Mario Garnero Given ‘Global Innovation Award’ by Swiss Style

At a Ceremony held in London, Prize acknowledges Lifelong Commitment to Development by Brasilinvest´s Boss Mario Garnero, Chairman of Brasilinvest, Brazil’s pioneer merchant bank, was presented with the 2011 Global Innovation Award during a ceremony held at the Claridge’s Hotel in London on Saturday, September 10, by the Chairman of Swiss Style Magazine, John François Beguin.

Founded in 1992, Swiss Style is a unique media concept geared towards the needs of the affluent English-speaking population of Switzerland, Europe and Asia. Many of Swiss Style’s readers exert leadership and commanding authority over the allocation of the world’s human and material resources.
During the ceremony, John Beguin stated that “in today’s world, as we address the structural fault lines that belie global financial crises, it is vital that both the individual and the institution apply intelligence to their best ends and act. Lives, fortunes and the public good may, in fact, be at stake.” In such a context, he added “Swiss Style is honored to present its 4th Global Innovation Award to a man who well reflects both private industry and public good: Mario Garnero.”

The chairman of Swiss Style highlighted Garnero’s visionary and tireless efforts to position Brazil as a world-class power, effectively balancing its strong position in an evolving world. By awarding Mario Garnero, he said, “we also salute the women and men of Brasilinvest, who, under his leadership, have contributed in putting Brazil at the forefront of the BRIC acronym.”
Mario Garnero declared he is “delighted and humbled” by the Award. “We can now see how right we were in establishing Brazil’s first private development agency, for Brasilinvest works today with 80 partner companies in 16 countries. Awarding me is but a signal of Brazil’s growing importance on the global stage,” he concluded.

Former recipients of the Global Innovation Award include:

2010 Abu Dhabi Future Energy Company (MASDAR) CEO, Dr Sultan Ahmed Al Jaber for The MASDAR Initiative in searching for solutions to some of mankind’s most pressing issues: energy security, climate change and the development of human expertise in sustainability.

2009 TNT Express CEO, Peter Bakker and employees for their CSR linking hunger and climate change solutions.

2008 Azeri President Ilham Aliyev in behalf of the State Oil Company of Azerbaijan.

How difficult is it to travel along the entire Swiss border by paddling, cycling and – the really hard part – climbing? All this summer (July–September), the news and information website swissinfo.ch will be presenting the attempts of one man to do just that.

Switzerland’s borders are not the world’s most accessible

Sometimes, you wake up one morning with an idea that just doesn’t want to go away. Last year, John Harlin, an avid mountaineer and writer on mountain matters, decided he would like to literally circumnavigate Switzerland by tracing its borders. Harlin began realising this idea on June 23, 2010, on the south shore of Lake Geneva in the village of St Gingolph that borders France. He had set aside three months to achieve the feat, but about ten days into the trek, he took a major fall and broke several bones in his feet while climbing the Aiguilles Rouge du Mont Dolent on the French border.

The intrepid mountaineer was determined to resume his journey once the bones had healed. But in the meanwhile, in October 2010, he opted for a less foot-based activity of paddling along the northern border with Germany (Rhine River and Lake Constance), mountain biking the wild western frontier with France and kayaking across Lake Geneva.

Mission statement

For Harlin, tracing the nation’s borders is also a way to contribute another perhaps meditative answer to his own Zen-like question: “When is a people a nation, a border a boundary?” The answer is perhaps more readily found between the covers of books detailing the history of this country of rebellious tribes who defied Europe’s aristocracy. Or in the wealth of monuments from the monastery of Romainmôrtier, to the motorway service area at Pratteln or the broadcasting tower at Beromünster that also reveal a great deal of the country’s evolution. But a man sitting in an armchair reading books or helping himself to fried foods in a late 1970s pit stop would be of no interest whatsoever to today’s twitterati and Facebook junkies.

Techno-party

Harlin will not be alone. While he clambers up and down Switzerland’s rocky borders, he will be vicariously tracked by an army of Monday-morning “mountaineers” through his online, multimedia diary available on swissinfo.ch/harlin, Facebook and Twitter, and pinpoint his exact location thanks to a customised and integrated Google Map. He is using a smartphone instead of pen and paper, allowing him not only to take notes, snap pictures and shoot videos, but also upload them in near real time to the exact location on the map where they were recorded. The process has been more or less automated. More than 21,000 people from around the world already decided they “like this” by clicking on the corresponding icon. Harlin’s latest “Border Stories” updates are then sent directly to their Facebook profiles. And he has been picking up fans on the way, like one Catherine Deegan, who enthused through a forest of exclamation marks: “John, thank you so much for sharing your adventure with us! Like so many others, I too have followed every step of your journey and enjoyed the photos and videos. I look forward to next summer, where you can count me in!!!! Enjoy the rest!”

To the nation’s limits: on pristine lakes…

The excitement is mounting, as it were. This summer, John Harlin will resume his conquering of the thin and often dangerous line that separates Switzerland from its Austrian and Italian neighbours. If he were to stay on the exact border, it would involve about 280,000 vertical metres of up and down. So he has planned to follow more trails and not climb every mountain. “If I stick to that plan, it is only 220,000 vertical metres,” he says. “That is like climbing Mt. Everest twelve times round trip from the sea.” The other great challenge he might encounter is the weather. Storms, wind and even snow would force him onto trails and off the peaks. “No matter what, there are certain important peaks that I really want to climb. The Matterhorn, of course, but also Monte Rosa, Piz Buin, Piz Bernina, Mont Dolent, and many others. Traversing these mountains is a big part of the adventure,” Harlin says.

Whether or not the deep question about borders and boundaries and Swiss national identity and international recognition through the ages is being answered by a mediagenic walk around the national borders is perhaps irrelevant. Altruism is often just a by-product of an ulterior motive. For Harlin, the Border Stories are essentially a way of challenging himself while at the same time literally embracing a country that he has made his home: “It is a really big, extremely interesting adventure, bigger and more interesting than any I have done before. Switzerland has always fascinated me. I lived in Leysin as a youth and somehow Switzerland became a part of my soul like no place else. It is mostly the mountains, but not just the rock and ice and tundra – also the people and chalets and cows.”

John Harlin III

John Harlin III

John Harlin III was born in 1956 and grew up in Germany and Leysin, Switzerland. After his father died in 1966 attempting to be the first to climb the direct route up the north face of the Eiger, his family returned to the US to live.

He finally climbed the Eiger north face himself in 2005, a feat that was the focus of the popular IMAX film, The Alps. He is the editor of the American Alpine Journal (published by the American Alpine Club since 1929) and a contributing editor to Backpacker magazine.

Follow Harlin and his multimedia Border Stories live on:
www.swissinfo.ch/harlin
www.facebook.com/swissborders
www.twitter.com/swissborders
swissinfo.ch is one of the enterprise units of SRG SSR, Switzerland’s public-service radio and television broadcaster. Its remit is to inform Swiss people abroad of what is going on at home, and to raise awareness about Switzerland beyond its borders. To this end, swissinfo.ch operates a news and information platform in nine languages. www.swissinfo.ch

Borderlining

Human beings are compulsive, Mother Nature a lot less. For centuries, wars have been fought over at times irrelevant bits and pieces of territory, but natural erosion and the effects of global warming have also had an important role to play in shaping nations. Unbeknownst to many, for example, Switzerland has been expanding. Not enough to excite real estate investors, of course, especially since the territory gained is mostly around inaccessible mountain peaks and ridges – though one should never underestimate the creativity of asset managers. The reason is that the borders between Italy and Switzerland were established using the water divide on top of glaciers. These have been melting rapidly in Switzerland’s favour, lowering the divide to the nearest land ridge, the core parameter in establishing borders. Glacier depletion near the Furggsattel (Matterhorn region) shifted the border by up to 150 metres into Italy. Seen from the perspective of a topographer, then, John Harlin III’s Swiss border adventure is probably inaccurate. Similarly, river borders are drawn in the middle of the streams, be they rivers, like the Rhone and the Doubs, which separate France and Switzerland, or tiny streams. They, too, tend to shift around naturally.

Article by Marton Radkai

From smoke signals, cave drawings, semaphore and heliographs, to the franchise system of the Catholic Church and religious hymns, human beings have always been excited about spreading some sort of message by any means possible. It’s all about “staying in touch,” essentially. Nations do it as well. Switzerland, for instance, has swissinfo.

Hi-tech from the good old days when Switzerland had a shortwave voice

Communication is what makes us feel less lonely and less vulnerable. Through communication we, as human beings in general and members of a tribe or community, become attached to a greater circle of other human beings. Not surprisingly, when radio communications began developing at the beginning of the 20th century, it became immensely popular. Not unlike the priests at the pulpit or medieval town criers, this new medium allowed news, entertainment, information and disinformation to spread to anyone with access to receiving technology – an ear, a church, a radio set – even to people who could not read or were occupied doing manual chores. It gave everyone the feeling of being connected, no matter how tenuous, illusory and one-sided the communication channel.

