[00:02] Jennifer Wu:  Hi everyone, thanks for listening to The Founder Spirit podcast. I'm your host, Jennifer Wu. In this podcast series, I interview exceptional individuals from all over the world with the Founder Spirit, ranging from social entrepreneurs, tech founders, to philanthropists, elite athletes, and more. Together, we'll uncover not only how they manage to succeed in face of multiple challenges, but also who they are as people and their human story.

The following episode was recorded during the 2024 Villars Summit held by the Villars Institute, where I recorded several short interviews over a period of 3 days. The Founder Spirit Podcast is proud to be a partner of the Villars Institute, a nonprofit foundation focused on accelerating the transition to a net-zero economy and restoring planetary health.

“Being in a family that has had a long tradition owning a company for now 6 generation(s), in the business of finance, this notion of service versus production has been something that I've been very sensitive to all my life.”

“The danger is complacency and inertia of comfort. So we have to be very vigilant and push the country to continue these processes. And I think the more it becomes complex elsewhere, the more we can be, because we're simpler.”

“There's only a bridge to build, and there's only one place in the world where you can take the tram and, in 15 minutes, be in any Director General offices of any of those big international organizations.”

“We all know today that public finance is under strain everywhere in the world, that private capital will be essential in this transition. We have to talk about unlocking massive capital to transform economies, not only to transition, but also to repair damages and restore. ”

Joining us today is Patrick Odier, Chairman of the Supervisory Board at the Geneva-based global private bank Lombard Odier Group, President of Swiss Sustainable Finance and Chairman of Building Bridges. Former Chairman of the Swiss Bankers Association, Patrick currently sits on the board of several academic institutions and philanthropic organizations.

How did a scion from the prominent Swiss banking family come to found Building Bridges and fostering sustainable finance practices? Well, let’s talk to him & find out.

Welcome to the Founder Spirit podcast, Patrick, thank you so much for joining us today at the Villars Summit 2024. 

[02:31] Patrick Odier: Thank you for having me.

[02:33] Jennifer: Patrick, I want to take us back to your childhood. And as someone who's coming from a family of bankers. Having this family legacy, what was it like growing up and what were some of your formative experiences?

[02:46] Patrick: Being in a family that has had a long tradition owning a company for, at the time 5 now 6 generation(s), in the business of finance, this notion of service versus production has been something that I've been very sensitive to all my life. 

In my family, the business was to serve the interests of others before, even from time to time, served one's own interest. Leading a company that had 4 or 5 generations before the current one was a sense of responsibility of bringing it to the next generation in a better shape than it got it. In this respect, it conveyed to me also long-term perspectives on things. 

[03:26] Jennifer: It's very interesting because when I talk to other people who operate family-owned businesses, that's the sense that I get, is the responsibility towards their employees, their suppliers, multi-stakeholders that enable the family business to succeed. But also, they can have a much longer perspective. Versus a publicly-traded company, where you're maybe forecasting a few quarters out. 

As a finance person myself, I wanted to know, how do you see that private banking has evolved over the last 40 years?

[03:56] Patrick: Well, it's probably interesting to know that I started through the door of technology as a young partner coming back from my studies in the US, etc. I was asked to look at the IT strategy, and not necessarily the financial aspect of our businesses, which I had to deal with later in my career. 

The profession, thanks perhaps to the fact that we are quite early, this technology trend, has (become) much more challenging from a pure financial point of view, but also from a technology and tool perspective - using the right information, interpreting the analyses, bringing a recommendation. 

I think this is perhaps what has changed the most during the last 40 years. At one point in time, you had someone who was supposed to have a good synthesis of the current situation of the world, leading to a recommendation on how allocate assets of a family or an individual or a pension fund. 

Today, you really have to jump into the shoes of your interlocutor and ask yourself not only these questions, but how will these assets be stable in the longer-term? What are the new trends that may affect their value? Sustainability being a good one, with the notion of stranded assets (”assets that have suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities”), which did not existed that much in the past. 

