Sustainability

Investing with awareness

Sustainability in investments

Sustainability in general is a topic that has become increasingly important over the past few years, steadily expanding its ranks of supporters both in the general public and in politics or business. The financial sector is no exception. This evolution has led both companies and investors to steadily increase their awareness of the impact of economic activities on the environment and sociality, leading sustainable finance to become a highly integrated theme in advisory and asset management activities.

Sustainable finance is based on an approach to selecting and monitoring investments that takes into account not only traditional financial and economic objectives, but also the positive or negative effects these investments have on the environment and society over the long term. This focus on so-called ESG aspects allows investors to align their sustainability preferences and aspirations toward investments that activate – in fact – a virtuous circle because they are directed on companies that are more attentive to their sustainability strategy. 

In the name of transparent, robust sustainable finance tailored to the needs of clients and investors, the Swiss Bankers Association (SBA) has drafted guidelines for financial service providers on the inclusion of ESG preferences and risks in investment advisory and asset management activities. These guidelines are binding on members of the Association, of which Axion SWISS Bank SA is part.

ESG analysis

From a methodological point of view, three factors are identified in the analysis of sustainable investments that comprehensively encompass the most important aspects of sustainability: Environmental factor, the Social factor, and the Governance factor (hence the English acronym “ESG”).

The first two factors indicate the two macro categories on which the effects of economic growth have the greatest impact: the environment (E), understood both as the use of natural resources and the pollution and waste of those resources, and the social sphere (S), understood both as the community involved in productive activity (workers, shareholders, suppliers, etc.), as well as those affected by such activity (customers/consumers, the inhabitants of the places where such activities take place, etc.). These actors are more generally called “stakeholders”. Governance, on the other hand, is the key factor that ensures that objectives are pursued ethically and in full compliance with existing behavioral norms and the spirit of the laws.

Why are ESG factors so important?

Climate change requires everyone to take action. At the same time, issues such as equality and social responsibility are becoming increasingly important within local and global communities. This also has a significant impact on companies, whose efforts in this direction are driven by two main factors. On the one hand, consumer behavior has changed significantly in recent years.

Today, customers are placing increasing importance on sustainability. Companies that operate sustainably and adhere to social responsibility standards enjoy a competitive advantage. Those that do not are at a disadvantage and are sometimes even publicly criticized, especially on social media, for their irresponsible or environmentally harmful behavior.

On the other hand, ESG has also become increasingly important in the field of investment in recent years. Institutional and private investors have recognized that sustainability is a key factor in a company’s long-term success. Today, there are numerous ESG funds and indices that have enjoyed widespread popularity in recent years. If a company is not considered sufficiently sustainable by investors, it may encounter difficulties, for example, in raising capital.

ESG risks

Recent decades have shown how the effects of economic growth and access to the benefits of globalization have both positive and negative sides. The negative effects, so-called negative externalities, spill over both to the investments themselves, i.e., to companies and related economic actors, and to the environment and society as a whole. In financial circles, this risk is referred to as ESG risk, which is the risk of the investment related to ESG (Environmental, Social and Governance) factors.

The SBA defines ESG risks as those events or conditions at the environmental, social, and business conduct (Governance) levels that can produce, in the contingent moment or in the future, negative repercussions on the profitability, costs, reputation, and thus on the value of a company as well as on the course of financial instruments.

Some examples of these kind of risks may be the consumption or contamination and pollution of natural resources necessary for economic activity, unfair treatment of workers, which can lead to operational risks or reputational damage, as well as opaque business practices that can trigger disputes with suppliers or customers.

Greenwashing

The integrity of financial services and products is of paramount importance to the Swiss financial center. This naturally also applies to financial products marketed as sustainable. Banks must therefore ensure that ESG (environmental, social, and governance) criteria are integrated into their financial service provision processes (e.g., through regular updates to customer preference questionnaires and internal training courses) and that customer expectations regarding sustainability are adequately met. In principle, three levels are relevant in relation to greenwashing practices: financial service providers, financial services, and financial instruments. The aforementioned ASB Guidelines focus on financial services.

