On the 12th of May, Debiopharm hosted in its premises a first-of-its-kind conference with several actors and pioneers within responsible investments. De Pury Pictet Turrettini & Co. (PPT) together with Impact Finance co-organised this event with the support of “Partners for Sustainability”. The objective was to illustrate how to invest efficiently and responsibly by taking the cocoa industry as an example.
Melchior de Murlat, managing partner of PPT welcomed the appreciatively 50 participants and presented the program.
At first, Francis Mathieu, fellow of the “Center for Sustainable Finance and Private Wealth”, from the University of Zurich introduced the audience to the progress made within responsible investments during the last twenty years. Melchior de Muralt put forward various investment solutions which are for many years simultaneously delivering sound returns and a tangible impacts. Cadmos Swiss Engagement Fund is one example. It has been ranked first in category by Morningstar and was hence logically awarded the famous five star rating.
Dominique Habegger presented in particular the positive impacts resulting from the engagement with Lindt & Sprüngli – an iconic company which is part of the Fund since its inception. Since 2014 we have conducted several open and constructive dialogues between the highest management representatives of the company together with the portfolio manager and our external experts. Some improvements of Lindt’s “Supplier Code of Conduct” published in 2016 were indeed directly answering our improvement suggestions formulated two years earlier. Even though the company is far from perfect in regards to traceability and human rights – like most multinationals within the chocolate industry – this example illustrate quite well that shareholders can nevertheless exert a positive and efficient influence.
An alternative investment strategy supporting innovative small and medium sized enterprises was later presented by Benjamin Firmenich, co-founder of Impact Finance. This impact Fund invests directly through private debt instruments in enterprises with a proven business model and track-record throughout the food and agriculture value chain. Since seven years, the Fund invested over $92 mio in more than 185 operation with loans averaging $800k at 9.5% for a two year period essentially in Latin America but also in Asia and Europe. Currently, the Impact Finance Fund supports 38 enterprises among which Ethiquable, an agricultural cooperative promoting an innovative and impactful fair trade business model.
Ethiquable’s co-founder Christophe Eberhart introduced his company which generated in 2016, essentially with chocolate but also with coffee and tea, around € 32 mio of revenues. Ethiquable provides a minimum price guarantee to all its organic cocoa producers. This model empowers people and enables them to secure their livelihood but also allows these farm operations to maintain their productions. This has proven particularly important in recent times as the cocoa prices have dropped by nearly 40%.
Melchior de Muralt summarized this event by highlighting the importance of a qualitative shareholder dialogue with large listed companies. Many industries are controlled by large multinationals, it is therefore important to engage with them to foster progress. Even if progress is sometimes slow and marginal, we can as shareholder have a substantial impacts on the lives of millions of people. In paralell, it also make sense to invest in pioneer and smaller companies like Ethiquable. Both investments are perfectly complementary from a risk/return perspective. From an impact perspective, we note a positive cumulative effect – generating progress at the large multinational companies and providing capital to smaller innovative companies which are setting the new frontiers for best practices. Melchior de Muralt exposed that we even have an economic interest for Lindt & Sprüngli and Ethiquable to share on their respective expertise. This is precisely what the Cadmos Funds are doing today, fostering win-win partnerships between performing and successful multinationals and innovative social enterprises.