And perhaps the last element, the sense of service has becoming even more important to a country like Switzerland than in the past, because many other financial centers somehow lost it.

[05:15] Jennifer: And as the President of Swiss Sustainable Finance, how can private sectors become a force for good? 

[05:22] Patrick: As you know, I've had these questions already on my table as Chair of the Swiss Bankers Association, and so I had time to reflect on that.

15 years ago, the question of sustainable investment philosophy was a matter of competitiveness - either you develop products that try to do good, or you differentiate yourself in another way. Today, this is completely different and Swiss Sustainable Finance recognizes that very well. 

Actually, it's not only a question that one should be asking, it’s actually a must, to be able to respond (to) how will sustainable investing or lending have an impact on my business? And how can I make sure that this trend is being managed based on the conviction that it will lead to either lower risk or better returns?

And that's not an easy thing to do, because we all want to say that, from a moral point of view, we want to do good. But actually, financial industry has a role, first and foremost, to service the interests of the clients and the investors in the long-term, preserving capital and irrigating the economy in the most sustainable way.

And that has to do with a pure professional conviction that going in that direction should lead to better services and better results for the clients that you're serving. The good news is that doing good is at the same time doing well, or doing well is doing good. 

I think this is a fantastic opportunity which leads to a huge responsibility of the financial sector to play its role.

[06:45] Jennifer: So if I think about the role that finance can play, if you look at the paradigm that we're operating in, which is companies and corporates are still focused on increasing shareholder value.

So how can we bring sustainability into more of a financial metric for these companies? Into the share price metric, perhaps?

[07:05] Patrick: Well, I think we should get educated in an area which is highly complicated, recognizing at the same time that we won't know it all very quickly.

And we should gradually get into educated decisions based on an understanding on how a company, its ecosystems have an influence on its wellbeing from a financial, long-term point of view, and better understand how the business model affect the ecosystem of a company.  

Not recognizing these forces that are now at work, it can lead to very big, not only financial but reputational risks, legal risks - your impact on your ecosystem is becoming much more transparent than in the past. In other words, sustainability as a whole has to go through transparency.

Transparency on the way you construct your value chain, transparency on the way you produce your product and services, on the way you handle your immediate energy and other needs, but also transparency on  the usage of your product or services. 

So it has a lot to do with education, that means information, and with transparency. And education should come from a framework that is generally accepted. Otherwise, it could lead to arbitrage of frameworks and different interpretation. 

And I think the best framework to use is the scientific framework, because science are facts and facts are the elements that you need to take decisions, even more than interpretation. And on those facts, you can exercise educated judgment.

[08:31] Jennifer: And you are also the founder of Building Bridges, which is a collaborative effort that aims to advance sustainable finance in Switzerland and around the world. Can you tell us what motivated you to start this initiative?

[08:45] Patrick: One easy motivation for us is that we're living in Geneva, where the right bank of the lake is the place and location of most of the international organization, and the left bank is the place of most of the financial institutions. 

In the same way as we never managed to get a positive decision on crossing the lake with a tunnel or a bridge, we always had some difficulty establishing passerelles of communication between those two worlds that are very important in Geneva.

Second was practically every single important international organization, at least the 40 biggest and most important ones that are stakeholders in the discussion about sustainability are based in Geneva, where 700+ NGO's discussing these issues are present in Geneva where faculty science, political authorities and finance is strongly represented, it was nonsense not to try to bring all those actors around the table to collectively solve that issue of sustainability.

There's only a bridge to build, and there's only one place in the world where you can take the tram and, in 15 minutes, be in any Director General offices of any of those big international organizations.

[09:48] Jennifer: The mission of Building Bridges is to align finance with sustainability. Can you tell us what it does concretely? 

[09:55] Patrick: Yes. I think dealing with such challenges needs a common understanding of the current limits. And the means to deal with these limits is one, dialogue, and two, the willingness to set the common agenda, to find a common language, a common understanding. 

