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In probably every investment book you can find the reference to a long-term horizon when investing. The background to this recommendation is the fluctuations in the stock markets, which can be outweighed by long-term investments. Those who think and act for the long term will perhaps also think about topics such as the sustainability of their financial investments. Freely based on the quote by Marie von Ebner-Eschenbach "what we do today decides what the world of tomorrow will look like".
At 1st part of our sustainability series we talked in general about the topic of impact investing. Today's 2nd part is intended to answer further questions on the topic of impact investing and also provide a first insight into the pension solution of FREYA 3a. For this purpose, we have once again called on the team of experts around FREYA Savings for an interview:
Co-Founder Freya Savings
Advisor investment solutions
Cantonal Bank of Graubünden
There are already a few digital pension solutions in the Swiss market. What inspired you to launch FREYA Savings and what is FREYA 3a actually??
Roman: In principle, FREYA is about pension provision with a sensible return. Internally, we also call this "combining sense & profit", because sustainability and attractive performance are very closely linked.
The central insight behind FREYA is that today's financial decisions also have consequences for future generations and must therefore be included in our investment strategy. Accordingly, all decisions are not just about the present, but also about the future for everyone. With FREYA 3a, we are applying this knowledge for the first time in the area of tied pension provision (pillar 3a).
FREYA 3a is therefore about making sustainable pension provision as simple, clever and sensible as possible for everyone. Our customers can independently manage their retirement provision and at the same time achieve social, ecological (or) and societal added value with responsible securities investments. To this end, we have designed a customised Sense Profile that makes it easy to focus on important parts of a sustainable economy. The amount of capital needed to transform for a more sustainable economy, such as to positively impact climate change, is enormous. It is important that all pension recipients can make their contribution and at the same time save and invest responsibly with a good return.
Personally, I like to look closely at where the money from my investments ends up. However, I am not sure if this has a broad value. The vote on the sustainable financial centre was not adopted in 2020. Was Switzerland not yet ready for the topic?
Roman: In Switzerland today, ecological, economic and social sustainability is relatively important for a broad section of the population. Sustainability is no longer an issue for "Birkenstocks" and "eco-fundis".
Sustainable action and investment pays off! There is a clear return on investment if we take all long-term consequences into account in our actions and ensure that all stakeholders are well off. Personal responsibility instead of prohibitions and laws: Perhaps not everyone sees it that way yet - but the trend towards more sustainability in the financial centre will continue to grow strongly due to its social relevance.
So the demand is already there and the interest in the topic is growing. What is your answer to this and what does the FREYA 3a strategy look like in concrete terms?
Rolf: In our investment strategy, we have defined five central sustainability focal points which our investors can (can) select directly via their sense profile and adopt in their investment strategy.
David: The aim of market participants such as FREYA is to raise awareness among Swiss pension fund holders of the positive impact of sustainable investments on financial, environmental and social returns. We can really make a difference with our pension money if we invest our pension capital wisely!
Assuming that all 3rd pillar funds in Switzerland were invested sustainably - what would be possible?
David: Today, we are only beginning to see the impact of sustainable investment. Of course, it is relatively easy to calculate how much CO2 a flight to Spain causes. However, CO2 data is not yet available for companies across the board in sufficient quality. This should now change with new regulatory requirements. More reliable CO2 figures will enable us to separate the good from the bad. Also, many companies have only recently defined their sustainability targets. So we are at the beginning of a very long development, which makes us very positive.
Roman: To perhaps give an order of magnitude of what the impact of Pillar 3a would be if it were invested sustainably: the current volume of pension assets is CHF 130 billion. If we compare this with the GDP of a national economy, then this roughly corresponds to a country like Kenya, for example. Kenya has 54 million inhabitants. In other words, if we were to manage our Pillar 3a pension assets in Switzerland in a sustainable manner,
would be equal to the economic benefit of the Kenyan economy in one year. Accordingly, the possibilities are huge!
Do you think you will also get customers who have more sense than profit in mind? So also interested parties who are rather activists than investors?
David: Our target group is all customers who want to secure their pension provision. Activists are more likely to resort to other means to achieve their goals. Nevertheless, we believe that a certain amount of discourse is good and promotes the topic. In our opinion, however, a sustainable pension solution should not be too extremely activist, because ultimately, in order to secure private pension provision, an optimal return should be generated with investments in sustainable, responsible and future-oriented companies.
Roman: And yet there is still no pension provider that addresses the need for sustainability as specifically as we do. Doing something small - like pension provision - can have a big impact. After all, in Switzerland we are talking about over 100 billion Swiss francs that have a considerable impact when invested sustainably. You can either put this money into a 3a interest account or you can invest it sensibly and make a positive difference. We recommend the second option.
Motivating words! I'd say we'll look at your FREYA 3a app in detail in the upcoming 3rd part of this article series. I'm already looking forward to it!
Thank you very much for your time and the exciting interview!
You don't have to be a political activist to make your investments sustainable. Returns are possible in many different ways, so why not combine profit and meaning?
In terms of area, Switzerland is a rather small country. But the impact that we can generate is quite impressive. We do not have to push for a sustainable financial centre politically, but can make this choice individually. In part 3, we will look at how this would look in concrete terms with FREYA 3a.
How do you see the topic of provision and sustainability?
Leave us a comment there!
If you would like to find out more about FREYA Savings, or invest your 3rd pillar with them in a sustainable way, you can access FREYA 3a here:
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One Response
Connecting sense & profit - good stuff!