Investment
Credit Suisse backs sustainability amid Federer furore

Investment bank and financial services powerhouse Credit Suisse has backed sustainability as the dominant investment theme of the coming decade, despite ongoing uproar around its investment in fossil fuels.

The prediction comes as Australia's bushfire crisis scorches the country black, claiming the lives of 27 nationally and an estimated one billion animals. Meanwhile, tennis superstar Roger Federer is being scrutinised for his partnership with the investment giant - something many have questioned as he gears up for the Rally for Relief charity match this week.

Sustainable investing has traditionally been considered the exclusion of unethical investments; alcohol, tobacco, gambling, fossil fuel miners and weapons manufacturers.

Of late, it has developed into a more nuanced investment philosophy, aiming to improve social and environmental issues and develop a sustainable global financial system.

Credit Suisse Private Bank Australia's chief investment officer Andrew McAuley said sustainable investing, or socially responsible investing, will continue to evolve rapidly.

"Sustainable investing is a long term trend that every investor needs to consider. Ultimately stocks with poor ESG credentials will trade at a discount," McAuley said.

"It starts with a philosophy and a framework to implement. Looking into the nuts and bolts can become quite complex, but having a clear understanding of the beliefs you want incorporated in your investments will be a good guide to at least improving the sustainability characteristics of your portfolio."

McAuley suggests applying three consecutive steps to best build a sustainable portfolio; exclude (companies tainted by human rights violations or weapons manufacturers), promote (companies with good ESG credentials) and contribute (through proactive investment in third world countries).

He also suggested that fossil fuels and plastics manufacturing will continue to be social and environmental issues in the near future, and thus, people may choose to exclude these assets from their portfolios.

But can sustainable investing still be profitable? McAuley gave it the tick.

"The most common question about sustainable investing is do I have to sacrifice returns? The answer is a clear no... Harvard did a study of the studies and found in 80% of cases, there was a proven link between sustainability and positive share price performance," he said.

However, he argued that sustainable investing still faces some barriers.

"It is still not clear that an ESG overlay can provide investors with a fully diversified portfolio," McAuley said.

"The situation is improving with increased ESG screened active and passive (ETF) solutions available, and these will continue to grow. However, in asset classes such as hedge funds and private equity, the choice is still limited."

Although investors can adapt their portfolios to exclude non-ESG compliant investments, McAuley maintained that fossil fuels should still be included.

"Without fossil fuels the world will grind to a halt and poverty will grow," he said.

"It is difficult to exclude the use of fossil fuels completely. For example, you may exclude mining companies from your portfolio because they use fossil fuel intensively. But there may be a large miner which is implementing the absolute best practice at reducing fossil fuel use. Rather than exclude it, investors may prefer to encourage it by including it in their portfolio."

Last week, 20-time Grand Slam-winner Roger Federer came under fire for his sponsorship deal with Credit Suisse, with climate activist Greta Thunberg imploring him to rethink his partnership with the bank.

Thunberg shared a tweet from 350.org Europe, claiming that Credit Suisse had provided $57 billion since 2016 to fund companies looking for new fossil fuel deposits.

"@RogerFederer do you endorse this? #RogerWakeUpNow," she tweeted.

Thunberg's tweet is just the latest example of Federer's partnership with the bank being scrutinized.

A group of climate activists faced court last week after refusing to pay fines of $32,140 (21,600 Swiss Francs) for a publicity stunt that saw them, dressed in tennis whites, hit tennis balls back and forth inside Credit Suisse branches in Switzerland last year.

Following the stunt, #WakeUpRoger began trending on Twitter.

Federer has responded to the mounting criticism.

"I take the impacts and threat of climate change very seriously, particularly as my family and I arrive in Australia amidst devastation from the bushfires," Federer said.

"As the father of four young children and a fervent supporter of universal education, I have a great deal of respect and admiration for the youth climate movement, and I am grateful to young climate activists for pushing us all to examine our behaviors and act on innovative solutions.

"We owe it to them and ourselves to listen. I appreciate reminders of my responsibility as a private individual, as an athlete and as an entrepreneur, and I'm committed to using this privileged position to dialogue on important issues with my sponsors."

Read more: Credit SuisseRoger FedererAndrew McAuleyGreta ThunbergRally for Relief
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