Once the amateur short-wave cowboys had shown the way in the 1920s – drawing parallels to the Internet explosion is inevitable – larger and wellfunded corporations jumped on the bandwidths assisted in particular by the development of the loudspeaker. The new conquerors of the air were a broad mix of bona fide news organisations like the BBC Empire Service (1932) to the noisy propaganda departments of the Soviet Union and the brand new Nazi Germany. And because the medium was relatively inexpensive, anyone with a product to sell or an axe to grind – like the notorious Father Coughlin in the USA – could suddenly reach millions of listeners with a relatively low investment.

Small country, big voice

By the early 30s, Switzerland had organised its regional radio stations into a national public broadcasting organisation and started looking beyond its borders. The League of Nations in Geneva had a short-wave transmitter that served for initial tests. Finally, in autumn of 1935, the Swiss Broadcasting Corporation launched Swiss Shortwave Service, which communicated news from the home front to the 200,000 or so Swiss citizens living abroad. At the time, it was just one of the smaller fish in the great radiophonic ocean. Then came World War Two and the four-year occupation of Europe by the Nazis. While the BBC managed to draw much of the spotlight owing, perhaps, to its safer position off the continent and its access to celebrities like Charles De Gaulle, it was also a moment of glory for the Swiss broadcaster, which kept Europe informed of daily events right from the thick of it. As its fame grew, so did its number of broadcast languages, which now included English, Portuguese and Spanish on top of German, French and Italian.

It continued growing throughout the Cold War adding Arabic and more frequency hours per week. The station’s strictly independent stance was well suited to the country’s decidedly neutral status and had a high level of listener appeal, as James Wood suggested in his History of International Broadcasting. In 1978, the name changed to Swiss Radio International (SRI). When the East Bloc broke up, media representatives from the former Communist countries were invited to come to Bern, home of SRI, to learn the trade from the station’s well-trained journalists and editors. Technology continued to evolve as well. Satellite transmissions in the early 1990s enabled SRI to reach millions of homes around the world in excellent quality. Content, though, was not cheap, and as has now become usual in an economy dominated by the bottom line, it was the ants who started determining what the voice of Switzerland was going to sound like, not the grasshoppers. Radio found itself in an unusual twilight zone, ephemeral by its very nature – disembodied voices using an especially pictorial language, now, alas, defunct for the most part – quite costly, yet not nearly as hypnotising as television. For those who worked with international radio stations, the 90s were stormy. Services were drastically cut, journalists, many of whom were seasoned freelancers with vast experience, found themselves without work or facing major pay cuts. All the while, paradoxically, the need for “content” grew and grew.

End of an era

For many involved in the grand adventure of finding and reporting news, from brittle politics, to cute human interest blurbs, the inexorable rise of the Internet offered little relief, since everything virtual is expected to be virtually free-ofcharge as well. But it was an opportunity for SRI, which performed a complete reset and reboot in October 2004 when the last programme was broadcast over the air and SRI became the multimedia platform swissinfo.ch with all the flexibility that technology could offer. The new website utilised traditional text reporting and as the applications appeared, increasingly incorporated videos, podcast, audio slideshows and picture galleries, all for the purpose of informing its audiences on relevant or interesting issues. “As we receive 50 percent of our funds from the Swiss government, we have the mandate to provide information for Swiss abroad,” explains Christophe Giovannini, Editor-in- Chief of the site, “but we are completely independent in our reporting”.

When the website first went online in 1999, it only appeared in German, French, English and Portuguese, not unusual considering the generations of Portuguese who have made Switzerland their home. Over the years, in order to meet the demands of other short-term visitors or residents from other parts of the world, the website has added Japanese, Italian, and Spanish in 2000, and one year later Arabic and Chinese. According to Giovannini, 70 percent of the stories are the same across all nine languages, with 30 percent of the stories that are only available in one to three languages based on the topic and its relevancy to the specific language. The website sources its daily international news from the wires but it produces around two to four original articles daily covering economic, political and social issues concerning Switzerland, or giving a Swiss point-of-view on a specific issue. The recent events in Japan, for example were covered by interviewing academics and experts in nuclear power from Switzerland. Many swissinfo journalists are Swiss, or foreigners who have made Switzerland their permanent home. They are a mix of salaried worker and freelancer.

Wider spectrum Even though the website continues to serve its mandate of providing Switzerland issues to citizens abroad, it has also become a source of information for foreigners interested in Switzerland or expats within. The various language sites offer tips and advice for those who are interested in or are already living in Switzerland. Greater user interaction has the additional advantage of attracting more hits, thereby growing the site’s value, always a good idea when its time to renew funding. In addition to keeping up with the daily news, however, the makers of swissinfo also have to keep abreast of technology and trends if they wish to stay in the game. The website recently launched surveys to research and receive viewers’ opinions about current issues. This is part of a drive to encourage greater user participation in the site. “We would like to generate a forum of debate on different stories, and to also allow journalists to answer and interact with audiences,” says Giovannini. To that end, viewers are invited to create a personal account on the website and track their comments on certain articles or issues. This, arguably, could dilute the news or at least distract from it, since viewers do not necessarily have the expertise or the time to research in depth. But is that really what is demanded from the media these days? The Internet seems to have redefined reality by creating a virtual world. Whatever the future holds for the media and swissinfo, one thing is sure: RSI, once a dynamic radio station and a quintessentially Swiss voice, has come a long way.

article by Marton Radkai

Even a lowliest building seems more attractive with a Swiss flag pattern

One of the simplest ploys of political hacks to garner votes is the play on national aspirations to, at times elusive, greatness. Vicarious nationalism is simple. Quantifying and qualifying national value is less so. Since 2006, the Swiss government has been hard at work revising the old law defining what is “Swiss made,” and it seems to be raising questions.

When the going gets tough, it’s always good to find something comforting to hold on to, an island in the storm, a soothing cup of hot chocolate in the middle of a cold, sleepless night, a watch that tells the time accurately. Even more comforting is the presence on the product of a little white cross on a red background and the word “Swiss” somewhere. It will generally be considered more reliable, more efficient, of better quality, more trustworthy than products or services from other countries.

The item might be a knife, a massive CNC machine, a savings account, or a jar of cream promising to restore one’s face in a few easy smears. Replace all the Swiss iconography with country X – feathers are easily ruffled, hence the anonymity – and immediately, truly or falsely, one thinks of dull and shaky blades made of quickly recycled steel, machines that don’t work, vanishing money and creams that will make you blind or burn a hole in your cheek.

It’s all about branding, which bundles the hidden persuaders that drive advertising and to a large extent the consumer market. Nations and their flags are often used as brands or cobrands to reinforce or express a specific quality. Swissness, as it is known, is one of the more powerful national brands on the international roster, in particular for certain categories of goods, like food, cosmetics, precision engineering, including mechanical watches, and the like. It manifests itself in the use of the word Swiss and a variety of emblematic images, like the country’s flag or the unmistakable profile of the Matterhorn. Branding expert and designer Andreas Markessinis writes on the Nation-Branding. com website: “Because Switzerland is perceived to be a country where its inhabitants enjoy great economic wealth and a great quality of life, Swiss-branded goods are also regarded as expensive and high quality.” In a 2007 article, Marco Casanova from The Branding Institute in Luzern even went further, suggesting that the reliability and quality associated with “Swiss” things contributed to the build-up of the nation’s general state of wealth: “Due to a positive image radiating on to those products and services that was consciously associated with the values projected into the ‘Swiss’ brand, it was possible to kindle or reinforce the attitude of consumers, which resulted in purchases.” In fact, the value of Swissness can be computed, as confirmed in many studies, notably one by the University of St. Gallen suggesting that Swiss branding can increase the value of a product or service by 20 percent on average, with spikes of 50 percent for luxury items. For the watch, jewellery, chocolate and engineering together, the added real revenue from a few words and symbols is around CHF 6 billion per year.

Holes in the Swiss cheese

The downside of the high co-brand value – and one of the paradoxes of luxury – is overuse and in some cases abuse. Over the past ten years, the number of companies using Swiss imagery or terminology on their products has grown by 400 percent. Those companies are not necessarily Swiss, and naturally not everything marked Swiss is actually Swiss made. Anyone can walk down rue du Montblanc in Geneva, for instance, and find hundreds of items in tourist shops bearing bold and gaudy Swiss crosses, but “Made in China” printed in more discreet tones. And this applies not only to made-for-tourists dust collectors. Not surprisingly, consumer confidence in the little cross on a red background eroded, which led to a general weakening of the brand or co-brand’s value. For a nation in which about half the GDP is earned from exports, the situation was somewhat threatening.

The brand is in fact protected by laws. A watch that claims to be “Swiss made,” for instance, has to have 51 percent of the value of its movement created in Switzerland, and assembly and quality control must have been performed in the country as well. As for use of the flag for branding, it has been prohibited since 1931, but in language that left some leeway. The law “explicitly prohibits using the Swiss cross for economic purposes on products or their packaging … So it is not allowed to put the Swiss cross on foodstuffs even if they have been manufactured in Switzerland.” On the other hand, the Swiss cross could be used for services and advertising, as long as it did not offend taste and decency, including deception as to the “geographical origin, the value or other characteristics of the products or services, the nationality of the company…” Violators, if caught, would receive a warning from the Swiss Federal Institute of Intellectual Property, but enforcement, except in cases involving the flag, was hardly possible.

