ESG in investment advice: BEKB’s approach

Sustainability is one of the cornerstones of BEKB’s business philosophy. The aim of this philosophy is to sensibly guide investments side by side with clients and to mitigate negative impacts on sustainable development.

Sustainability criteria are taken account of in all BEKB investment solutions – in various forms. Of particular note are the sustainable BEKB investment funds and discretionary mandates, which solely invest in companies that are leaders within their industry in terms of social and ecological criteria and are neither active in controversial business areas nor do they apply controversial business practices.

New minimum requirements for integrating sustainability criteria into investment advice

Sustainability is not a new issue from a regulatory perspective either. In Switzerland, the “Guidelines for financial service providers on the integration of ESG preferences and ESG risks into investment advice and portfolio management”, published by the Swiss Bankers Association (SBA) in 2022, for the first time define binding rules in terms of sustainability for investment advice, portfolio management or mortgage advice.

The guidelines are binding for SBA members and came into force on January 1, 2023. Transition periods have been granted for the adaptation of the respective processes.

Sustainability in the advisory context – efficient, regulatory compliant and maximally transparent

Thus, the industry is faced with the challenge of asking clients about their ESG preferences, and then offering appropriate services and products. In addition, when establishing the client’s ESG preferences, the Guidelines also set out obligations for the provision of information, documentation and accountability.

With Finfox, BEKB efficiently implemented many requirements at various points in the investment process already in 2022. This includes, for example, the following aspects:

• Integration of sustainability ratings of different dimensions (e.g. ESG ratings, portfolio contribution towards the achievement of the Sustainable Development Goals, contributions of invested securities to global warming, etc.)
• Allocation charts of the invested securities to different sustainability aspects
• Calculation of ESG portfolio ratings
• Consideration of sustainable service packages, investment strategies and model portfolios in the investment process
• Presentation of detailed sustainability analyses for the current portfolio and investment proposals as well as consideration of sustainability fact sheets in documents and reports

In 2023, in line with the SBA guidelines, the focus is shifting to the integration of ESG preferences as part of investor profiling, as well as other information and documentation aspects.

The result: Increased sustainability – «Hüt für morn» (Today for Tomorrow)

As a result, the project created a win-win situation for all parties involved. BEKB has incorporated its sustainability philosophy in its advisory processes and has taken account of the strategic goal of steering investments responsibly and reducing negative impacts on sustainable development.

“Thanks to Finfox, our clients receive a transparent and comprehensive overview of their portfolios’ contribution to various sustainability aspects as part of the investment advice. This has been well received. At the same time, regulatory requirements are adhered to in an uncomplicated and efficient manner.”

Renato Herrmann
Senior Product Manager, Value Stream Investing & Pension Solutions,
Berner Kantonalbank

Portrait Berner Kantonalbank

With around 470,000 customers, over 1,200 employees and around 80 locations, BEKB is one of the largest cantonal banks in Switzerland and has strong roots in the cantons of Berne and Solothurn. BEKB is a universal bank with a focus on standardized basic banking services, real estate financing, corporate financing and private banking. BEKB has been committed to sustainable development for many years. With a broad range of products, it supports its clients, among other things, in sustainable investing.