And also the solutions will come only by setting an agenda to tackle these issues. So, for instance, here in Villars, we had a brainstorming session with experts. We are nine months before the end of the year, characterized by a number of different factors affecting us all - democratic, technical, regulatory issues, even geopolitical. 

How do we prepare ourselves to set an agenda to make sure what has started will not stop? And what will be added to the list of priorities can be integrated as quickly as possible? 

Example, we believe that beyond the technical aspects linked to climate, nature protection and regeneration, a huge domain that needs to be tackled quickly is the social impact of the sustainability transition, and it's urgent.

Sources of worry for us is practically everywhere in the world today, communities do not relate to the objectives of making the world more sustainable, because they don't have the roof they need, or school for their children, or even the means to feed themselves.  

So how can you ask the population, even if it is short-term for future benefit, to go through additional constraints if these problems are not being tackled correctly? So it's not only a problem of emerging markets suffering more than the OECD countries, which have been creating damages. 

It is more of a question of everywhere in the world, the narrative, the discussions are based on the view that nobody should be excluded of that transition, and that equality is a generic objective to reach at the same time, if not before the rest.

So that's an issue that will be even more important in the world, in terms of rising inequalities, cost increases, inflation in very basic resources such as food and energy.

[11:50] Jennifer: So one word that I definitely heard across my podcast guests is the word inequity - it came up in every single conversation. 

Before we can even talk about sustainability, we need to address the issue around livelihood and a fair distribution of wealth, of capital. And I think that's why financial institutions, banks, have a big role to play. 

Now, another issue that I've been hearing as well is that capital is not there to fund all these projects, whether it's conservation, climate change, the capital is not there. 

Now what is your take on that, Patrick? And where can we go from here? 

[12:29] Patrick: Actually, if I may, I disagree. The capital is here, capital allocation is the issue. 

We all know today that public finance is under strain everywhere in the world, that private capital will be essential in this transition. We have to talk about unlocking massive capital to transform economies, not only to transition, but also to repair damages and restore. 

There is massive capital available for many other things. And if you look at the figures for some of these priority actions to be taken or funding to be addressed, although billions per year, it’s only a small fraction of the subsidies flowing to industries that are creating the damages or other priorities that are less important than the sustainability challenge, at least for the common good.

And so there are issues, other than capital, that explain why we're lagging in terms of speed. The speed is much too slow, given the fact that we have the technologies needed to make some of the biggest changes, and we have most of the institutions we need to take the decision. So it's an issue about not taking the decision or not knowing how to make the decisions. 

Again, I'm coming back on education. For instance, a company like ours, Lombard Odier, has been active in sustainability investing since the beginning of the 90s. Systematically, we had to educate some of the top management and ourselves on those issues. 

So we are lucky to have 1 or 2 of our managing partners naturally inclined at looking at the prosperity of the community, not only of the company. Perhaps these issues were more present in our reasoning, that’s why we were one of the first instruments in Europe allowing pension funds to invest in sustainable investment. 

In the last 30 years, we moved from an approach based on exclusion, i.e., things are (either) good or bad, still used in some of the current regulatory discussions in Europe, where when you qualify an investment, the first thing you do is to decide whether an investment is green, to judge whether a company is good or bad, which is completely aside of the reality of what has to be done, actually. 

Why? Because very often, those companies that are doing damages, a taxonomy that only allow for green investment would simply eliminate all those companies having the power and abilities to make changes.

If come back to your question, it's really changing from a world where capital was not enough to a world where capital has to be differently allocated and helped by all the rest of the things I was mentioning. And one way to change that allocation is to change the mindset with regards to certain destination that we invest today.  

Nature has not to be looked at as something dramatically affected by the current economic model that we should repair, nature has to be looked at as one of the three, and not two, factors of production of any industry today in the world. 

And if we do that, we will, very quickly, one, address nature with a sense of its worth that is different than today. And secondly, realize that using nature differently will be a huge source of efficiency, because sustainability is efficiency.

