Dr Agnes Neher
Head of Responsible Investment at Baloise Asset Management
Dr Neher holds a PhD from the German University of Hohenheim, a Diploma in Economics from the German University of Tubingen, and an MSc in Philosophy of Social Sciences from the London School of Economics and Political Sciences. During her PhD she was scholar of the German Konrad-Adenauer-Foundation, and a member of the 'Social Market Economy' Graduate School. As a visiting scholar at St. Andrews University in Scotland, Dr Neher researched ESG risks in the financial markets with the focus on the social reporting activities of institutional Investors, on the relationship between national ESG culture and sovereign bond yields, and on regulation regarding Responsible Investment in the EU. She is also a guest lecturer at the Duale Hochschule in Karlsruhe where she teaches Sustainable Finance.
Baloise Asset Management
Established as the asset manager of the Baloise Insurance Group, Baloise Asset Management has a staff of more than 150 investment professionals. Baloise provides both private and institutional investors as well as pension funds with services to help them reach their financial goals. Baloise Asset Management manages CHF 67.2 billion of assets as of 30.06. 2021 overall of which CHF 12.7billion are Third party assets.
“We can’t wag the finger and tell developing countries they’re not allowed to do what we did. We must find a way to help them to improve and grow because this is what they want.”
Solving the climate change crisis won’t be an easy sell to voters.
Agnes says effective change has to start with a new financial regime. “I think we need the regulator. I used to hope that the market really understands the issue and will seize the opportunities, but looking at the situation today I see that it’s only the regulator that can really force companies and financial players to act.”
Secondly society has to get real, “and I'm not optimistic”, she says. People don't want to hear that they face restrictions on their way of life, and politicians are reluctant to tell them.
Agnes cites a referendum in Switzerland on a package of environmental measures, which was rejected. “I realised that if people can decide whether they have to give up something or not, they will not give it up, they just want to keep what they have. That's why I'm pessimistic that society can really try for change, but being realistic there is bound to be interplay between politics, society and the economy.”
The financial system has responsibility but not enough power yet.
“The financial sector has a lot of responsibility, and with all the money we manage we also have a strong instrument to push with. But at the moment, I think it is often not very understood, what exactly we can do and how we can do it. When we look at the studies of what the actual impact is of all those strategies, it's so disappointing, because although we all claim nowadays to do some kind of responsible investing or to integrate ESG factors, the actual impact on climate change mitigation is minimal, very small. Hence, while we can have a big effect on change, we’re not really putting it into practice yet.”
Sustainable investments can’t be properly identified on our present data.
“We are still fighting to account for good scope one and two numbers, this is not easy work, and on scope three there’s no chance. I work in Switzerland, you would assume it's easy, but no, not yet.”
Carbon accounting which helps us look forward, not just backward, will be a key tool, Agnes says. “We need a quantitative basic in order to implement future strategies, it's a means to an end, to achieve something.”
Ideally investors also need a qualitative check, to understand how the company approaches its challenges, and how it differentiates from other players. The portfolio managers making the decisions on ESG and sustainability need a “deep dive into the whole carbon topic” but the present quantitative data are just not good enough.
In emerging markets we have to be prepared to compromise but still invest.
Agnes says we need to think hard about fairness and equality. “Are we allowed to tell them they should neglect things which we did in the past and where we became rich as countries? This is extremely difficult because of the necessity of urgency. We must somehow find a compromise, and certainly we shouldn’t wag the finger and say you’re not allowed to do what we did. We must find a way to help them to improve and at the same time to grow because this is what they want.
“I think the developed countries have a huge responsibility and it's not enough to tell them please stop now with the coal, if it's the cheapest way they can generate energy. We need a multi-stakeholder dialogue with the private and the public side and we have to bring some financial flows into the developing countries.”
In dealing with stranded assets we have to distinguish between serious promises and empty ones.
“If a company is prepared for the energy transformation, if they are spending enough money researching alternatives, maybe in joint ventures, and we can see this, then I think it's okay to stay invested,” Agnes says. She adds that people in central Europe are already worried about power shortages and being able to keep the lights on.
“We need those companies. But obviously, we must distinguish between those who are really willing to prepare and those that don't really mean it.”
That’s when divestment comes onto the agenda, “because then they should not get the money any more, no way”.
Mitigation and adaptation are both needed right now.
“For the sake of our society and for our grandchildren and great grandchildren, I hope companies focus on the mitigation of negative climate change impact, and they must also look at how they can adapt. But if we just assume that they are sure to do so in 2021, then we have already given up.”
The 2050 roadmap: it’s still possible to be optimistic.
“Generally, I'm a very optimistic person. Yes, there are some points where I'm slowly getting very critical, but for me the glass is still half full. I think it will not go as well as we all hope. We will not be on the 1.5 path, but I still hope that we will keep it to two degrees or a bit more. Hopefully all of us who are convinced of the urgency will be able to have more and more influence.”