Case study: How Lombard Odier works with its clients and customers to encourage sustainable practices

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

Lombard Odier recognizes that banks have a pivotal role in the economy and society, and that their long-term success will positively impact business as well. As a global wealth and asset manager, Lombard Odier sees it as its fiduciary responsibility to assist clients in mitigating risks and seizing opportunities linked to the transition to a Circular, Lean, Inclusive, and Clean (CLIC™) economy. This entails collaborative efforts with a diverse range of stakeholders. Being a certified B Corp, collaborative engagement is integral to Lombard Odier’s interactions with all parties involved.

Academia and partners: Lombard Odier has joined forces with the systems change company Systemiq to enhance its approach to transforming markets, business models, and asset classes within three economic systems: Energy, Land and Oceans, and Materials. The firm collaborates with the University of Oxford to support education and research in sustainable finance and investments. In 2021, Lombard Odier published its inaugural joint study, “Predictors of Success in a Greening World.” Additionally, Lombard Odier is a founding partner of the EPFL Center for Digital Trust (C4DT), which brings together researchers, industry, the public sector, and civil society to define and realize a shared vision of reinventing trust mechanisms that will contribute to prosperous and peaceful societies in the digital era. In 2022, Fondation Lombard Odier collaborated with the International Committee of the Red Cross (ICRC), the International Institute for Management Development (IMD), and the World Economic Forum to co-incubate and launch “Driving Innovative Finance for Impact,” a new three-week IMD course for decision-makers in humanitarian organizations. That same year, Lombard Odier also announced a significant multi-year research partnership with Enterprise for Society (E4S), which is leading the transition to a circular economy. This research will focus on the investment case for various aspects of the circular economy, detailing what the implementation of circular economy practices will look like across different sectors and examining their intersection with the transition to net zero, among other themes. E4S is a collaboration involving the University of Lausanne’s Faculty of Business and Economics (UNIL-HEC), the International Institute for Management Development (IMD), and the École Polytechnique Fédérale de Lausanne (EPFL).

Peers: Lombard Odier is an active participant in the Geneva financial centre and contributes to various initiatives aimed at accelerating the transition to a sustainable financial system.

Lombard Odier has played a key role in the Building Bridges event in Geneva, Switzerland, since its inception in 2019. Building Bridges is an annual gathering that brings together politicians, the financial sector, and NGOs to discuss the climate agenda and collaborate toward a shared vision of advancing sustainable finance to address the Sustainable Development Goals (SDGs).

In 2022, Lombard Odier hosted a roundtable session at the World Economic Forum in Davos, Switzerland, inviting prominent leaders to explore innovative solutions and partnerships that could reshape the future of food systems. At Davos, Lombard Odier also co-hosted an event with its partner Systemiq to envision a new future for the financial system.

Civil Society: Since 2005, Lombard Odier has been a founding member of the Corporate Support Group of the International Committee of the Red Cross (ICRC). The firm has provided expertise and seed funding for various projects, including the incubation of the Program for Humanitarian Impact Investment (PHII), also known as the “Humanitarian Impact Bond.” In 2022, Fondation Lombard Odier continued to support the ICRC’s endeavours in developing New Financing Models for humanitarian action. Another example of Lombard Odier’s commitment is its collaboration with local organizations such as Terre des Hommes Switzerland, which received seed funding from the Lombard Odier Foundation to establish the annual “Corporate Walk of Hope” in 2021, dedicated to companies and their employees to walk for children’s rights.

Regulators: Lombard Odier endorses the UN Principles for Responsible Investing (UNPRI) and actively engages with local, national, and international regulatory and political authorities to promote a sustainable finance framework. The PRI Collaboration Platform serves as a unique forum for signatories to pool resources, share information, and strengthen their influence on ESG issues.

Additional examples of Lombard Odier’s engagement include participation in the UN Environment Programme Finance Initiative (UNEP FI) and the Task Force on Climate-related Financial Disclosure (TCFD).

Clients, Employees, Suppliers: Lombard Odier maintains ongoing dialogue with clients, employees, and suppliers to understand their areas of focus, expectations, and concerns.

Lombard Odier has been a B Corp certified company since 2019. Its performance across the five areas assessed by B Lab (governance, workers, community, environment, and customers) has been thoroughly analysed, leading to a number of actions and initiatives. Lombard Odier actively participates in the global B Corp movement, gaining insights from the certifying body B Lab and from engaging in dialogue with other B Corps.

How did Lombard Odier work with its clients and customers to encourage sustainable practices and enable sustainable economic activities?

In its 2023 PRB Reporting and Self-Assessment Template Lombard Odier reports that it works with its clients and customers to encourage sustainable practices and enable sustainable economic activities as follows:

Lombard Odier is dedicated to promoting sustainable practices among its clients and customers, actively working to enable sustainable economic activities. The bank offers a variety of sustainable investment strategies that prioritize companies with strong ESG practices, along with impact investing opportunities aimed at generating positive social and environmental outcomes alongside financial returns.

In addition to investment options, Lombard Odier provides sustainable financing solutions to its clients. This includes green bonds, social bonds, and sustainability-linked loans designed to incentivize companies to enhance their sustainability practices and contribute to the transition to a low-carbon economy.

Lombard Odier collaborates closely with its clients to integrate sustainability into their overall investment strategies. The firm offers guidance on how to measure and manage ESG risks and opportunities, as well as how to ensure that investments align with the client’s values and goals.

In European markets, Lombard Odier is required to discuss sustainability and ESG approaches with each client to ensure that their portfolios align with their expectations and wishes. In Switzerland, this requirement took effect on January 1, 2024. Since Lombard Odier already ensures alignment with clients on sustainability strategies, the formalization of these regulations further reinforces the firm’s chosen approach.

Lombard Odier actively engages with clients on sustainability topics and provides educational opportunities in collaboration with the University of Oxford for groups of clients.

To ensure that its clients’ portfolios are aligned with their sustainability targets, Lombard Odier incorporates various restrictions and exclusions, including SRI restrictions on tobacco, coal, unconventional oil and gas, and level 5 controversies. The firm monitors exposure to stocks ranked in the bottom two ESG quartiles on a GICS sector level 2 basis, as well as overall portfolio compliance with its investment process using internal benchmarks to compare holdings.

Additionally, Lombard Odier discloses its proxy voting record on a retrospective quarterly basis and publishes an annual Stewardship Report in alignment with the Financial Reporting Council’s 2020 Stewardship Code (this paragraph refers to LOIM only).

Lombard Odier has prepared detailed and comprehensive disclosures for its Article 8 and 9 products in accordance with the Sustainable Financial Disclosure Regulation (SFDR). These disclosures include information on the funds’ sustainability objectives, performance against sustainability indicators, sustainability impact metrics, strategies and methodologies, and the extent to which investments align with the European Taxonomy for sustainable activities.

Finally, Lombard Odier is committed to integrating the objectives of the EU Taxonomy, which establishes a list of environmentally sustainable economic activities toward which capital flows can be directed to achieve environmental objectives, as soon as these objectives become available.

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

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References:

This case study is based on published information by Lombard Odier, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://www.lombardodier.com/files/live/sites/loportail/files/csr/doc/Lombard_Odier_Group_PRB_Reporting_and_Self-Assessment_2023.pdf

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