Solutions, not activism: Become green or die trying

Climate change is a global problem, but the solutions begin on a local level. Every individual, every company and every municipality need to do their bit to save natural resources and reduce carbon emissions. There is no doubt that Switzerland can maximize hydropower electricity and switch from cars to trains by the thousands; however, a small country like ours will hardly have a noticeable effect on global warming. Even so, setting an example for others is a responsibility we should all take on.    

If we truly want to make a difference, we need to focus on our fortes. Not only can we become a leading market, but also a leading exporter of climate-friendly solutions.

This is in the very interest of Swiss companies; saving the climate and earning money are not mutually exclusive.

Green capitalism is possible if sustainability becomes a “business model” by which society and the economy equally benefit. This was also one of the major topics at the WEF in Davos this year; stakeholders and their interests move to the center while companies need to adapt.   

In my mind, there is only one way for us to become the global center of excellence and provider of sustainability solutions. We must focus on our three strengths: bold ideas, technological know-how and easy access to capital. All this needs to be embedded in a political framework that allows for innovation while also creating incentive for more sustainability. In each of these areas, we are strongly positioned in Switzerland. However, we have yet to succeed in bringing together these different elements; this is what we need to do now in order to create a “big bang” and establish Switzerland as a global cleantech location.  

Insane ingenuity: Filtering CO2 from the air 

Let’s begin with the ideas. It’s not surprising that Swiss universities such as ETH Zurich enjoy a high reputation for their research; they are also leading the way when it comes to transferring these research findings into business models. According to the Swiss Venture Capital Report, there have been 30 spin-offs from ETH last year alone, six of which were focusing on sustainability. A true pioneer among the green entrepreneurs and a real success story; this is Climeworks, founded at ETH in 2009. The young company has specialized in a technology for filtering CO2 directly from the air and storing it underground. Since 2018, Climeworks has also supplied some of the CO2 needed to carbonize drinks for Coca Cola as part of a joint project. We need more of such founders;

only “insane ingenuity” will help us find the vital solutions to fight climate change.  

The second factor is technology know-how. If you want to turn your ideas into reality, it’s difficult to get past advancements such as AI. Many of the solutions against climate change will be based on technology. This spans from connected agriculture to reducing energy consumption in manufacturing, as well as managing complex supply chains in the circular economy. IT firms play such an important role in the practical realization and scaling of climate-friendly ideas, both from academic research and from ambitious cleantech entrepreneurs. This is one of the reasons why Accenture has been a proud partner of Climeworks since April 2018.  

With regards to technology, Switzerland is not only well positioned in terms of research. Furthermore, our manufacturers are already focusing on highly complex products at the upper end of the value chain today. Our innovative power was and still is the most important foundation of our prosperity. Today, when technology-based solutions for protecting the climate are in high demand, our competitive advantage has only become greater.

For a country with a strong currency and minimal natural resources, “green innovation” is the only logical strategy.

With this we can become successful true pioneers and first movers on a global scheme.  

A highly specialized workforce is equally crucial. They do not only develop new technologies; they also know how to utilize them to solve problems. Combining human expertise and the technical possibilities of our time brings up the "big" solutions which we now need in the race against climate change. Switzerland is indeed well-positioned in this field as all global rankings point to the availability of highly skilled experts.   

Money saves the world 

The third aspect is ease of access to capital. This will fund cleantech start-ups, scale green technologies, and support companies with the transformation of their business models toward higher points of sustainability. The finance sector plays a significant role here as it has the greatest influence on where investors put their money. As one of the most important asset management locations globally, Switzerland must be at the forefront of sustainable investments.  

However, the initial situation is as follows: for a cleantech it is still challenging to attract investors, especially in the early stages. Is green finance just a hype without substance? Of course not. Ethical principles and increased awareness of the environmental impact of investments play a focal role in capital formation today, but not only there. More generally, ecology has long since developed from an individual niche topic to a global social movement. Financial service firms have not yet fully adapted to the changing values of their customers. One thing they now need to act on is becoming more transparent about the environmental impact of investments, such as CO2 emissions or air and water pollution.  

ESG is a first step 

The EU’s ESG disclosure requirements (environmental, social, governance) for the financial industry, which will also be implemented in Switzerland, are the first step in the right direction. Under the new regulation, it will be mandatory for everyone in the market to disclose the ecological and social footprint of investments in a binding and explicit way. For example,

clearly defined benchmarks help investors understand what the carbon footprint of their portfolios is. 

In addition, many institutional investors, especially in the USA, are building up pressure themselves by urging companies to take sustainability seriously and anchor it firmly in their corporate strategy. In the future, the environmental rating of a firm could be just as critical for investors as its creditworthiness.  

Accenture supports banks and asset managers in Switzerland with a dedicated sustainability team in our Capital Markets Practice. For example, the team supports our clients with sustainability reports. By no means is this a trivial task; above all, the challenge is to determine which data should be used to rate an investment according to environmental criteria and decide which sources to use.  

Ecosystem: Bringing together ideas and capital 

So far, many institutional investors have successfully identified suitable investment opportunities but less successfully chosen sustainable companies. The same applies to banks that launch green funds but often do not consider young start-ups and their climate technologies in the portfolios. Why? The answer is simple; they do not know them.

Therefore, we need more platforms and ecosystems in which investors, banks, fintech and cleantech entrepreneurs come together. They are capable of drawing attention to “crazy” ideas to stop climate change among the rather conservative financial community.

Switzerland is ideally positioned to accommodate such platforms and ecosystems, as all the mentioned players are already present in a critical size in this country. 

Conclusively, the political framework is fundamental. Regarding the introduction of a CO2 tax on fossil fuels, such as heating oil and natural gas, Switzerland was one of the first countries to implement this in 2008. It was really a pioneer in many ways; fixed reduction targets were defined, and the level of the CO2 tax was then repeatedly adjusted when targets were missed. The discussions right now is about spreading the tax scheme to other areas such as road and air transport. However, if and to what extent national approaches to greenhouse gas pricing will have an effect also depends on whether other countries, particularly those in our immediate vicinity, follow suit. This is currently not the case; although many countries are considering the introduction of new environmental taxes, they are shying away from taking drastic action for fear of a competitive disadvantage.  

Therefore, it is imperative that private companies take the initiative and investors increase pressure on companies with a negative CO2 balance. Politics should focus on creating reasonable motivation to support environmentally friendly innovation, thereby creating investment security. Under no circumstances should bans and inefficient subsidies be the answer, as they will only limit progress and innovative solutions.    

The activists might have banners, but business offers solutions.

The Swiss economy, including financial service providers, cleantechs and IT companies, must now take the responsibility. I am convinced that this will happen in an efficient manner. This requires not only the proper framework conditions but also a much closer alignment among the different players. If we tackle a climate-friendly future now, we will not only make a global contribution, but also help Switzerland to achieve its very own "green economic miracle".