Patrick Kindle: «ESG Delivers Overperformance»
The investment strategist is convinced ESG will weather the current political storm. In this interview with finews.asia, the Liechtenstein banker criticizes the behavior of major institutions — and explains how sustainability and performance can go hand in hand.
Patrick Kindle oversees key elements of investment strategy at Neue Bank in Vaduz.
Speaking to finews.asia, he outlines how the Liechtenstein-based private bank uses a proprietary traffic light system to navigate uncertain geopolitical terrain — and why the ESG focus of his fund is more than lip service. Rather, it’s a disciplined, profitable investment strategy.
Kindle is the mastermind behind the firm’s in-house sustainable equity fund, whose investment strategy he first developed as a university thesis over 15 years ago. In this conversation, he discusses climate targets, empowered clients, regulatory burdens, flawed ratings, and defense stocks in the ESG context.
Mr. Kindle, which market developments are you currently paying the most attention to?
Right now, it’s all about politics, primarily about Donald Trump and his unfortunate, so-called «Liberation Day» — another round of tariffs. For us, it’s clear: With all his uncoordinated pronouncements, he’s already become a political lame duck. His unpredictability, combined with institutional tensions like the chat scandal involving his ministers, is weighing on the markets. Add to that other geopolitical crises: Erdogan’s authoritarian posture in Turkey, unresolved conflicts in the Middle East, and the ongoing war in Ukraine.
Since Donald Trump took office, European stock markets have outperformed their US counterparts.
That’s right. Europe has recently decoupled from both the US and China. While the most recent US earnings season disappointed and failed to deliver any impulses, we’ve seen a remarkable comeback in European equities. The «Magnificent Seven» are starting to look more like the «Maleficent Seven» — momentum is shifting, and value is currently winning out over growth.
«With all his uncoordinated pronouncements, Trump has already become a political lame duck.»
Neue Bank uses an in-house traffic light system to guide equity entry and exit points. What’s the thinking behind it?
Our investment traffic light is based on six core components: macroeconomics, valuations, market trends, volatility, technical analysis, and behavioral finance. Each is analyzed independently to generate a partial signal. The sum of these signals determines the current traffic light color — essentially our aggregated market outlook. It’s not about predicting short-term fluctuations but identifying major market turning points — primary trends. The strength of the system lies in the discipline it brings to the process, without being dogmatic. It’s not an oracle — it’s a risk compass.
And where does the light stand now?
At the beginning of April, it was still on yellow. That means: we remained invested, but with heightened attention. Following the recent market turbulence, it has shifted to orange. This means we are further reducing risks — specifically, our equity allocation. For several weeks now, we have been scaling back our equity investments in favor of safer bonds, primarily government bonds. In conversations with clients, we emphasize: the traffic light helps us avoid emotional overreactions. We don’t exit based on gut feeling, but because data and indicators are sending clear signals.
Which markets does your traffic light system focus on?
The focus is clearly on global equities, especially US markets — still the world’s most important. If America catches a cold, others get the flu. Many of our indicators are US-based or highly correlated with US data. We analyze them daily, weekly, or monthly, depending on how quickly the data changes. Some are live; others lag slightly. The key is interpreting them in combination.
You also founded the Champion Ethical Equity Fund. How big is it today?
The fund currently manages around 85 million Swiss francs. It has grown steadily over the years — a clear sign that our approach resonates and that demand for credible, climate-focused investment solutions is rising. That’s also reflected in winning both the German and Austrian fund awards.
«Demand for credible, climate-focused investment solutions is rising.»
What makes the fund special?
Its outperformance relative to the MSCI World! Our fund blends climate action with returns — it’s not an either-or. We follow the EU Paris-Aligned Benchmark, apply strict exclusion criteria, and require a minimum ESG rating of «A» per MSCI. That ensures sustainability — while leaving room for a robust investment strategy.
How does your stock selection process work?
It’s a two-stage process. First, we exclude companies that don’t meet ESG rating thresholds or violate EU regulations — such as fossil fuels, defense, and other controversial industries. All holdings must comply with the «do no significant harm» principle. Regulators also require that sustainable funds invest in companies that «do something good.» For us, that means companies must be working to reduce their CO₂ emissions.
How many companies pass that filter?
Globally, about 500 to 600 companies would qualify. But the fund only holds 30 stocks.
