Sustainability in 2021
In our latest podcast, Brian Blackstone catches up with Lydie Hudson, CEO of Credit Suisse's Sustainability, Research & Investment Solutions function about the outlook for sustainability in 2021.
In a year marked by the devastating consequences of COVID-19 on public health, families and economies, sustainability stood out as a positive theme. If anything, the pandemic fast tracked rapidly growing developments in how investors and the public prioritize climate change and social issues.
"The rate of change will only accelerate. It's a disruptive space, but we are very dedicated to being an active participant in facilitating this transition both with our clients and for our firm overall," Hudson said.
Credit Suisse created SRI this summer at the Executive Board level to infuse Environmental, Social and Governance standards across research, advisory, investment banking and wealth management, along with the goal to provide 300 billion Swiss francs in sustainable financing over the next 10 years.
On December 15, Credit Suisse announced fresh initiatives including:
- The development of science-based targets within the next 24 months to achieve net zero emissions from our financing no later than 2050, with intermediate emissions goals for 2030
- Aligning our financing with the Paris Agreement objective of limiting global warming to 1.5°C
- Putting sustainable investment solutions at the core of our offering to wealth management and institutional clients
- Mobilizing capital to support our client's transitions
- The establishment of a new Sustainability Advisory Committee at the Board of Directors level
"We believe that the transition actually will lead to a lower cost of capital and a lower cost structure in the future. But it doesn't come for free," Hudson said. "So we as a bank consider it part of our responsibility and part of our opportunity to help facilitate the transition by mobilizing capital and assisting our clients in their transition strategies."
Here are Hudson's other thoughts on 2021 and beyond.
The US and the Paris Agreement:
"I think the US will sign up again. But it goes further than the Paris agreement. I think to have the United States' full set of infrastructure and government moving in the direction of ESG adoption or Paris alignment would really be pretty material in the sense that it would further incentivize capital to flow either to corporates that are financing their transition or institutional wealth management."
Sustainability and the economy:
"Until the vaccine is rolled out in a statistically relevant and meaningful manner, we're going to continue to see pretty severe repercussions. I expect that, on balance, funds are going to flow to ESG-friendly mechanisms because in a world where so much disruption has been had, I think people are going to be looking for as smooth of a landing as possible or as much of a smooth recovery as possible."
One key theme for 2021:
"Look for the world to become a little bit more cohesive either on disclosure topics or how to talk about something being 'sustainable' or a bond being a 'transition' bond. And while that may seem quite legalistic or jargony, it's actually where from a financial services perspective we have an opportunity to play because our clients are going to want access to this intelligence, these insights, these products and services."