Je pense donc je suisse

In 2006, in light of growing concern about the cavalier use of the brand, the Federal Council proposed revitalising and strengthening the regulations governing how much Swiss had to be in “Swiss made” and the government and its institutions set about defining the criteria for carrying the label. The goal of the so-called “Swissness” project is to create a clear legal framework allowing for control and enforcement and re-charging the brand. Some provisions are cut and dry. No one disputes that products from within the country’s borders, like fish, venison, plants, and so on, are Swiss and are perfectly entitled to be labelled as such. Swiss service providers, being usually inside the country, will probably be unaffected. When it comes to processed natural products, however, like cheese, biscuits, ice cream, and the country’s famous export, chocolate, Swissness suddenly becomes a legal and political conundrum. The proposed criteria for Swissness is at least 80 percent of the weight of the raw materials available in Switzerland that compose the product must come from Switzerland, and the part of the process that gives a product its unique characteristics must take place in Switzerland, like the processing of milk into cheese. It sounds pretty clear-cut, but there are exceptions for natural products which are not found in Switzerland (cocoa, for example) or that are temporarily unavailable (due to crop failure following a storm, for example). Consumer groups and agricultural associations, who are fairly strict patriots when it comes to comestibles, are happy with the draft law as it stands. Mathieu Fleury, General Secretary of the Consumer Association of French-speaking Switzerland, puts it succinctly: “If it says Swiss on it, it should have Swiss inside it.”

The processing industry, however, feels it is too limiting, and there are other criteria that should be put on the table. The Federation of Swiss Food Industries (FIAL) proposed a separate 60-percent clause for heavily processed foods – sauces, candy, soups, etc – and “an indication of source for less processed raw foods reflecting the location where 80 percent of the raw materials come from”. Further, in a FIAL press release, Daniel Lutz, in charge of frozen foods at Nestlé, came out in support of using criteria like quality, knowledge, work input and innovation, otherwise some notoriously Swiss products, like Thomy mustard and the quintessentially Swiss paté in the tube, “Le Parfait,” could lose their Helvetic accolade. In his eminently quotable words: “Too much Swissness is killing Swissness.” Suffice to say, the 80-percent resolve has started to weaken given the pummelling by Switzerland’s heavyweights. The subcommittee of the National Council’s Committee for Legal Affairs, which is mandated with a detailed preliminary examination of the bill before it will go to Parliament, has started mulling over other factors that need to be considered, such as the origin of the idea. Experts are also discussing whether the relevant criteria for processed natural products should be the degree of the weight of the raw materials or manufacturing costs.

Manufacturing future

As for industrial goods, they are also the subject of fairly intense deliberations. “There are companies producing 100 percent in Switzerland, and they want a law focusing on production criteria,” says Felix Addor, Deputy Director of the IGE. “Other companies, like some pharmaceuticals, use raw materials from Switzerland but produce abroad. So if all the research and development is done in Switzerland and the drug is approved here, is it a Swiss drug?” The current draft foresees 60 percent of manufacturing costs including R&D being spent inside Switzerland. Naturally, the computation of those costs will exclude the materials used in manufacturing, such as gold, iron, aluminium and other raw materials not available inside the country.

The watch industry, one of the big promoters of a more stringent law, is not so happy. At an interview at Baselworld, Jean-Daniel Pasche, President of the Federation of the Swiss Watch Industry (FH) was enthusiastic about the fact that the government had apparently accepted the FH proposal for a 60-percent Swissness proportion for electronic (power-end) watches, and 80 percent for mechanical watches. “This is absolutely necessary to maintain the credibility of the label,” said the FH boss. In mid-June, however, the 80-percent criterion was rejected probably under pressure from the European watch industry and much to the dismay of the luxury watchmakers. It would have affected, among others, the small component manufacturers in the French Jura, which entertain close trading ties with its Swiss counterparts across the River Doubs.

On the other hand, watchmakers in the lower price range producing cheaper quartz timepieces are worried that even the 60-percent limit could actually have a negative effect, however: “In order to increase the Swiss percentage of manufacturing costs,” a press release from the lobbying group IG Swiss Made proclaims, “manufacturers will have to resort to cheaper and, hence, lower quality materials from abroad in order to maintain the higher Swiss percentage”. The decline in quality, the group suggests dramatically, could lead to loss of thousands of jobs. For Ronnie Bernheim, co-CEO of Mondaine Group, the change in the law only serves to increase the dominance of the high-price segment. “Swiss made means quality and reliability and any strengthening of the law must serve the consumer,” he points out. “I’d say, for example, an obligation that all Swiss-made watches should be waterproof and reparable in all regions of the world for at least ten years. That would be a real added value for the consumer rather than a complicated regulatory excluding law.”

Business is business

Felix Addor, for his part, believes that ultimately business sense will prevail. “Those who are interested in profiting from the added value of the brand Switzerland and the Swiss cross will simply change their production processes to comply with the regulations.” An understandable and transparent law will also support enforcement, he feels. “If the rules become complicated and disparate, then enforcement will be difficult, too.” Will the Swiss government’s “branded” ingenuity serve to develop loopholefree regulation of Swissness? The money is on yes, but introducing exceptions has the tendency of clouding issues, which could in turn restore the status quo ante. There are external elements that might also play a role, like the status of the ongoing agricultural free trade agreement being negotiated with the European Union. The very strong Swiss franc could also influence the deliberations. While it is a burden for an exporting country, it also means that raw materials purchased abroad are fairly cheap. At any rate, the current projection for a final decision is late 2012.

Whatever the outcome, though, Swiss will probably remain a mark of distinction for all sorts of products, from throat-cleaning candies to stockings, from bags made of recycled lorry canvases, to aluminium water bottles. Hence, no matter what the law says, there will always be companies and individuals in the market trying to make an extra rappen or two bamboozling the buyer. Even domestic businesses do that at times. The consumer rule of caveat emptor applies. If people wish to purchase products that are more expensive because they say “Swiss” on them, it would appear to be their problem. What makes real Swiss products so popular is the reliable functionality, unpretentious yet innovative design and robust manufacturing, very much like the Swiss flag itself, which might have been designed by one of the apostles of the Bauhaus movement. Unfortunately, simplicity is easily replicated, and even experts have trouble telling the difference between an original and a fake and no amount of ingenuity can correct that problem.

Article by Marton Radkai

Carl Elsener

How deceptive postcard pictures can be. A small, sleepy town nestled in the green pastures of quiet, quaint Switzerland; a large family devoted to the craft business founded by their great grandfather; a pleasant, soft-spoken couple, Carl and his wife Veronika Elsener, at the head of the family affair. Welcome to Ibach, a small town of just over 4,000 inhabitants in the Swiss German-speaking canton of Schwyz.

It is here, at the very heart of the historic cradle of Switzerland that the Elseners run their family business. The region is often regarded as one of the most old-fashioned, primordial, if not plainly conservative regions of an already conservative country. When an interview is arranged to know more about the company, Carl and his wife Veronika come together as the representative members of a family of eleven siblings, many of whom work for the company. It all sounds like your textbook family legacy walk in the field. But we are in for a big surprise. Carl Elsener, the man who heads Victorinox, of Swiss Army knife fame, is soft-spoken indeed, and tends to sound more sweet than aggressively entrepreneurial when he describes, with a smile, Victorinox as “a box full of surprises”. But in truth he is nothing less than a brilliant businessman who managed to make his very Swiss company, as he likes to describe it himself, a very successful one by any national and international standards.

It all began in 1884 when Elsener’s great grandfather, Karl Elsener – after which his great grandson is named – opened his own cutlery business in Ibach having earned his spurs in Paris and Southern Germany as a journeyman. The tough economic conditions of the 1880s had forced many Swiss to emigrate, and Elsener was hoping to provide jobs to his fellow-countrymen, and to do so on the long term, a mindset that remained the cornerstone of the company structure. The company very early on became the official supplier of knives to the Swiss Army, and in 1909 started to use the very Swiss symbol of the cross and the shield to clearly differentiate its products from those of its competitors. A brand was born. To this day, all Victorinox products bear the same identifiable emblem, so reminiscent of the Swiss flag that one would be forgiven for assuming that Swiss Army knives and other Victorinox products are actually produced by the Swiss government itself in an attempt to capitalise of what must be one of the world’s most instantly recognisable flags.

Swiss Army Knife

What was at first a simple move aimed at making the product stand out among others has become, under Carl Elsener, in the fourth generation, a very clear and conscious marketing strategy. Interestingly, Victorinox’s competitor Wenger used their symbol of the cross as well on all its products without either of the two companies ever dreaming of changing their respective logo, Finally Victorinox bought out its competitor a few years ago.