And if sustainability is efficiency and efficiency being cost, any economic actor will be interested in trying to reduce its cost, that is increased sustainability, and that's the alignment that we need to have.

This is exactly the discussion at Sustainable Finance Switzerland and at Building Bridges. I'm trying to bring on the table, how do we change this mindset? And how do we create the right products, liquidity to have this capital flow in the right direction?

[15:48] Jennifer: You know, it's interesting, you mentioned change the mindset, so I'm trying to help people to change the mindset through the podcast. 

A lot of times, we try to address these macro challenges at the top. But in fact, in order to meet these global challenges, we need to work on ourselves at the individual level, at the micro level - how do you change the mindset of the people? And that's always a tough challenge to meet.

[16:12] Patrick: That's why there's a question and a necessity to work on the answer, and that's why Building Bridges is there.

[16:18] Jennifer: So Martin Luther King famously said, “let's build bridges, not walls.”

[16:22] Patrick: This morning I had a professor from Yale University talking to me about biodiversity ideas. He said, could we monetize some of these ideas? I said, look, it's not an issue of monetizing, it's an issue of having people understand how they can have an impact on biodiversity at their level of activity or profession. 

I think it's a good question to ask at the moment where we have not yet finished to tackle climate, we are starting to do that for nature. In general, it is good to address biodiversity a bit early rather than too late, because we know it's going to be complex to solve. So that's where I think the responsibility lies and that's why I think Building Bridges has to play a role. 

Perhaps the last comment on Building Bridges, in my view, it's also a tool that should help our country to take an exemplary role and perhaps lead some of that thinking process.

[17:07] Jennifer: So that actually leads really well into my next question. As we're here in Villars, Switzerland, in the beautiful Swiss Alps, we can look around us and it's mid-March, but there's barely any snow around us, so climate change is real. 

A lot of people think that Switzerland is a country of cows, chocolate, Swiss bankers and cheese, but I believe that Switzerland can also take a leading role in tackling these global challenges. 

You're from Geneva coming from a dynasty of Swiss families, can you give the audience a little bit (of) flavor how Switzerland is leading in terms of tackling these global challenges and what we're doing on the ground accelerating the transition to a net-zero economy?

[17:52] Patrick: Yeah, Switzerland is not very vocal on these issues and not recognized widely as having had some prime responsibility in these discussions. Much of them came out of the UK, the US, sometimes from other countries. But as a matter of fact, in Switzerland, the implementation is real. 

If you take the history of sustainable investment, Switzerland was at the beginning by, I wouldn't say inventing, but hosting the very first development in microfinance. And Switzerland is today one of the most important financial centers with regard to microfinance, which has become a tool perhaps not as scalable as we would like, but widely used in the world. It has been the case also for blended finance.

As an example, 2007-2008, the World Bank came out with Green Bonds, which is one of the first instruments that had this notion of integrating sustainability-driven criteria into a financial instrument. Switzerland was one of the first to develop an expertise in this domain, together with Australia and the UK. 

Switzerland has been very much involved at the technical level because Switzerland is a pragmatic country, which allows a lot of dialogues to happen between industry, regulators and political authorities. 

Political authorities and regulators will get a competence faster than in other countries based on industry practitioners. That is going to be very useful in international discussions to implement some of the new standards that have been developed. 

If you think about climate protection, Mark Carney's efforts with CFD, this famous taskforce for climate-related financial disclosures, has led to an obligation to ask companies to report on their emissions. Switzerland is one of the first countries that implemented that. 

Switzerland has already mentioned that it will do the same with TNFD (Taskforce on Nature-related Financial Disclosures). Switzerland is working very hard in the NZDPU (Net-Zero Data Public Utility) discussion, which has to do with what sort of data should be gathered by whom, where, to make sure the reporting is correct. Switzerland is not jumping on all the international standards that create bureaucracy, but says, let's wait until we see what is really effective. 

