25.01.2025
«I make the world as I like»
Dear readers,
It was Astrid Lindgren who wrote the famous line sung by Pippi Longstocking, «I make the world as I like.» This statement in the children’s book stands for childlike freedom and the drive for independence. Pippi doesn't want to submit to adult expectations and rules, preferring to create her own world. She gives her imagination free reign, and the result is her exuberant independence.
This is not all that far-fetched. In real life, we, too, create our own worlds all the time and see things as we like. Pippi admits the construction of reality with carefree openness. That is much harder to do in the adult world. These beloved constructs of reality can be very long-lived. And by the time they are exposed as constructs, they can cause significant damage.
The debate surrounding «woke capitalism» is currently gaining momentum, as Lorenz Honegger explains in a feature article in the NZZ newspaper. Major financial institutions and tech corporations are backing out of climate alliances. Criticism of one-sided ESG criteria is growing louder. They often stand more for PR than genuine sustainability. BlackRock is also backpedaling. The world’s largest asset manager is turning its back on the climate coalition, as reported in the Wall Street Journal. The center of this trend is in the USA, where Political Correctness is on the way out. Nothing symbolizes this turning point more than the second inauguration of Donald Trump.
In the world of finance, ESG criteria were intended to point investors in the «right» direction. ESG stands for Environmental, Social, and Governance. In fact, assets managed in line with ESG criteria have made tremendous gains worldwide in recent years. The basic idea of evaluating the impact companies have on the environment is in no way objectionable. But the proof is in the pudding when this idea is put into action. And this is where the criticism ramps up. One key argument is that current ESG criteria are defined too narrowly and often have ideological biases. They create a world that works for marketing but may have little to do with a sustainable reality.
This frustrates Stephan Brupbacher, Director of the industry association Swissmem, to no end. In a LinkedIn post, Brupbacher sharply criticizes banks and insurance companies for putting up barriers to investments in the defense industry with their ESG criteria. According to him, this is totally out of step with reality because Europe needs to strengthen its defense industry, not weaken it. The war in Ukraine is a perfect example. What is more, Europe should become less dependent on the USA in the arms sector. Swisscanto, for example, which manages investment products for Zürcher Kantonalbank, refuses to invest in companies that generate more than 10% of their revenue in the arms sector.
Swisscanto claims in very general terms to invest in companies and countries that promote the UN's sustainability goals. However, it also maintains long exclusion lists. This is not a new debate. Back in 2022, the Aargau Chamber of Industry and Commerce AIHK and the Aargau Trade Association AGV sharply criticized the state Aargau Kantonalbank for excluding hard liquor producers, tobacco dealers, and casinos from obtaining credit. Both organizations criticized this practice as «impermissible, hostile to the economy, and therefore damaging to Aargau’s labor market and tax revenue.» The associations see the ban on granting credit to nuclear power plants as particularly objectionable. The result of this idealized banking world is that entire industries are excluded: the weapons industry, genetic engineering in human medicine and agriculture, as well as the natural gas, oil, nuclear power, and aircraft industries. Critics deem such practices as out of touch with reality. Banks exclude technologies from which they themselves profit, because they are too focused on (potential) risks and blind to the benefits that these goods have to offer. Of course, it is good to set goals, but the analysis should be based on facts and take into account that these industries (unlike the service sector) manufacture real goods that humanity needs and demands. Both green genetic engineering and nuclear power, for instance, offer tremendous potential for reducing CO₂; and without genetically engineered cancer medications and vaccines, to name but a few examples, many more people would die. And the world cannot stop using petroleum from one day to the next; it requires a transition. Instead of emulating unrealistic and ideological NGOs and distancing themselves from the real economy—going so far as banning companies—banks could take their cue from pragmatic environmentalists. You'll find these environmentalists in organizations like WePlanet, as highlighted recently in the Sunday edition of the NZZ newspaper. They want to engage in fact-based arguments free of ideology. That would be a start.
A Bain study on the sustainability of companies likewise offers a counterpoint to an overly simplified view of sustainability. It shows that sustainability only works when it also makes sense economically. «Obviously!» one might be tempted to respond. That is because economic efficiency is already one of the pillars of sustainability. A bank may have sustainability departments that are as good and pioneering as those Credit Suisse had, but if the company itself does not survive, then it was not sustainable. The Bain study shows the dynamic nature of sustainability. Companies can develop better solutions through their research activities, leading them step-by-step towards a more sustainable world. Overly simplified ESG goals lead to a static way of thinking.
Fact-checkers face similar pitfalls as proponents of ESG. While it is essential to check the accuracy of statements made in the media, we have to deal in actual facts. As soon as fact-checkers start judging opinions, they overstep the fine line to becoming thought police, and ideological objections take the place of scientific criteria. An NZZ headline mockingly stated, «Fact-checkers poison the debate.» Decisions are made on a distorted basis, without taking into account the actual benefit of technologies or products to society and the environment.
The realization is taking hold that it is unbelievably complicated to determine the «truth» in the sustainability debate. Purely ideological ideas that do not acknowledge complex relationships are very often misleading. Therefore, it is no coincidence that woke capitalism should give way to a new kind of pragmatism. Conflicting objectives need to be reconciled sensibly. And a simple exclusion list is virtually no help at all. In contrast, a conclusive risk-benefit analysis can set innovation in motion. New technologies for a more environmentally friendly future can only emerge if research and development are facilitated. But such technologies must be scalable and economical in order to survive in a harsh business environment. Not every university or start-up idea that is celebrated in the media enjoys long-term success on the market.
The research industry has known this for a long time. Companies are seeking solutions to improve resource efficiency, and they stand behind their sustainability goals. According to a recent PwC survey, 91 percent of Swiss CEOs continue to make climate-friendly investments and are sticking to their net zero objectives. And they are proving everyone wrong who claimed that government intervention is needed to get companies onto the straight and narrow. Continuous improvement is a fundamental part of the research industry. Indeed, «companies in competition with one another are better equipped to identify technologies for the future than the government, which is guided by any number of other interests,» as Antonio Fumagalli pertinently remarked in the NZZ. But CEOs were not as keen to talk about their climate goals, said PwC Switzerland CEO, Gustav Baldinger, to the Aargauer Newspaper. Sustainability, in reality, is extremely complex. It ties up resources in companies and requires more than just exclusion lists. Feasibility, conflicting objectives, and private and public research must be taken into account. Research delivers innovations and solutions that enable all of us Swiss to maintain our standard of living, while conserving resources more effectively, without having to give up too much. The public expects the research industry to achieve sustainability through technology.
Sustainability does not stop at agriculture. Farmers are using more precise methods to maintain yields and protect nature. Artificial intelligence will assist them in their efforts. But all of this requires capital, know-how, and social acceptance. It is time to remove the ideological blinders. If lending institutions finally adopt pragmatism, we will have a chance. To take sustainability seriously, you have to look at the entire system. The environment, social issues, and the economy must be taken together. The same applies to fact-checkers. It is their job to scientifically verify facts and not to censor opinions. It is the only way to nurture trust, the only way to promote effective measures. The media must also stop spiraling into a state of permanent indignation, as Isabelle Jacobi writes in response to conditions in the USA.
In short: We must cease simply seeing the world «as we like.» But in such a way that it remains worth living in for future generations. Research and technology can help. Equally as important and effective are framework conditions and rules aimed at real impact—and not just a good image.
Your swiss-food editorial team
