Money moves the world, and it's up to us to use it responsibly
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In an interview with swissQuant, Antoinette Hunziker-Ebneter , founding partner and CEO of Forma Futura Invest AG and President of the Board of Directors of the Berner Kantonalbank AG (BEKB), explains her view of sustainable investing, what inspired her to found Forma Futura, and her views on the challenges of sustainable investing today.
Today, sustainability is a hot topic in the financial sector. You were ahead of your time when you founded Forma Futura. What inspired you to found Forma Futura? What were particular challenges or milestones that marked the early years of the company??
The idea came to me during conversations with clients, with entrepreneurs who run their businesses based on values. They cared about how they treated their employees and how they used resources such as water and energy. It no longer made sense to me that their money was being invested without first thinking about the consequences.
Moreover, as a banker and stock exchange manager, I have seen how money moves the world and how it's up to us to use money responsibly.
That's when I decided to live and work only with people who share the same values and to work together with others - employees, clients, members of management, boards of directors and shareholders - to promote the responsible use of money for a better quality of life, and to develop instruments and show ways to make this transformation possible.
One of the big earlier challenges was the financial crisis of 2008, which occurred only two years after we founded Forma Futura. Trust in financial institutions was very low at the time and so it was a less than ideal time to be a young company in this industry. However, my fellow co-founders and I persevered and were patient with our business to take off. We continued to put in hard work, to uphold our values, and now we are thriving.
You once said in an interview "sustainability is not a trend, it's a necessity" - could you elaborate on that?
Yes, I have said that many times, and it's in fact a core belief of mine. This distinction might seem trivial at first, but the closer we look, the more we realize that it's a fundamentally different perspective on sustainability.
For myself, my founding partner at Forma Futura and all of our employees, sustainability is a necessity. This means that we are deeply aware of the social and ecological challenges the global society faces, and we are convinced that we can only master those challenges if we undergo a fundamental transformation towards sustainability.
Viewing sustainability as a necessity represents the inside-out perspective. It's about contributing to solutions. A call to action.
If sustainability merely is understood as a trend, this puts one in a more reactionary, passive position.
Trends come and go. They are only temporary, not permanent change. And if we want to tackle climate change and biodiversity loss, reduce our material footprint and improve human rights, well-being and equal opportunities, we need lasting transformations.
Sustainability is one of Forma Futura's core values. How does Forma Futura measure and evaluate the impact of its sustainable investment practices??
At this time, we do not quantitatively measure the impact of our sustainable investing practices. We are very conscious of the term "impact", but we understand it a bit differently than many of the newly emerging impact investors.
At Forma Futura, we make sure to minimize the negative impact of our investments by applying multiple selection strategies to the potential investments. We apply a best-in-class approach as the first selection strategy, then we perform a negative screening that consists of exclusion criteria, critical themes and norm-based screening.
However, the impact of our investments comes mainly from our post-investment approaches. Probably Forma Futura's greatest direct impact is through dialogue and engagement with companies.
Our sustainability team systematically engages with companies during the analysis process, either to ask further questions about their sustainability performance or to sensitize them to problematic aspects and opportunities for improvement.
We are also committed to sharing our knowledge through a variety of channels. Our sustainability analysts regularly publish background papers on various aspects of sustainability. We share specific content on LinkedIn and also give presentations at universities or events in the field of sustainable investing.
Since 2011, we have been preparing voting recommendations for our clients for the general assemblies of all Swiss companies in which we are invested. In this way, we enable our clients to directly influence sustainable development of companies. The reason why we do not quantitatively measure the difference these activities make is in part because such a task is practically impossible. Our world is infinitely complex, and one cannot reduce this complexity to a simple cause and effect.
We seek to be part of the solution, but to us the sustainability transformation is not about saying "this change happened because of my effort", but rather "we did this together".
How transparent and customized can ESG products or investments be? What are your customer's needs and concerns, and how are you addressing them?
ESG products and investments should strive for maximum transparency while still keeping all communication, reporting and declarations understandable for the intended target audience.
At Forma Futura, we provide transparent information to our clients on what companies are in their portfolio and are able to explain in detail the reasoning behind the choice of those companies.
Regarding customization of ESG products and services, this element depends highly on the financial service provider. Forma Futura sets up individual portfolios based on the client's risk profile, their chosen investment strategy, as well as their personal values.
Our approach combines a series of sustainability instruments: Negative and positive screening, an in-depth qualitative analysis, as well as dialogue strategies and results in an investment universe of around 250 companies.