So I think Switzerland is just a pragmatic country where dialogue between the different facets of the economy is easy, because country is small and because the spirit is to make decisions based on practitioners' expertise, not necessarily on bureaucratic or political criteria.

[20:07] Jennifer: It's interesting because when we were speaking earlier about changing mindset, now I've been living in Switzerland for over 20 years.I was born in China, grew up in the US and now I'm in Europe. So I always tell people I lived through communism, capitalism, and now I'm living in social democracy. 

And people often ask me, well, what is the best system? 

And culturally, the Swiss people, we talk a lot about the country just now, but because we have nature, we have mountains and lakes, the sense that I get is (that) people are much more connected to the land. From what I understand before World War I, a lot of people in this country operated as farmers - that was the main industry. 

Also, we don't have big cities, our largest city has about a million people in Zurich, and Geneva is even less than that. So we have villages, we have the sense of community. 

And also from a cultural point of view, I like to think that the Swiss actually will do what is good for the collective. So they might pay higher taxes, for example, but for the common good, which I don't think you find in a lot of places these days.

[21:09] Patrick: Yeah, well, I think all this is true. We are very lucky to be in this situation because God gave us the trees and the mountains, also snow and water. And this allowed us to be quite renewable in general, if I may say, without having had to go from one system to another. 

This being said, the danger is complacency and inertia of comfort. So we have to be very vigilant and push the country to continue these processes. And I think the more it becomes complex elsewhere, the more we can be, because we're simpler.

So it might go faster for a while, then it gets so complex and needs to go back to reality. And for the European taxonomy (EU taxonomy for sustainable activities), it's taking years to have the best brains of Europe to think about taxonomy without having gotten to an agreement. 

Whereas in Switzerland, by common sense, we hate to tell the economy where and how it should invest - it is the economy that has to do it. And the state has to give some incentives that will gear the investment, not tell a company to invest.

[22:01] Jennifer: Patrick, you were on two plenary panels today. One was about aligning finance and trade with sustainability, which we already talked about, and the second one is on accelerating the restoration of ecosystems. 

And this is our last day at the Villars Summit. What are your main takeaways from this conference?

[22:23] Patrick: One more edition of the Villars Institute shows that there's a need for such exchange of views. One more example where as soon as you have the right personalities around the table, you realize the complexity of those issues, because each and everyone has deep understanding. 

Expertise needs to be communicated before others can take a decision or even get to a conclusion, so it’s very useful to have such discussions, to realize that complexity is not diminishing. Because that forces the discussion towards how to make sure, one, the language becomes simpler; two, the tools become less costly to put decisions in place; and three, the social fabrics of the community will be better after this transformation.

And also, my takeaway is that people recognize there may be deviation from the course, but the destination remains a certainty that everyone agrees with.

[23:13] Jennifer: Absolutely. So my takeaway, someone else said this yesterday, in order to meet these challenges, it's about caring, sharing and daring. So first we have to care, which is why we're all here, and now we're sharing, the next step is daring.

[23:27] Patrick: Yes. And as I said this morning, daring is important, but doing is even more important, because the pressure to change is huge.

[23:35] Jennifer: Yes, absolutely. And that's why I think the effort put forth by Building Bridges is so critical because we need to build these alliances, because a lot of these companies that you might categorize as not green, they're the ones that have capital to actually deploy towards working. 

So I think it requires inspiration, like you said, imagination, and last but not least, dedication.

[23:57 Patrick: Absolutely, thank you very much.

[24:00] Jennifer: If this podcast has been beneficial or valuable to you, feel free to become a patron and support us on Patreon.com, that is P-A-T-R-E-O-N.com/TheFounderSpirit. As always, you can find us on Apple, Google, Amazon and Spotify, as well as social media and our website at TheFounderSpirit.com. 

The Founder Spirit podcast is a partner of the Villars Institute, a nonprofit foundation focused on accelerating the transition to a net-zero economy and restoring planetary health. 

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