Elsener recalls how his company was traditionally “all about the product”, manufacturing and providing the best knives possible to the Swiss and US armies, business partners and the general public. “Victorinox was not so much about the marketing,” says Elsener, who quickly saw the branding potential of a high-quality Swiss product. Ever since the Second World War, the US had become the single most important market, with the US Army, Air Force and Marines all using Victorinox knives. Those clients held Victorinox in high regard, and the Elseners, who were starting to feel the need to branch out from the star product focus, sensed that it was time to capitalise on this good image. Elsener seized the opportunity when his American distributor came to pay a visit to Switzerland and, impressed by the country’s watchmaking, asked about the possibility of producing watches with that quintessentially Victorinox cross and shield on them. Worried about what would become of Victorinox if “Asia was ever to find a way to produce good quality knives while maintaining their low prices,” Carl Elsener knew it was time to diversify and that relying solely on one product was becoming too risky. “I figured customers would always be willing to pay a little bit more for high quality products, especially if it comes from a brand they identify with,” he says softly.

Deeper meaning

Carl Elsener tellingly notes that it was “time to invest in the brand”. Watches, often identified as a “pure” Swiss product, stamped with the high quality image of Switzerland, seemed like “the right direction to go,” and in 1989, Victorinox launched its watch range. The Elseners did not stop there. As Veronika Elsener explains, “we really wanted to open up our minds”.

And opening up they did, identifying the products that could be brought under the Victorinox name without diluting the brand power, but instead reinforcing it. “It looked to us as if watches, outdoor equipment and clothes would be accepted as natural Victorinox products,” says Elsener. And so 1999 saw the birth of a travel gear line. Not the one to toot his own horn, Elsener gentle tone belies the fact that this was indeed a truly bold decision.

It took vision and guts to sense and implement the branding potential of the family business and then to achieve the right balance between selling – when your company is product-focused – and branding – when you are all about the image. Elsener’s advantage was that the new products for the market were as high quality as the knives that had made the brand’s reputation. Like many other company managers today in Switzerland, he also knew how to leverage the business’s Swissness for marketing purposes. “Brand” is a word that he and his wife use repeatedly, as they have clearly understood its power and use it to the company’s advantage.

But there is more than just good marketing savvy in the Elseners’ story; when Carl Elsener enthuses that “brands are something people identify with” and that Victorinox exudes Swiss values like high quality and professionalism, what one really feels is how the Elseners are their brand. Their passion, devotion and trust in what they produce go well beyond any calculated PR talk. Victorinox is the Elseners, and the Elseners are Victorinox in the most positive sense: they nurture their company and their brand by being truly innovative, exploring new possibilities, and venturing into new products. This might be why Victorinox’ branding turned out to play such a crucial role in the expansion of the company, and why the new products actually reinforced the power of the core brand. As Scott Bedbury, the man who has been credited with building the brands of Nike and Starbucks, says: “A great brand taps into emotions. Emotions drive most, if not all, of our decisions. A brand reaches out with a powerful connecting experience. It’s an emotional connecting point that transcends the product.” The South African publication The Entrepreneur Magazine notes that, “if you go back and look at the history of any great brand, from a large or small company, you will find people who are super passionate about their work underlying the brand. In some way that passion transcends into the product and into the experience that the customer has when using that product… A truly passionate entrepreneur is something very special.” Not only did the Elseners tap into the Swissness of their company to help developing it, but they truly believe in and embody this Swissness themselves and they are clearly passionate about it. What could be perceived as a calculated and clever move to use their country’s image actually comes naturally to them.

It was obviously the right move. Swissness has become a competitive advantage in itself. Over time, it has come to embody a mix of luxury, excellence, quality, and trust that are thought, rightly or not, to emanate from anything originating from Switzerland. The products that leverage that Swissness aspect benefit from a very positive image that enable them to win and keep customers while positioning themselves at the higher end of the market in terms of price. This is actually so effective that the Swiss government has been in the process of revising the criteria for using the designation Swiss made or even emblematic images. The new regulations should make it harder for companies to actually use these terms. An innovative entrepreneur at the head of a family business, Elsener perfectly understood this, echoing the words of Richard Branson, CEO of Virgin and someone who happens to know a little bit about branding: “A brand is more than a name or a logo – it is a promise and a contract with every customer with whom you are dealing.” And for the next decade, the Elseners resolutely honoured their contract and drove up the success of the company.

A few years into the diversification of the product range, distributors started to ask the company about licensing possibilities. Here again, the Elseners were careful to remain true to their business’s core values, selecting only high-end distributors, issuing very strict guidelines about the use of the Victorinox brand and the products’ quality. Risk-taking and innovative entrepreneurship seemed to be paying off, and the Elseners did not flinch when Cutlery World, one of their most important clients in the US, went bankrupt. They put on their innovation cap instead, reflecting on the best way to keep on reach- ing their US customers, and decided to launch their own retail chain. Elsener humorously remarks that “we could not fill up shops only with knives,” again a very matter-offact observation that led to the launch of the Victorinox clothes line in 1999. The Elseners’ pioneering approach was to culminate with the opening of the Victorinox flagship store in New York sometime during the month of September 2001, right in Soho, the city’s trendy neighbourhood. But something else happened that month; something that would derail Victorinox from its successful course.

The world stage

Careful diversification: luggage is still allowed on airplanes

The images of the September 11, 2001 attacks are still vivid in everybody’s mind. Beyond the obvious and immediate suffering of those who lost family or friends that day, the attacks sent shockwaves from New York directly through the global economy. The effects were short-lived in the end, but the airline industry took a severe and more lasting hit. After 9/11 airlines operated and people travelled differently.

The most obvious and visible consequence was a drastic change in air travel regulations to prevent that planes could ever be used as potential weapons again. Airlines’ bookings were directly affected, as were the travellers who kept on flying and now had to face long waiting queues. But 9/11 and the radical change of airlines regulations that followed also made collateral victims thousands of kilometres away from the US. As airlines forbade to carry knives on board, Victorinox, for which the US was the most important market, witnessed an almost overnight decline of 30 percent in its turnover. Business to business sales also decreased sharply, as Swiss Army knives were now perceived as an inappropriate gift in the US – the terrorists had used simple box cutters to hijack the planes. “Watches helped to compensate the drop a little bit, but it was indeed a very difficult time,” admits Carl Elsener in his usual even tone, which does not give away the number of sleepless nights one assumes the Elseners must have gone through trying to find ways of saving their business. This task was even made more complex by the Elseners’ resolute decision not to let one person working for their company go.

It is very telling that in a time when most company CEOs would decide that they have no choice but to fire employees in order to save the company – all the more so if the business is a family one you are strongly attached to and would save at any cost – the Elseners concluded that this was to be avoided. The explanation for this once again lies in the clear, unwavering attachment and respect the Elsener family displays for the values on which their business is built. Employment opportunities were after all what Karl Elsener had in mind when he founded the company, and it only seemed natural to the Elseners to respect this principle. Renouncing redundancies meant that to save the company they had to come up with a more savvy solution than cut, cut and cut more.

A little deeper and counterintuitive thinking goes a long way. Victorinox froze hiring, cancelled overtime and reduced shifts by 15 minutes. Employees were encouraged to take vacation, sometimes in advance of when it was due. Stocks, an issue that can end up being very costly to a business, especially one in a precarious situation, were easily managed, as Elsener notes with a wry smile: “Luckily, knives do not take a lot of space to stock up.” One of the most innovative measures saw the company’s senior managers approaching other companies in the Ibach region to ask if they needed highly qualified workers temporarily. Elsener estimates that 60 to 90 Victorinox employees were lent that way to other businesses in the region for periods ranging from three to six months. Thanks to these measures, Victorinox managed to keep all the employees on its payroll. Most of the anti-crisis measures were in place for about two years. But Victorinox did not just remain reactive during this period, it also managed to create new opportunities to accelerate its progress towards recovery. The company speeded up its investments in new products, such as watches to sell in airports instead of pocket knives, and towards new markets such as Russia, China and India to lessen its dependence on a particular product, the knife, and sales channel, the US.

Out of the maelstrom

So did it work? Victorinox did not simply survive the 2001 crisis, it actually – once again in the history of the company – turned it to its advantage by using it as a means to create new business opportunities. It kept on making profits and expanding, opening its first European flagship store on London’s New Bond Street in 2008 and its first Swiss flagship store in Geneva in 2010, always high-end retail locations.

The company is now venturing into new territories with the launch of a new luggage line, a new product that still embodies the values of the brand, “quality, innovation, functionality and iconic design”, Elsener proudly enumerates. The Elseners’s crisis management proved to be so successful that it actually became a case-study within business schools, with the Financial Times running a piece on it and remarking that the company had not only avoided bankruptcy, it had “also consolidated the loyalty of its workforce and diversified into various new product lines, including watches, travel gear, fragrances and fashion – many of which could still be sold in its traditional outlet of airports. These new product lines continued to carry the top quality image of the Victorinox brand and represented up to 60 per cent of company turnover composition in 2009”.