If a client has specific additional exclusion criteria that he or she wants to apply, we discuss these together and educate the client on the implications for their portfolio. If the client insists on having these criteria applied, he or she can make that decision fully informed.
In general, our clients are highly interested in the topic of sustainability, and they want to know that their money is managed and invested in a manner that is consistent with their values. We are in continuous dialogue with our clients, which not only contributes to their knowledge about sustainability but also shapes the ongoing development of our offer of Forma Futura.
Whether it is during the performance reviews or in our semi-annual reporting documents, our clients receive regular "deep dives" on current topics related to sustainability such as deforestation, deep sea mining, hydrogen or renewable energies.
How has sustainable investing changed since you founded Forma Futura in 2006? What were the challenges back then, and where do you see them now?
When we founded Forma Futura in 2006, the biggest challenge was demonstrating that it was indeed possible to integrate sustainability into investment decisions and still generate market-rate returns.
Another big challenge was convincing the financial industry that sustainability was not a short-lived trend or a green "craze". It was serious business and an absolute necessity in order to align financial flows to contribute to addressing the global challenges we currently face.
In recent months, there have been repeated accusations of greenwashing against the financial industry from civil society. This is a major challenge because the credibility of the financial sector with regard to sustainability is at stake. The problem is that sustainability is not a protected term, and this can and is also used for marketing purposes. The financial sector is no exception, and we already know the problem from food or cosmetics industry.
The entire financial sector is called upon to maintain the credibility of the term "sustainability" through transparency and honesty.
From the customer's point of view, it's important to ask how exactly a sustainability approach is defined and why the corresponding criteria are applied. Check the information and explanations for authenticity, plausibility and credibility.
I expect the euphoria for sustainable investments, which has been in place since around 2016, will gradually fade and that we will enter a phase of disillusionment. This means that we will begin to realize that the billions invested "sustainably" have not managed to fundamentally change business as usual, and that we need to make more and decisive action in society as well as in economy.
This also means that the content and impact of sustainable investments will come under close scrutiny, and we can expect greater intervention from the regulatory bodies.
We are entering a phase in which the focus is on greater professionalism in the field of sustainable investment and proverbially speaking – the wheat is being separated from the chaff.
Mastering the complexity of the sustainability topic and at the same time not overcomplicating its practical application will be key – and swissQuant is a known expert in the area of complexity.
What ambitions does Forma Futura have going forwards? Are there any specific goals or objectives you are trying to achieve in this industry??
Our overarching goal is to contribute to sustainability transformation of the financial industry. We do this, on the one hand, by investing the money entrusted to us responsibly, with the utmost prudence and an integrated, comprehensive sustainability analysis process.
On the other hand, we continuously share our expertise in the various areas of sustainability, whether it be on a panel, at a conference, at a lecture at university or today with you at swissQuant.
Larissa J?ger , Ambassador and Private Clients Advisor at?Forma Futura Invest AG, at swissQuant's Quant Lunch event on "Sustainability in Asset Management".
You have a diverse professional background and extensive experience in banking and risk and wealth management. What has nurtured your approach to enterpreneurship and influenced the direction and strategies of Forma Futura?
Who I am is the result of all of my previous experiences, both personal and professional. I probably inherited my entrepreneurial spirit from my parents and my grandfather, who was the son of a farmer and created his textile business from the ground up.
Even as a child, my parents encouraged me to stand up for my own opinions and to honor and pass on values such as integrity, discipline, responsibility and, above all, respect for people, animals and the environment.
These values also shape our company culture at Forma Futura. When I was head of the Swiss Stock Exchange, I saw the influence of responsible corporate governance, and what can be achieved through the concentrated power of collaboration.
My career has taught me extremely valuable lessons:
What are some of the biggest lessons you have learned during your journey as founder of Forma Futura? What advice would you give to aspiring entrepreneurs starting a business with a strong focus on sustainability and social impact?
As a 26-year-old foreign exchange trader, my boss at the time said to me: "You only need to succeed in 70% of your endeavors. In the remaining 30% you are allowed to fail."
This sentence gave me the courage to present innovative ideas in a risk-conscious manner and to realize them with teams of experts. It was also my motto during the time of my professional self-employment when I was providing financially for my family.
To aspiring entrepreneurs who are seeking to start a business with a strong focus on sustainability, I would say: Always stay true to your values and surround yourself with people who believe in you but also constantly provide you with constructive criticism. Never think that you have seen or thought of everything. Be open to feedback, critical questions, and new ideas.
The best business ideas in sustainability harness the collective wisdom and creative power obtained through collaboration.