When we talk about greenwashing
Greenwashing occurs when a financial services company positions itself as sustainable in its internal and external communications (e.g., on social media, in advertising, in the publication of statements of support, or in sustainability reports), but its internal practices contradict the image it communicates. Greenwashing also occurs when misleading or deceptive information is provided about the characteristics or composition of a financial solution.

Greenwashing risks for investors
Axion SWISS Bank SA is also sensitive to this issue and wishes to provide its clients and investors with adequate and transparent information on ESG risks in the context of greenwashing:

  • Lower return on investment: Investors may invest in products that claim to be sustainable but do not meet the corresponding criteria, with the risk of achieving lower performance. 
  • Lack of transparency or insufficient transparency: Incomplete or misleading information about the actual environmental and social impact of the proposed investment solutions.
  • Reputation and trust: Greenwashing could undermine confidence in the sustainable investment market, making it more difficult for investors to align their values with their investment decisions. 
  • Inadequate advice: Investors may be misinformed by client advisors who present investment solutions as more sustainable or ESG-friendly than they actually are. 

How to recognize and avoid greenwashing practices
Companies that practice greenwashing often use sophisticated tactics and clever marketing to create the illusion of sustainability and mislead investors. 
Recognizing greenwashing is not always easy, but some warning signs to look out for include:

  • Vague wording or unverifiable claims about sustainability;
  • Selective, inconsistent, or incomplete ESG disclosure; 
  • Excessive emphasis on long-term goals without concrete short-term action plans.

Fortunately, greenwashing can be avoided. A number of tools and resources are available to help investors evaluate ESG characteristics.
Best practices include:

  • Thorough review of companies’ annual sustainability reports and ESG strategies; 
  • Use of third-party ESG ratings and certifications; 
  • Monitoring of media and news related to emerging ESG issues and controversies.

Sustainability in Axion SWISS Bank SA and in the BancaStato Group

Sustainability is an integral part of the BancaStato Group’s corporate thinking and actions. During 2023, the Group adopted its own sustainability strategy. This is based on a comprehensive understanding of the economic, social, and ecological effects of its activities and focuses on five key elements: commitment to clients, care for the environment, taking responsibility for employees and the community in which it operates, and attention to conscious Corporate Governance. ESG criteria constitute the three pillars of non-financial analysis applied in the context of so-called responsible investment.

To enable the Bank to better manage ESG risks, the Institute integrates sustainability aspects into its traditional investment policy with the following objectives:

  • Optimization of the range of financial instruments offered to clients and integration of ESG criteria within the traditional investment policy;
  • More informed financial risk management, compliance with clients’ sustainability needs and offering appropriate solutions through diversified approaches;
  • At equal risk/return ratio, promotion of investment in sustainable solutions in advisory mandates and Asset Management.


The products managed by Axion SWISS Bank SA primarily aim to generate steady income supplemented by capital gains while preserving the real value of assets with additional income potential. To this end, ESG factors and associated sustainability aspects are incorporated into investment decisions as a key element alongside risk and return considerations.

ESG criteria

  • Climate changes;
  • Biodiversity;
  • Consumption of natural resources;
  • Waste and pollution;
  • Contribution of banking products and services to environmental issues (energy transition, circular economy, etc.).

  • Human rights respect;
  • Consideration towards local communities;
  • Labor law and human resources policy (occupational health and safety, non-discrimination, etc.);
  • Contribution of products and services to social issues (education, health,financial services, etc.);
  • Sponsorship.

  • Independence, diversity and senior management compensation;
  • Dividend policy;
  • Compliance with laws and regulations;
  • Corporate fiscal transparency;
  • Business ethics (anti-corruption, good business practices).

How are ESG criteria integrated in Axion SWISS Bank’s asset management

ESG integration is implemented by applying the following approaches:

Positive screening: selection of financial instruments with sufficiently high ratings (e.g., ESG Rating MSCI ≥ “BB”), thereby excluding securities and funds with insufficient ESG.

Negative screening: exclusion of controversial business sectors avoiding to indirectly contribute to potentially harmful actions.

Norm-based screening: exclusion of controversial business actively practices contributing to compliance with international conventions in the social, environmental and governance spheres. 

The approach of Axion SWISS Bank SA for the integration of ESG criteria in the analysis of investments and in decision-making processes, is implemented as follows in the management lines defined as ESG, in advisory services.

For further details, download the information brochure.