What Carl Elsener demonstrated was an unwavering belief in his brand, and that the almost platitudinous crisis- opportunity sequence was not just a tired buzzword. He used the hard economic times “to renew the company and to keep on being relevant in the market”; his wife remarks that a “new blood” was needed and that “new markets demanded changes in the management style”. Here again, their “power of the brand” credo was put to good use. The Financial Times notes that “having committed workers who understand and share the company mission is the goal of many businesses. But few achieve this. Victorinox is one of the exceptions. The secret lies in the consistency the company has always demonstrated. Victorinox has matched its words about cultural values with actions. It created some employee-oriented management systems, such as long-term employment, training and development opportunities, and an integration policy that aims to better incorporate young and older workers, immigrants and people with disabilities into its workforce. It maintains a 5:1 salary ratio between the highest-paid and average-paid workers. Most important, Victorinox stuck to its founder’s credo in bad times as well as good. This is how Victorinox wins commitment from its workers and was able to develop new top quality products, such as its new line of luggage, that achieved the same excellence”.

No small compliment coming from one of the most respected financial newspapers around. And it all goes back to those core family values that the Elseners staunchly defend. “We are a company of nine hundred people that actually feel like they are part of a family”, says Carl Elsener, “and this feeling actually became even stronger after the 9/11 events”. The Elseners even go as far as praising the “Christian values” passed within the family as a reason behind this resounding success, a speech that would normally raise eyebrows within the business community and beyond. But the Elseners are everything but conservative bigots. For them, Christian values on the contrary mean taking care of their employees and ensuring the future of the family business is secure, values often overlooked in modern management practices. “The future of the company is always paramount,” stresses Elsener, “and we do not consider ourselves owners of the brand, but rather responsible for it”. This is a rather striking thing to say, and something seldom heard within the business community. It is nonetheless a managerial attitude more and more people, among the general public but also in political circles, would like to see replicated. When the 2008 crisis broke, many expressed disgust at a financial system that seemed to be profoundly disconnected from reality or for that matter from any kind of positive values, and heads of government around the globe called for an overhaul of the system to finally achieve “responsible capitalism”.

The company is more than just another business selling Swiss-made items. The Victorinox story above all shakes any misconceptions one could have had about what seems at first a traditional family business centred around an almost folkloric product. It also ultimately pushes us to revise our misconceptions about Switzerland in general, a country generally thought of as somewhat quaint and stodgy, old-fashioned, even comical. In March last year, the renowned Economist issued a harsh piece on Switzerland, stating that “bored and frustrated financiers were homesick for grimy, high-tax London,” a nostalgia wave apparently entirely induced by the “oppressiveness” of Switzerland, perceived as boring and monotonous, to the point that even a lower tax bill could not console depressed foreign traders. One of them, moving his business back to London, assured that “the best training for young traders is on the dealing floor of one of the big London-based banks”, which prompted the magazine to conclude that “size, it seems, is still a big advantage”.

Yet the country has more to offer than what meets the eye of the dispirited expatriate. According to the European Innovation Scoreboard (EIS) in 2010, Switzerland was a leader amongst innovative countries in Europe. Its performance in innovation grew four percent above the average rate. The EIS explains that these results reflect “a balanced innovation system with a strong position to compete globally. Switzerland scored especially well in the field of registering international patents. Moreover, it also distinguished itself by a particularly high rate of employment in cognitive activities and the proportion above average of innovative SME and high-tech products exports”. Switzerland appears to be “an agile economy, standing out in European competition and which can rely on the expertise of top universities and research in Switzerland. It has clearly imposed itself as an economy of specialised knowledge and highly skilled professionals”.

The success story of Victorinox proves that in Switzerland business can be innovative and risk-taking while at the same time respectful of what people around the country regard as “Swiss” values: quality, client service and very good employment conditions, among others. Victorinox and other Swiss companies, be they well-known large multinationals or thriving SME, show that competitiveness and profitability can be sustained and even expanded without having to make sacrifices to the demands of harsh capitalism. A revolution might be taking place in Ibach, albeit a very Swiss revolution, quiet and civilised. Maybe some postcard pictures are not so far from the truth after all.

Human business

Carl Elsener: recession without (too much) pain

Could it be that Victorinox actually found the winning formula to save the system from its own egregious self? The concept of responsible capitalism is gaining ground and has been defended for quite some time by Professor Michael Porter from Harvard Business School, who developed the idea of “shared value” in the Harvard Business Review earlier this year. Porter’s notion of shared value embodies the connection that exists between societal and economic progress, a link that has not only been overlooked but also undermined by what Porter calls the “current capitalism outdated approach to creating value”. Porter sees a true “hunger for purpose” within the business community and beyond, that capitalism in its current, most usual incarnation does not seem to fulfil, as expressed by the general public outcry on the aftermath of the 2008 financial crisis. Because “business is profiting at the expense of society, consumers and employees,” argues Porter, “capitalism is being increasingly seen with suspicion and even hostility”. According to Michael Porter, most companies around the world keep on viewing value creation narrowly, optimising short-term financial performance in a bubble removed from societal needs, ignoring the broader influences that determine a company’s long-term success. “How else,” wonders Porter, “could companies think that simply shifting activities to locations with lower wages is a sustainable solution to competitive challenges?” A move, incidentally, that Victorinox never had to consider, and that has most probably never even entered the mind of the Elseners.

This “old, narrow” view of capitalism advocates that business contributes to society by simply making a profit, which in turn supports employment, wages, purchases, investments and taxes. This is the view defended by Milton Friedman and a line of argument Porter deems as completely disconnected from current society’s needs, as the logic behind Friedman’s thinking puts financial profit-making above anything else and prevents managers from understanding that a company can create economic value by creating societal value. It is actually what could guarantee its longevity and success in the long run, as a narrow conception of capitalism actually halts its course to achieving its full potential. According to Porter, the “socalled trade-off between economic efficiency and social progress” is what creates artificial limits to what capitalism could bring about to society as a whole. Even the “corporate social responsibility mindset,” as Porter puts it, fails to grasp the true possibilities of capitalism since it puts societal issues “at the periphery rather than at the core”.

When Porter calls for “a more sophisticated form of capitalism imbued with social purpose, one that should arise not from charity but rather out of a deeper understanding of competition and economic value creation,” those familiar with the Victorinox success story cannot help but see how the Swiss company embeds Porter’s notions of shared value and societal capitalism, and furthermore, how it actually contributed to the company’s success and general profit sustainability. Carl Elsener truly echoes the ideas of Michael Porter when he enthuses about the values of the family company, how relevant they still are to their today’s business and how central they are to the day-to-day management of the company: from the products’ high quality to human resources management, everything at Victorinox is a reflection of values the Elseners have identified as being in total harmony with their business environment and history.

It is a persuasive illustration of how the type of capitalism advocated by Michael Porter and others can actually be successful in pure economic terms but also in societal terms. A German journalist touring the Victorinox facilities in Ibach was amazed to hear employees saying that working at Victorinox was “quite close to paradise”. And it must be, since the company can pride itself in employing 43 people that have been with Victorinox for 50 years, and 101 that have been with the company for 40 years, nothing short of exceptional in today’s business environment. Furthermore, and as a perfect illustration of Porter’s argumentation, Elseners’ view on business conduct not only contributes to the company’s present success but also enables the family to secure its future. The eleven Elseners siblings have managed to agree on putting their company’s shares in a foundation to ensure that the family business will not be the victim of potential familial bickering. This guarantees not only that Victorinox can remain financially independent, but also that the brand or company does not disappear in the event of an inheritance dispute. And finally, 15 percent of the foundation finances are dedicated to the support of “qualitative projects all around the world,” as Carl Elsener discreetly calls them.

Victorinox milestones

1884 — Karl Elsener opens his cutlery business in Ibach-Schwyz.
1891 — The Swiss Army is supplied with soldiers’ knives for the first time. 1
1909 — In order to distinguish it from copies, the company founder decides to use the cross and shield, the current Victorinox emblem, on all pocket knives
from then on.
1945 — After the Second World War, the PX stores of the U.S. Army, Marines and Air Force sell large numbers of the “Swiss Officer’s Knife” to their officers and soldiers. The Ameri cans call it “Swiss Army Knife” for short. This term is adopted in all English-speaking countries.
1989 — Expansion into timepieces
1999 — Victorinox strengthens the brand and broadens its appeal with the Travel Gear line.
2000 — Establishment of the Victorinox Foundation to provide job security in the long term and to ensure financial independence.
2001 — All five Victorinox product categories (pocket tools, household and professional knives, timepieces, travel gear and fashion) are presented for the first time together in a flagship store in Soho, New York.
2005 — Takeover of Wenger SA, Delémont (CH), a knife manufacturer since 1893 and also a supplier to the Swiss Army.
2008 — First European f lagship store in New Bond Street, London.
2009 — Victorinox has a global workforce of over 1,700 and generates sales of about CHF 500 million.

Article by Lauriane Zonco

Environmentalism was once the bailiwick of radical thinkers and street-proven activists ready to chain themselves up to risky places… It still is, but there are those from the business class, like José María Figueres, who have come to realise that given the right spin, going green is actually a good business proposition.

