Sustainable Investing Capabilities of Private Banks

 

About the project

 

About 36 million people each control more than USD 1 million in wealth. Such high-net-worth individuals represent about 0.7 percent of the global population, yet control around USD 130 trillion, which is around 50 percent of the world’s wealth. By contrast, the poorest 70 percent of the global population—that is to say, 3.5 billion people—control a combined total of around 3 percent of global wealth, or less than USD 10,000 each (Credit Suisse, 2017).

At the same time, humanity today faces dramatic social and environmental problems, to which the global poor are the most vulnerable.

The United Nations defined the Sustainable Development Goals as a framework to tackle these challenges, yet outlines that around USD 2.5 trillion in private investment capital is required, per year, to achieve these goals.

We see, in our research and training, that many wealth owners are aware and mindful of these challenges and want to be part of the solutions and opportunities that we see and hear of every day. Wealthy individuals want to move capital away from investments that worsen these issues, toward investments that help solve them - for the benefit of the poor in particular, and society at large.

However, we also see important barriers to wealth owners doing so—including private banks. Wealth owners often ask us what capabilities their private bank has, and other banks have, or should have, in regard to sustainable finance. Private banks ask us similar questions, wondering how to serve the substantially increasing interest among their clients in sustainable finance solutions.

Thus, we started the “Sustainable Investing Capabilities of Private Banks” project together with a panel of experts and wealth owners in the summer of 2017. The goal is to develop a robust framework to help private investors, and banks, understand the sustainable investing capabilities of private banks.

 

Outcomes to-date

The initial resulting framework, and pilot results from its application to four banks, were published in 2017 in the first report “Sustainable Finance Capabilities of Private Banks: Introducing the Framework”.

With the second report, which was published in September 2018, we discuss the results of the application of the framework to 15 private banks in Europe. We present initial insights, both into individual banks and in aggregate, and a refined guide and questionnaire for wealth owners to use.

The latest report was published in November 2019 and outlined the investing capabilities of 20 European private banks. In addition to this, the report featured special sections on the impact of the EU Action Plan on Financing Sustainable Growth and private banking and its alignment with international environmental goals. Download the online version of the report here  (PDF, 1580 KB)and the printable version here (PDF, 1603 KB).

 

Who this work is for

For private investors, this project provides a frame of reference, helping them to know what to expect from each bank, and tools that help them understand the relevant sustainable investment capabilities. For example, we include bank profiles, and a questionnaire for wealth owners to go through with their own advisors.

For private banks, this project offers an overview of the industry and an opportunity to engage in the question of how to improve sustainable investment offerings specifically for private investors. For example, we include best-practice cases, and an industry capabilities overview.

 

Tool: DIY Questionnaire for Private Investors

As a private investor interested in sustainable investing (SI), it can be challenging to find the right bank.

 

This questionnaire is a spin-off result of the “Sustainable Investing Capabilities of Private Banks” project. It is an adjusted version of the questionnaire we have used to map out SI capabilities of banks. Each question is accompanied with a checklist and a good/bad practice to guide the private investor once banks have replied.

 

We hope this guide assists private investors understand their bank better and foster further development of sustainable investing in wealth management.

 

Download the guide. (PDF, 147 KB)

 

2018 SI BO Guide_titlepage