A financial center goes "green"
The Government of Liechtenstein is making great efforts to protect the climate and preserve nature. The primary focus is on efficient energy use and renewable energy sources. In the future, sustainability is also to play a central role for the Liechtenstein financial center.
With around 5,000 employees in Liechtenstein and abroad, banks have traditionally been one of the most important industries in the Principality of Liechtenstein. The financial institutions manage assets of more than 350 billion euros. The banking industry contributes around a quarter of the Principality's national product; it accounts for around 40 percent of tax revenues.
In March 2021, the banks adopted a joint master plan for strategic realignment called Roadmap 2025. The motto is "growth through innovation and sustainability" and it is a continuation of two similar initiatives adopted in previous years. In 2015, the first Roadmap was announced shortly after the outbreak of the financial crisis; it focused on modernizing the financial center. "With this initiative, Liechtenstein and its banks committed themselves both to consistent compliance with international standards and to a 'zero tolerance policy,'" explains Hans-Werner Gassner, President of the Liechtenstein Bankers Association (LBV). In Liechtenstein, corruption, money laundering and tax evasion are tolerated no more than in other Western financial centers at this stage.
This reform paved the way for a profound repositioning of the financial industry in Liechtenstein, which was laid down in two further initiatives. The 2020 Roadmap was the first to place a strategic focus on sustainability. In spring 2021, the third Roadmap was launched; the main idea is that economic growth and ecological investments are by no means mutually exclusive, but, on the contrary, mutually dependent.
Sustainability, however, is not a completely new topic for the Liechtenstein financial center. "We have been thinking about it for more than ten years and have already launched several sustainable funds," says Ursula Finsterwald of LGT Group, the country's largest financial institution. For several years, Neue Bank has also been offering sustainable financial products, which undergo a rigorous, multi-stage selection process. Furthermore, VP Bank launched the Sustainable Plus investment offering in September 2021.
The strategic realignment of the banks in Liechtenstein was triggered not least by growing client demand. "For about five or six years, institutional investors have increasingly been looking for sustainable financial products," LBV Managing Director Simon Tribelhorn explains. Among wealthy private investors, interest in ecological and social investment has also been growing. Finally, the banks have even observed that there is a growing request for sustainable options among private customers, who want their savings to benefit the climate, nature and society. "The younger generation plays a key role in this," Tribelhorn says.
The Liechtenstein banks' Roadmap 2025 is based on the 17 Sustainable Development Goals adopted by the United Nations General Assembly in 2015. "We have a very broad understanding of sustainability. It is true that climate protection is the most important goal, but it is not the only one," explains LBV Managing Director Tribelhorn.
FAST initiative launched
Social goals also play a major role. For example, the Liechtenstein Bankers Association is committed to the FAST initiative, which was launched by the Government of Liechtenstein. The acronym stands for "Fight Against Slavery and Trafficking." An estimated 40 million people worldwide are interned in government labor camps or otherwise exploited through forced labor.
By now, the FAST project is also supported by Australia, Norway and the Netherlands. With their strategic reorientation, Liechtenstein's banks appear well prepared for the Green Deal announced by the European Union (EU) at the end of 2019. The comprehensive program includes strict criteria for evaluating financial products that are advertised as sustainable or socially responsible. The EU taxonomy, which will regulate sustainability criteria down to the finest details, is expected to come into force in mid-2022.
The planned rules set will also affect the Liechtenstein financial center. The country is not a member of the EU, but the Principality is connected to the common market via the European Economic Area. "Alongside Asia, Great Britain and Switzerland, the EU is one of the most important markets for us," says LGT sustainability expert Finsterwald. Liechtenstein will therefore do everything in its power to meet the new EU requirements for banks, fund companies and financial products.
LBV President Gassner concludes: "The banks in Liechtenstein stand behind the Roadmap 2025 strategies, which put us in an excellent position to actively shape sustainability for the benefit of clients and society."
New blockchain law
Liechtenstein was the first country in Europe to introduce a law to regulate blockchain. This software technology allows for a transmission of valuables and rights of all kinds, from shares via licenses to real estate. Transmission is secure and largely protected from manipulation. Blockchain became known primarily through the cryptocurrency Bitcoin, which is admittedly not very transparent and can therefore easily be misused for criminal purposes. The Blockchain Act, which came into force on January 1, 2020, has laid the foundation for trustworthy use of the blockchain.
The article appeared in the 13 January, 2022 issue of the Frankfurter Allgemeine Zeitung. The online article can be read here (german only).