José María Figueres at rest (here with John Béguin of Swiss Style)

The man is apparently always on the move. After almost two decades of whirlwind tours, gravitas-laden talks, ambitious projects and inconclusive summits, many might associate José María Figueres with crowded conference centres where international officials, ministers, activists and functionaries of various ranks flock to innumerable working groups and side events before flying back home with little more than sundry tchotchke and hope for another next conference. But the former President of Costa Rica would like to be seen as more than just another suit chasing around the conference track.

While speaking with Swiss Style recently, he came across as a person with a healthy combination of vision and action with a nicely rounded sentence to sum up his approach to climate change: “We can’t wait until governments get organised and make decisions.” Instead of blaming politicians or indulging in apocalyptic predictions about our future, he focuses on immediate and large-scale opportunities for business, ones that can reduce carbon emissions and promote sustainable development as well. His conviction is that for companies “being green means green(backs), and environmental focus means good earnings”. The idea is not exactly new, but Figueres is an accomplished political animal as well and has developed the art of spinning the message to make it palatable to a social stratum whose earnings generally derive from rapid resource depletion, be it natural or human. Conveniently, he is not only Managing Partner of IJ Partners – which seeks to manage the assets of HNWIs and UHNWIs – but he is also Chairman of the international NGO the Carbon War Room, which is headed by non other than Richard Branson, whose business model of eco-friendly airplanes combined with low-cost flying are reminiscent of what light cigarettes did to smoking.

Life’s callings

Figueres at his Geneva office, with the world at his doorstep

Figueres mastered the art of decisiveness and rhetorical conviction early on. “A combination of family upbringing and education opportunities is what makes me extremely mission-oriented,” he readily admits. Born in 1954 in San José, Costa Rica, he grew up in a family devoted to public service, in which “it is always one’s responsibility to give the best of oneself”. His mother, Karen Olsen, was a progressive social worker, congresswoman, and ambassador to Israel for a while. His father, José Figueres Ferrer, three times president of the country, is considered by many the father of modern Costa Rica for having abolished the country’s army and granted women and blacks the right to vote, after leading a revolution to restore democracy in 1948.

José María spent his childhood in a farm community founded by his father. Years later, to the surprise of his parents, he applied for admission to, and was accepted by, West Point, the US Military Academy. He graduated in 1979 with a major in engineering and returned to his country to work in the private sector. “West Point was a very competitive environment in every sense of the word,” he recalls. “It instilled in me a spirit of perseverance and the importance of teamwork in whatever environment one is in.” Personal discipline was also important but definitely not the only quality Figueres took home from the Academy. Admittedly, he learned how to “lead and take decisions after considering all the relevant information at hand”.

Such an approach to leadership and decision-making has certainly served him well: “I like to size up opportunities, aggregate the resources at hand, focus on clear objectives and get the job done,” he proclaims.

Stepping stones

Figueres was no man to see the presidency as the accomplishment of a lifetime. He did work hard to make an impact and transform the country. As a man with military training, he found himself in the odd position of leading a country that had no armed forces. But the world was changing, with armies of businessmen and -women emerging to create another kind of war, just as asymmetrical as those that had gradually liberated the world of the colonial virus. “In a globalised economy,” he explains, “countries, much like companies, need clear strategies to position themselves and render themselves much more competitive”.

Inspired by his close collaboration at Harvard with management guru Michael Porter, and leading economist Jeffrey Sachs, he was convinced that countries must “gain comparative advantages that enable them to extract value from the process of globalisation”. Accordingly, he shifted the paradigm of development in Costa Rica towards what we call sustainable development. The strategy was “an articulate integration of sound macroeconomic policies, investment in social programmes focusing on health and education, and building an alliance with nature,” he comments, stressing the last point.

Costa Rica soon complied with the UN’s Agenda 21 for Sustainable Development and the international conventions on biodiversity and climate change. In 1995 – well ahead of what everyone is talking about these days – his government enacted a tax on carbon emissions. “It paid off handsomely,” he adds. “Direct foreign investment was up to 7.5% of GDP at the end of my term and economic growth amounted to 8.5% per annum, almost double the regional averages of the time.”

In the process of redesigning his country’s economy along green lines, however, Figueres, it seems moved somewhat too close to the private sector. A substantial “consulting fee” from Alcatel that came too close to being entirely clean not only blemished his record in Costa Rica, but also resulted in his being let go from a high-level post with the World Economic Forum, which does not allow its wheels to move vehicles on other tracks. But such is the destiny of a man who moves quickly and at so many different levels. A lesser man might have stumbled, but Figueres, true to his sense of discipline kept his eye on the green line and soldiered on. After all, if a plane stops in flight, it will fall.

(Re-)made man

In the meantime, Figueres made a new home for himself in Geneva and, world citizen that he is, has not looked back. “It is a superb place to be based,” he points out effusively, “the place is a melting pot of ideas and people, for leadership both in public policy and the private sector”, Figueres’s enthusiasm though goes beyond just the local social qualities. His business acumen always guides his judgment as well: geographically, Geneva is a genuine crossroads and is thus “a terrific launching pad for innovative approaches to business and policy at the global level”. Furthermore, he feels, the city, like the canton and country as a whole operates on the basis of trust. “This,” he argues, “lowers the transaction costs of society and renders Switzerland a much more pleasant, efficient, and competitive place to work in”.

But of all the opportunities available in the city, Figueres chose IJ Partners, whose offices overlook Lac Leman, because of the firm’s commitment to a different model of investment and private wealth management. “We allocate capital to production, and not to financial engineering. We are completely transparent in our fee structure, and we co-invest alongside our clients.” With Figueres on board, the company is now looking much closer at opportunities in the clean tech space. That ties in nicely with his other responsibility, as Chairman of the Carbon War Room.

Carbonated battles

Back in 2008 Richard Branson, Figueres and a small group of fellow entrepreneurs established the Carbon War Room. The name, of course, has PR pizzazz, recalling perspiring generals moving ships, tanks and tin soldiers about maps an acre in size and telegrams coming in from the front. And that is the impression it is supposed to give. “Richard based the concept on the Churchillian notion that you need to organise a war room in order to win a war,” says Figueres, surely remembering his studies at West Point. The Carbon War Room has identified 25 battles across seven theatres of operation where emission reductions of at least one gigatonne can be achieved.

Its mission is clear – and so are their methods: “We identify sectors of the world economy where through addressing market failures or reinventing business models, we can achieve gigatonne level reduction of carbon emissions,” he explains. According to Figueres, the business angle of the Carbon War Room is the key to success. “I am a tree-hugger. However, I’m also absolutely convinced that we must create good business opportunities out of preserving the environment and reducing carbon. Only then will we attract the leadership, entrepreneurial skills, talent, and capital that this important task requires.”

Only a few governments will lead with policy as he did in Costa Rica, Figueres argues. The urgency to act requires “companies to lead – governments will then follow,” and provides examples to make his point. He cites the case of European telecommunication companies at the dawn of the mobile phone era that “got together, agreed on the GSM standard and began to produce according to that standard, with governments following and setting up regulatory frameworks”. What’s good for business, is then supposed to be good for everyone, though here serious environmentalists would beg to differ. Even in field of environmental protection, “back in 1985,” he explains, “the main problem was the ozone hole caused by the use of CFCs. It was the private sector with Dupont in the lead that stepped in and decided to substitute the use of CFCs, thus effectively dealing with the problem in only ten years. That is the way forward.” DuPont, of course, spent a solid five years lobbying against any pending regulations of CFCs, before turning its coat inside out, and marketing an alternative, thus making a killing in the market and seriously irritating its anti-regulation allies.

Figueres prefers to avoid all the theories and discussions about the past, however. “There are ways of addressing current environmental challenges from a business perspective and doing so efficiently. This can be done with today’s technology,” he points out, citing the cases of corporate green leaders such as Walmart, Siemens, Abengoa and Suntech.

However, he does not stop with examples of what others are doing. For its part, the Carbon War Room is directly involved in an ambitious attempt to profitably reduce shipping emissions by working directly with the industry. “There are about 100,000 ships on our oceans. If they were a country, they would be the sixth largest carbon emitter in the world,” he says. “If we take the 15,000 bigger-class ships, put them into a dry-dock and equip them with technologies we already have, we could roll them out six to eight weeks later consuming between 20 and 30% less energy, hence drastically reduced carbon emissions. In the process, we would have created thousands of jobs in today’s economy, and allocated capital to help finance the shift to the low carbon economy with very profitable rates of return.”

Other battles the Carbon War Room has singled out regard the use of biofuels in the aviation industry, and the retrofitting of buildings to make them resource efficient. Again he says, “Think of the thousands of jobs we could create by retrofitting buildings to make them energy efficient, reducing both their operating costs and their carbon emissions and thereby increasing their market value”.

Forerunner of a new era

Figueres likes to think big. “Two hundred years ago we initiated the Industrial Revolution. It produced enormous opportunities for both economic activity and development.” Today, he argues, the transition to a low-carbon economy can create even greater and better opportunities to reinvent our lives, our workplace, the way in which we transport ourselves and interact in our society. This will re-energise the global economy and set us on to a new path of opportunities. He then adds confidently: “That’s exactly where I feel the world needs to go.”

