A sustainable future Sustainability for foundations

Sustainability for foundations

Now is the time for foundations to align their investment strategies with their missions and include sustainability criteria in their investment strategies. As recent developments have led to higher expectations and the demand for transparency, sustainability is vital.

A holistic approach to meeting goals

Switzerland is home to over 13,000 charitable foundations, with total assets exceeding 70 billion Swiss francs. The Swiss marketplace for foundations has traditionally been characterized by low regulation and high donor autonomy. But society’s expectations have started to change. Stakeholders are demanding more transparency, and they want to be assured that the foundation lives its mission. Moreover, it is expected that a foundation’s investment strategy include environmental, social, and governance (ESG) criteria.

According to the Center for Philanthropy Studies (CEPS) at the University of Basel, 30 percent of charitable foundations do not have a formulated investment strategy. Even more – 70 percent – lack a defined target return.

Finding the right investment strategy

In light of this trend, the Swiss Foundation Code 2015 highly recommends the alignment of the foundation’s investment strategy with its mission, as well as adherence to environmental, social, and governance (ESG) criteria in its investments – in short, sustainable investment. In particular it says that the foundation board should examine regularly whether the results of asset management are appropriate and whether the investment strategy is in line with the foundation’s objectives (recommendation 28).

To construct a sustainable portfolio, both negative and positive screening is applied through four sustainable investment strategies.