How do you narrow it down from 600 to 30?
Through a quantitative selection process using our proprietary system — which we also use outside of ESG. It factors in financial metrics, growth prospects, valuations, and momentum. We don’t just look at price/earnings ratios — we use the PEG ratio, which includes expected earnings growth. We also prioritize dividend growth and stable cash flows. Our goal isn’t broad market exposure — it’s to identify the best mix of sustainability and financial quality.
Are there any standout stocks you’re particularly proud of?
Nvidia is a great example. It’s been in the fund since its 2017 launch — and has gained over 4,000 percent. Of course, we had to rebalance along the way to meet weighting limits. But Nvidia exemplifies what we aim for: companies that are both sustainable and high-growth. Another is Brambles, an Australian packaging firm that excels in resource efficiency and ESG ratings. We include companies like these alongside more familiar names.
«Nvidia has been in the fund since its 2017 launch.»
How is the fund’s regional allocation structured?
We are deliberately underweight in the US — currently below 50 percent, whereas the MSCI World has around 70 percent US exposure. The remainder is spread across Europe and other regions.
And the fund’s carbon footprint?
Significantly lower than that of the MSCI World — about 85 percent less. We also track an «implied temperature rise» metric: our fund currently sits at 1.7 degrees Celsius, with a target of 1.5. By comparison, the MSCI World stands at roughly 2.5 degrees. For many investors, that’s a compelling reason to choose us.
Are ESG products still in demand given today’s turbulent environment?
We continue to see solid demand — from both institutional and private investors. Of course, clients are asking more questions now, especially given the political debates around ESG. But we welcome that: our approach is fact-based, transparent, and verifiable. Once clients see how much a thoughtful ESG fund can reduce carbon — without sacrificing returns — the value becomes clear.
What’s the biggest challenge in implementing ESG strategies?
The inconsistencies in ESG ratings. Clients often compare them to credit ratings — but credit ratings are based on highly standardized quantitative models. ESG ratings always include qualitative, subjective elements. That leads to discrepancies: a company rated «AA» by MSCI might receive a much lower rating elsewhere — or vice versa. These differences often prompt discussions, especially when a client questions why a certain stock is in the fund despite a lower ESG score elsewhere.
What other challenges do you face?
Regulatory reporting is another major issue. Under the EU’s SFDR regulation, the requirements for smaller institutions like ours have skyrocketed. The reporting is complex, granular, and constantly evolving. The bureaucratic burden is heavy — and unfortunately, it often distracts from what matters: delivering sustainable returns with positive impact. We’re hoping the EU’s upcoming omnibus package brings some relief here.
«We’re hoping the EU’s upcoming omnibus package brings some relief regarding regulatory reporting.»
One increasingly debated topic is defense: Can it be ESG-compliant?
We’re not allowed to include defense stocks in the fund — per the EU rules for Article 9 products. And frankly, I wouldn’t want to. In my view, defense has no place in a sustainable fund. Sure, the debate has become more nuanced given the European security context. But for our fund, the rule is clear: no weapons, no fossil fuels, no controversial industries. It’s a different story in our discretionary mandates. If a client wants a sustainable portfolio but sets different priorities — say, allowing certain exceptions — we can craft a tailored solution. That’s the strength of a private bank.
ESG is under political fire in the US, especially from the «anti-woke» movement. How do you handle that?
I personally believe that if we don’t reduce CO₂ emissions, we’re heading toward severe ecological and economic risks. ESG investing is a tool to mitigate those. But — and this is important — we’re not here to preach. We don’t tell clients: «You must invest this way.» We say: If you’re looking for a clear sustainability strategy, we have a solid product with good returns. If your priorities differ, that’s fine too. Our job is to act as a sparring partner — not a moral compass.
Still, it’s striking how quickly sentiment has shifted on ESG in the US.
What bothers me is that some major players are now backing away from earlier ESG initiatives just because of political headwinds. That strikes me as opportunistic.
Patrick Kindle is Deputy Head of Asset Management at Neue Bank in Vaduz. He studied banking at the University of Liechtenstein. In 2008, he developed a sustainable investment strategy as his master’s thesis, which the bank initially used for discretionary mandates and launched as a public fund eight years ago. Kindle is a member of Neue Bank’s sustainability and investment committees.