An out-of-the-ordinary life

An out-of-the-ordinary life

José María Figueres Olsen was born on 24 December 1954 in San José, Costa Rica, son of the three-time President José Figueres Ferrer and the American-born Karen Olsen Beck.
He grew up in a farming community and, upon graduating from high school, he was accepted at the United States Military Academy of Westpoint, where he graduated in 1979 with a degree in engineering.
Back in Costa Rica, he led the restructuring of the highly indebted family business
before being appointed as head of the National Railway System in 1986, another institution suffering from perennial deficit. He rose rapidly in public service: Figueres was Minister of Foreign Trade shortly afterwards and Minister of Agriculture in 1988. In the early 1990s, after obtaining a Masters in Public Administration from the Harvard Kennedy School of Government, Figueres fought a highly contested nomination for the presidency, which he won in 1993. In February of 1994, at the young age of 39, José María Figueres was elected President of Costa Rica. Upon leaving government in 1998, he became involved in a number of initiatives with academic institutions, social organizations, private sector partners and the United Nations. He became Managing Director of the World Economic Forum in 2000, but he had to leave the post four years later. He is currently Managing Partner of the Geneva-based investment and wealth management firm IJ Partner SA and sits on the Executive Board of the Carbon War Room. Among his many appointments, he is a member of the UN Secretary General’s Advisory Group on Energy and Climate Change.

Painted green

Painted green

When Rachel Carson wrote Silent Spring in the 1960s, she was branded by conservatives as an agent of the then-USSR, an anarchist, a witch, in short anything that could spook little children. Today, however, even large and conservative companies – and the political class it caters too – likes to put on some green clothing occasionally, especially if it improves the bottom line. Here, a small list.

Walmart: In October 2005, the world’s largest retailer announced an ambitious plan that includes a USD 500 million investment to increase the fuel efficiency of its truck fleet by 25 percent, a 20 percent reduction in greenhouse gas emissions by 2012 and other drastic cuts to energy use and solid waste in shops.

Siemens: Europe’s largest engineering conglomerate has resolutely moved towards sustainability employing its know-how to develop technology and equipment for solar and other renewable energies as well as many “green building” technologies components.

Abengoa: This Sevilla-based company has become one of the world’s leaders in sustainable industrial waste management and a number of renewable energy technologies, including the concentrated solar power (CSP).

Suntech: The Chinese holding is the world’s largest producer of crystalline silicon photovoltaic modules; in 2009, it produced 1 GW of emission-free electricity. Founded in 2001 by a consortium of private equity firms, it is believed to have been the most profitable private equity investment ever made in China.

The green efforts are commendable, but they must be taken with a helping of salt, since often the issue of sustainability goes beyond just changing the sparkplugs in a company’s fleet more often. The problem is larger and broadly associated with other, more fundamental practices. walmartwatch.com, for instance, states: “Wal-Mart’s massive size and its voracious need for growth mean that the company’s current green efforts are to the health of the planet what cleaning one store is to its global maintenance operations.” By the same token, the responsibility for environmental sustainability must also be carried by consumers as well in their daily decisions. Just to note a few: The unconscionable use of SUVs, for example, or the chronic need for “choice,” which ends up filling supermarket shelves with wares that have to be thrown out. These are subjects that demand exploration by the media as well.

Michael Eugene Porter is Professor at Harvard Business School and author of 18 books on strategy and competitiveness. His work on competitive advantage and his “five forces” model made him the leading authority in the field and the most cited author in business and economics.

Jeffrey David Sachs, currently at Columbia University, at the age of 29 became one of the youngest professors in the history of Harvard University. A trained macroeconomist, he has been the master behind the “shock therapies” in former communist economies. He currently works on economic development, poverty alleviation and climate change.

Article by Andrea Bonzanni

Taking a look ahead with André Schneider

André Schneider - Managing Director & COO, World Economic Forum

The New Champions Meeting has now become as famous as the annual World Economic Forum meeting in Davos and is just as eagerly anticipated – especially by those who have been working to bring more Asian decision makers and business entrepreneurs to the global economic discussion platform.

As we approach this fourth meeting of the World Economic Forum– the so called Summer Davos – we take some time out to talk with André Schneider, Managing Director and COO at World Economic Forum and overall responsible for the New Champions, in order to help us put it all into context.

“Growth-Based” solutions

Continuing and building on the World Economic Forum general platform of “growth-based” solutions, this upcoming New Champions Meeting is planning to look in depth at world economy on the all important basis of sustainability.

But, since the object of the exercise is to find sustainable solutions, not quick fixes, the intention is to also integrate the topic of whether stimulus packages should be continued or not. Without growth we cannot address some of the major challenges of the world in general and the developing world in particular, but growth alone, as we have only too recently noted, is not sufficient – this growth needs to be sustainable.

“Last year we concentrated very much on the environmental aspects of sustainability and this year we want to look at sustainability as a whole,” says Schneider. “I think we have suffered very badly over the last two or three years due to what I would call really bad preparation which resulted, in some cases, in enormous risk-taking.”

Schneider confirms that because globalization means that economies are interconnected, business sustainability is an even more important issue, particularly given that, as we have recently seen, one player or a small group of players has the capability to damage or even ruin the whole economy through unsound or unsustainable business decisions.

“This raises two questions,” says Schneider. “One is the need for global cooperation and regulation. (A question WEF also addressed at its meeting in Quatar.) A good case in point is Switzerland and UBS – the problem becomes immediately evident simply by comparing the turnover of UBS to the Swiss GDP! The second question is the capacity of business management to integrate questions such as business sustainability and risks into their planning”.

A better way forward

In common with other global economists, Schneider thinks that many managers don’t fully comprehend where certain business decisions might lead them and the inherent risks they may be taking. To this end, the World Economic Forum is also building a project for their global agenda councils to look at risks and other issues in order to find ways to create a better understanding of and better management of risks, and to create systems to analyse the consequences of business decisions and emerging risks.

“To take a very simplistic but very revealing example,” says Schneider, “look at what has happened in the Gulf of Mexico – here we can see that the relationship between business actions and possible risks have taken on unseen and unexpected proportions. If BP look back to the moment when, just five or so years ago, when they took the deep-sea exploration decision, and then compared the expected positive outcome and the actual scenario, I think it would shed a different light on their original business decision.”

Improving the balance

The second issue relates to social sustainability – the need to improve the balance between economic development and social development. Humanity is constantly striving to achieve a better social context – a balance between a select elite, who enjoy a luxury lifestyle, and the large majority that struggles to survive. And as Schneider points out, “This is especially worrying when you look at the lifestyles of some of those who were involved in the business decisions that led to the recent crisis. Some have actually gained important salaries and other advantages, while the majority of the debts have been paid back by the public, government (taxpayers) and indeed everyone of us through a deteriorated economic situation which has led to layoffs and important spending cuts and now, in countries like Greece – austerity packages.”

Historically, social unrest has, in the long term, been the instigator of improvements, but, as Schneider points out, in Switzerland social unrest has been avoided by introducing sustainable state social improvements which have resulted in a smoothly run country – so perhaps there are lessons here that would be useful for other countries he suggests.

Globalization itself is another case in point, most of us remember the extreme anti globalization movements of some ten years or so ago, the result is that we are all now aware that it is important that to find the right balance between the good effects of globalization whilst keeping a steady eye on the negative impacts and continuously fixing these. “Sustainability is not just a moral concept, it’s actually based on the belief that only a sustainable approach will ensure sustainable growth and hence, I would say, sustainable success for the years to come,” says Schneider.

We are currently at a crossroads believes Schneider, a moment of change. The last ten years were about instant results (quarterly profits), but on reflection this risks losing the customer as the result of the extreme pressure of needing to make the sale, in fact, in such situations we force the sale, the result being that the business is not sustainable and we actually destroy the long-term commercial basis – creating a kind of schizophrenia between the need to build a customer base and the need to close the sale.

Pragmatism – the name of the game

Getting all these concepts together is not an easy task believes Schneider, as he points out, there are also those that believe that we need no growth, or even negative growth, because there are huge parts of the developing world which are still waiting to improve their social environment, but from a purely practical point of view, straightforward sharing of gains is politically impossible to implement.

“On the one hand,” says Schneider, “we have to recognize we are coming out of a very national, not to say regional, world where most of the decisions had

"...this year we want to look at sustainability as a whole."

only a national impact. And we’re quickly moving into a globalized world where actually almost every single issue we’re facing is global and cannot be, by definition, solved by national or regional regulations. Consider climate change, if Switzerland said it was going to reduce CO2 emissions by 50% in ten years, while that would be nice for Switzerland, it would not even solve Swiss climate problems never mind anyone else’s.”

Pragmatism is the name of the game since governments are unlikely to change their approach overnight. The more immediate way to succeed he believes is through public/private partnerships. For example, as far as climate change is concerned, WEF has created an alliance of over 100 large, international business that have reduced CO2 emissions as part of their business achievements’ and “doing better business” plan.

