Simon Tribelhorn: Sustainability Matters

The Principality of Liechtenstein and its financial centre take a holistic approach to sustainability, aligned with the UN’s Sustainable Development Goals.

“Climate change” is a term on everyone’s lips, and a fourth summer of record heat in a relatively new century has ensured that not only activists, scientists and media are focusing on the problem.

The topic is now mainstream. For many, enjoyment of “nice weather” is tempered by concern for the future. With melting glaciers, fish kills, floods in Asia, hurricanes in Florida and heatwaves in Greenland, the latest report from the International Panel on Climate Change (IPCC) is more than a wake-up call — it’s a kick in the ass. In the words of Pat Cox, former president of the European Parliament: “We are the first generation which destroys our planet, and we are the last which can save it.”

The world is confronted with some major challenges, and the outlook is alarming. There is an urgent need to transform society and the economy — quickly and decisively. The climate goals of the Paris Agreement are no longer seen as paying lip-service to the issue. No single country, company, or institution can overcome the challenges; they are too complex, and have a global dimension.

To achieve the goals of the Paris Agreement in the EU alone, additional investment of around €180bn is needed — a substantial part of which must come from the private sector. The banking sector plays a central role in mobilising and channelling these financial resources, and the Liechtenstein financial centre is ready and willing to accept the challenge.

Sustainability is more than “just” climate protection; the UN recognised this early on. In 2015, it adopted the 17 Sustainable Development Goals (SDGs). They provide a shared blueprint to achieve a more sustainable future for all and acknowledge that ending poverty and other privations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth — all while tackling climate change and working to preserve our oceans and forests. The SDGs address the global challenges we face as a society; they interconnect and aim to leave no one behind.

The Liechtenstein government published its first interim report on the implementation of the SDGs in July, highlighting that sustainable development is a key priority. Liechtenstein has been the “solar world champion” since 2015, with the highest per-capita installation of photovoltaic equipment. Each municipality is committed to increasing energy efficiency, leading to Liechtenstein becoming the first “Energy Country”.

To mark World Water Day, on March 22, 2017, “Waterfootprint Liechtenstein” was launched. The principle behind the project was straightforward: Drink tap water, and donate drinking water. Liechtenstein aimed to be the first country to provide access to clean drinking water to one suffering person for every Liechtenstein resident — so improving the basic living conditions of around 38,000 people. The initiative is well on the way to achieving this target. More than 22,000 “water footprints” have been activated. The government, schools, municipalities and many companies — among them all the major Liechtenstein banks and the Bankers Associations — refrain from buying bottled water and use tap water.

Collaboration

Then there is the “Liechtenstein Initiative”, a plan to end human trafficking and modern slavery. The project is a partnership between the governments of Liechtenstein, Australia and the Netherlands along with the United Nations University Centre for Policy Research and a consortium of banks, philanthropic foundations, and associations.

The Liechtenstein Bankers Association and its members are part of these supporting organisation – for good reason. The UN estimates that more than 40 million people live in captivity, are exploited by forced labour, or suffer some other form of serfdom. Some 25 million of them are pushed into forced labour, 16 million in the private sector.

Although 58 percent of the people who work as slaves live in India, China, Pakistan, Bangladesh and Uzbekistan, around one million people in Europe also live in quasi-slavery. The goods produced often end up in normal sales channels, for example as textiles or food. The International Labour Organisation of the UN estimates that around $150bn is traded annually through slave labour and human trafficking.
And this is where the financial sector comes in. It can be associated in various ways with modern slavery and human trafficking, for example, by handling money generated from such practices, or by financing goods and services whose supply chains include modern slavery or human trafficking. According to studies, modern slavery and human trafficking are the most common predicate offences to money laundering and terrorist financing in the world today.

Driving the change

In light of the global nature of the activity and the need to access financial data to identify abuses, the involvement of the financial sector is essential. Liechtenstein’s financial community and regulatory authorities have considerable expertise in combating illicit financial flows, and can play a pioneering role in tacking human trafficking and modern slavery. This can take place through the promotion of a high due diligence standards, the development of responsible investments, or the promotion of inclusive financial technologies.

The Principality’s banks and the bankers association actively support the Liechtenstein Initiative. The commission has been holding global consultations since September 2018 to discuss the sector’s approach to anti-slavery and anti-trafficking compliance; responsible lending and investment; and financial sector innovation.

Experts from around the world present their research and initiatives at these meetings, and a catalogue of measures places the financial sector at the centre of worldwide efforts. This catalogue takes action against those who enrich themselves illegally and at the expense of others, and financial institutions are advised on how they can protect themselves against these transactions. In September 2019, during the 74th Session of the UN General Assembly, the commission has released a blueprint for accelerated action.

Banning unworthy working conditions and forced labour would contribute to more climate protection. How? Legal jobs can be regulated in such a way that less environmental pollution or waste of resources occurs. The circle to the Paris goals closes — and the holistic approach of Liechtenstein makes even more sense.