LGT: Committed to sustainability, driven by innovation

SUSTAINABLE investing has been growing in popularity among wealthy investors in Asia, driven by their growing desire to help solve global challenges, such as climate change and inequality. Investors today are interested in the real-world impact that can be realised when investing in sustainability-related assets.

The next generation of leaders in Asia, who are more socially conscious, have also recognised these opportunities and are driving a shift in mindset and capital allocation towards sustainable investments. This trend is expected to accelerate as 35% of Asia's wealth is projected to transition to the hands of millennials in the next five to seven years.

"Already, a majority of investors in the region allocate some of their equity portfolio to a thematic approach, and are seeking to increase allocation in themes related to climate change," says Mariam Ashroff, Head of Sustainability Management, Asia at LGT Private Banking.

With more than 15 years of experience in sustainable investing, LGT Private Banking is at the forefront of the field. The bank today is recognised as an expert in sustainability-related solutions, delivering a comprehensive range of public and private market offerings in ESG-focused investments, impact investing, and venture philanthropy.

Indeed, the roots of LGT's dedication to sustainability stretches back to the core values of its owners, the Princely Family of Liechtenstein, whose 900-year history reflects a long-term and sustainable approach. This mindset has translated into investment solutions that aim to generate and preserve value for its clients over multiple generations.

This unwavering commitment to sustainability has been the driving force behind LGT's transformation into a global player in wealth management. Today, the bank employs around 4,000 professionals and manages over US$300 billion worth of assets across 25 financial centres globally.

Holistic solutions

LGT understands that sustainable investing is not a one-size-fits-all approach; which is why the bank offers a range of tailored products to meet the specific needs of its clients. For instance, the bank's solutions may focus on a particular sustainability theme, such as renewable energy, sustainable food systems and healthcare innovation.

LGT is also a pioneer in impact investing, which goes one step further by intentionally creating positive, measurable, and long-term social and environmental impacts alongside financial returns. Through a partnership with LightRock, a global private equity platform, LGT is able to offer its private banking clients opportunities to invest in private companies with innovative business models tackling the world's most pressing challenges by delivering tangible societal or environmental benefits.

As a pioneer in the field, LightRock manages USD 3 billion in assets under management and a portfolio of over 80 high-growth companies globally, making it one of the largest impact-focused growth portfolios across Europe, Latin America, and India. Some of its portfolio companies have since attained unicorn status, including CMR Surgical, which increases the availability of minimal access surgery through next-generation robotics.

To make these impact investments more accessible to private banking clients, LGT and LightRock have developed a range of investment solutions which are met with enthusiastic investor demand. Such solutions enable LGT clients to directly invest in promising sustainable private businesses around the world; an opportunity usually reserved for institutional investors.

Ensuring transparency

To ensure the transparency and integrity of its investment process, LGT Private Banking developed its own proprietary ESG tools to accurately assess and measure the impact of its investments.

One of these tools is the LGT ESG Cockpit, a systematic evaluation system that assesses the sustainable credentials of businesses and countries in equities, bonds, and funds. It then indexes the material ESG factors of each proposition on a scale of one to five stars, indicating the low to high sustainability quality of the investment. This index, known as the LGT Sustainability Rating, has underpinned the development of a wide range of sustainable investment solutions that are made available to LGT's clients.

For instance, the rating and underlying ESG metrics are at the heart of the bank's investment selection process for sustainable discretionary mandates, giving clients the confidence that their investments are aligned with their sustainability goals and values.

LGT recognises that preserving biodiversity and natural capital is crucial to the long-term growth of the global economy. While it is currently extremely difficult to analyse biodiversity due to ecosystem interconnectivity and dependencies, LGT evaluates biodiversity risk in its investment portfolio using the LGT ESG Cockpit's environmental metrics. As biodiversity data and research continue to develop, the bank intends to launch nature-positive investment solutions.

In combatting the effects of climate change, LGT recognises that carbon reduction alone is not sufficient. It is crucial for companies to actively invest in technological and nature-based carbon removal solutions. In ₂021, for instance, LGT signed a 10-year agreement with Swiss company Climeworks to remove 9,000 metric tons of CO2 from the atmosphere. The bank's investments into carbon removal is in line with its own commitment to reduce the net emissions of its operations and investments to zero by 2030.

LGT's strategy to achieve this goal comprises three elements: Educating clients about climate risks in their portfolios, identifying long-term investment opportunities in low-carbon companies, and actively engaging with investee companies on their Net Zero targets.

Says Ms Ashroff: "LGT has committed to its net zero goal not only to address the climate crisis, but because it represents an opportunity for our clients to better manage risks in their portfolios, and identify long-term growth opportunities amid the global low-carbon transition."

Brought to you by