Dorothea Baur: «UBS May as Well Finance Coal and Oil»

Written by Samuel Gerber

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Dorothea Baur helps pension funds hone their sustainability strategies. The ethicist tells finews.asia why banks like UBS should keep financing coal producers.

Dorothea Baur, you recently won a mandate to advise one of Switzerland's biggest pension funds. Why do they need an ethics expert?

Interestingly, we encountered each other at an investor conference where a speaker had said that his pension fund is directed by Swiss democracy. I asked for the microphone and said, 'how half-baked is that?'

Why half-baked?

Because it cannot possibly be thought through – for example with last year's self-determination initiative which sought to set Swiss law over foreign laws and thus impacted human rights law which applies the world over.

And they hired you on the spot?

A representative of the other pension fund was also in the audience that day and they contacted me. They wanted to develop a sustainable investment policy and were looking for independent advice in order to clarify for themselves what sustainability means.

You also find the term murky?

For some people, it means calculating carbon emissions. For others, it includes governance and gender diversity initiatives. For yet others, sustainability is a PR joke.

«If the world is destroyed by climate change, your monthly pension doesn't mean much anymore»

There's a lot of confusion among pension funds what sustainability means. My job is to help clients get clarity on what they want to discuss with each other in this respect.

How's that worked out?

I conducted one-to-one interviews with my clients in order to find out where their consensus was. By that, I mean what they hoped for from sustainability – and what they feared. Many of them are fearful of breaching the duty of care guidelines.

Those who aren't considering sustainability aren't fulfilling their duty of care to their policyholders?

This is a huge debate outside of Switzerland too. Here, pension funds need to maintain the standard of living for their beneficiaries. It's primarily a monetary obligation. But in a world that destroyed by climate change, a monthly pension payout doesn't have much value anymore.

What does that mean?

Those who invest in firms which foment climate change are putting the value of their pensions at risk. In the U.K. for example pension funds have to actively justify why they aren't investing along sustainable criteria.

Swiss finance will probably adopt the EU sustainable finance action plan. The price of clear standards and rules?

We urgently need standards. If the EU establishes them, Swiss pension funds won't be able to get around also being subject to them.

«Today's young climate strikers are the banking clients of tomorrow»

Personally, I would like pension funds to define and internalize their own values – instead of having these forced on them.

Is finance underestimating the youth climate strikes as well as victories for environmental-focused parties in Europe?

The climate youth have a long-term perspective – ironically, they have that in common with the pension fund world. That's why I see synergies here. By contrast, the finance industry is frequently short-term focused, so the protests are a challenge for them. We need to clearly recognize that today's climate strikers are tomorrow's banking clients and employees.

What Swiss firms are role models – except Alternative Bank, where you are an independent ethics expert?

I don't want to advertise individual firms. Most banks and many financial technology firms have various sustainable products. The hurdles for even retail clients to invest in them have fallen.

UBS has pledged to double its assets in these strategies by 2020. How sustainable are these industrial-style promises?

Scale is key in order to have an impact, but we need to ask ourselves what exactly we are scaling.