“If we link that together with discussions such as those in Copenhagen or in Mexico at COP-17,” says Schneider, “we can say that we don’t actually need governmental promises (which they are worried about giving since they don’t know how they’re going to execute them). We could link them with existing contributions coming from business and create a public/private partnership without undermining some of the democratic fundamentals which are related to governments.”

Schneider believes that there is a real opportunity through public/private partnerships to better merge the capabilities of a globalized business world, and where they can actually address global issues on a global level while taking into account the need to maintain the democratic structure of states or governments. He warns that we should not let this pragmatism encourage us not to do the right thing, but to find better ways to do just that. “I think there the relationships between business and governments that we have built through our global re-design initiative in Quatar and will be building again in Tianjin this year, is going to be a crucial factor.”

Interestingly, if you look at the last four years of the Annual Meeting of New Champions, the global Fortune 500 companies have increased in importance – which would seem proof that they are more and more attuned globally – there is now a need to look at problems locally.

“I think the challenge we have is to demonstrate that the geopolitical global aspect is not the only aspect,” comment Schneider. The great thing of the Annual Meeting of New Champions is that we gather together the next generation of big companies. And it is true, in this group you find a lot of companies which you’ve probably never heard of before, similarly, many of our top 500 CEOs. This is actually quite important in the sense of understanding who is going to shape and what is going to be the shape of the future business environment.”

Two sides of the same coin

Sustainability and growth are two sides of the same coin, but the challenge will be to keep them in balance. Having chosen China, one of these global growth players, as the place to hold the meeting, we risk blurring the overall image and giving the impression that the Meeting could be about this region, when in fact it is not. Since China is about to replace Japan as the second biggest world economy – evidently China is a major global player, but it is not the only regional player who will be present at the Meeting, Malaysia, Indonesia, Vietnam, and Africa (already experiencing its own steady growth and development) will also be there.

“It is important to look at some of the fundamentals in growth which make these regions so active and successful,” Schneider comments, “hence, our participation also in global competitiveness in the annual meetings of New Champions, because we very much believe that governments can use these to set their framework for growth. There are very few comparative works which actually look at growth performance and the framework for conditions and compare the two. And I think that’s probably one of the important qualities of the work we’re doing as well as providing a historic database to allow governments to understand where we can help. We see more and more governments coming to us to seek advice on what kind of reforms or regulatory changes could actually improve their competitive standing.”

A bold and rewarding feat

On September 25, 2008 China sent three astronauts into space, registering another landmark in the country’s ambitious space programme part of which is the exploration of the moon’s helium for our planet’s energy needs. China is a nation that often takes the risk of challenging the unknown and that is committed to searching for optimal solutions for its population. If the country had a mission statement it would, perhaps, follow the lines of that of the World Economic Forum’s– the commitment to improving the state of the world, a feat as bold and rewarding as that of conquering outer space.

Article by Ita McCobb & John Béguin

Sustainable development: A good investment strategy

“If you have certain convictions in your personal life, you also apply them to your professional life.”—Ivan Pictet

Ivan Pictet Senior Managing Partner, Pictet & Cie

Sustainable development is no longer just an idea or a marketing ploy. For many, it’s a viable way to invest their money. For Ivan Pictet, it’s the way.

In a recent article written for The Guardian, Klaus Schwab wrote: “There is a real danger that the financial and economic crisis will develop into a social crisis. Difficult times lie ahead. If we want to keep society together, a sense of community and solidarity are more important now than ever before.”
As readers of Swiss Style know, Schwab is the founder and executive chairman of the World Economic Forum. But this isn’t the only thing he’s known for. About 40 years ago, Schwab developed the “stakeholder” theory for businesses. Ring a bell?
According to his theory, the management of a business ought to act on behalf and in the interests of all stakeholders and not just the company’s shareholders. According to Schwab, the theory is based on the idea that each individual is embedded in societal communities in which the common good (and the success of a business, for that matter) can only be promoted through the interaction of all participants. In his article, Schwab attributes part of the economic recession to what he calls an erosion of the communitarian spirit. “Instead of a communitarian sense of duty,” he writes, “there is a rise of individualistic profit-seeking behaviour in which society plays only a secondary role.”
In line with the theme of this year’s World Economic Forum Annual Meeting – “Rethink, Redesign and Rebuild” – Schwab’s article is a call for a fundamental shift in how we develop our morals, our ethical norms and the regulatory mechanisms that underpin the economy, politics and global interconnectedness.

Answering the call

One man answering Schwab’s call is Ivan Pictet, senior managing partner at Pictet & Cie, one of Switzerland’s largest private banks. Pictet is also, among other things, a member of the Foundation Board of the World Economic Forum and the vice-chairman of the Global Humanitarian Forum. He also chairs the Geneva Financial Center Foundation.

Like Schwab, Pictet is wary of implementing policies that focus on the short-term in the hope of maximizing profits and shareholder value.
“As long-term stewards of our clients’ capital,” he says, “we cannot afford to take short-term views or to ignore the eventual consequences of our actions, whether financial or personal.”

In view of this, Pictet Asset Management began looking at broadly diversified sustainable investment in 1997. In 1999, they launched a Swiss Sustainable Equities fund and, shortly afterwards, a European Sustainable Equities fund. In late 2005, they partnered with Ethos, a Swiss socially responsible investments (SRI) foundation that promotes SRI investment and corporate governance services, to manage socially responsible investment for institutional investors. Today, Pictet Asset Management manages over EUR 1.7 billion in global SRI assets, on top of some EUR 7 billion in environmental-related theme funds. This is less than 3% of the total assets managed by the Group.

“So far, everything that relates to the environment or to sustainable development has been looked at as a constraint which reduces the return on investment,” Pictet says. “I think that the short-sightedness of business, which has been flagrant in this recent crisis, is going to move more and more toward management being more sensitive to the long-term advantages of sustainable development.”

The sustainability approach

Pictet & Cie define sustainability as economic activity that meets the needs of the present generation without compromising the ability of future generations to meet their own. Their SRI portfolios are aimed at meeting their client’s financial needs, as well as their concerns about social, environmental and governance issues.

Pictet & Cie’s approach to managing SRI portfolios is a “best-in-class” one. Rather than make global exclusions or apply negative screenings, they prefer to do positive screenings by selecting companies with high sustainability ratings.
“Among the public institutions, apart from the Dutch and some of the Scandinavian pension funds, very few apply a sustainability approach,” Pictet says.
“At Pictet, we offer our clients the possibility to have a degree of sustainability in their portfolio. In his tailor-made portfolio, the client chooses himself the exact level of SRI constraints he is willing to accept.”

Pictet & Cie says they do not claim that investing in sustainable development leads to better performance. What they do say is that they are, through SRI, able to create portfolios that achieve a high sustainability rating by providing their clients with portfolios that incorporate the maximum sustainability for a given level of risk relative to the client’s benchmark.

Having said this, Pictet believes private banking is more sensitive to the issue of sustainability than institutional investors because their clients are often more willing to sacrifice some of their profit for the long term and for the greater good. But, Pictet stresses, at the end of the day, it’s still the client’s decision to invest in sustainability or not. “I think the critical issue is that you cannot force a vision,” he says. “You can just try to make people more sensitive to it.”

Supporting the cause

Pictet & Cie, together with The Financial Times, developed and sponsors Prix Pictet, an annual photography competition that focuses on social and environmental issues. “The competition not only gives photography expression,” Pictet says, “but more importantly, through pictures you can make people much more sensitive to the issues.” In 2008, Benoit Aquin, a Canadian, was awarded the first Prix Pictet; the 2009 prize winner was Nadav Kander, an Israeli photographer.
In addition to the competition, each year one of the shortlisted nominees is offered the Prix Pictet Commission to photograph a sustainability project supported by Pictet & Cie.

In 2008, the competition’s inaugural year, Pictet supported the Chittagong Hill Tracts Water Project in Bangladesh, which is managed by UK-based charity, WaterAid. The project seeks to provide water, sanitation and hygiene education to communities in the area.

In 2009, the bank supported eco-charity, Azafady, and their work in Madagascar. The charity works with communities in the country to improve their living standards and quality of life while at the same time raising awareness of and respect for the fragile local environment.
As a further example of the bank’s commitment to sustainability, their head office in Geneva has been designed to optimize environmental, social and working conditions. The CO2 emission per employee does not exceed 1.8 t/year and if, after an annual audit, Pictet’s total CO2 emissions are higher than their target, they compensate by purchasing CO2 certificates. In addition, financial incentives exist to encourage employees to use public transport rather than their own cars whenever possible. At Pictet & Cie, it appears, everyone walks the talk. Literally.

For Ivan Pictet, it doesn’t make sense to focus on the short-term as it could have disastrous consequences for the global economy (which, of course, it has!). Rather, like Schwab, he believes the focus should be on the long-term and that sustainable development – by promoting a more stable and sustainable overall economy for companies, investors and societies alike – not only makes sense on a normative level, but it’s a good investment strategy.

Article by Alinka Brutsch

SWISS STYLE honours TNT Express CEO Peter Bakker and employees for their CSR linking hunger and climate change solutions

SWISS STYLE honours TNT Expres CEO Peter Bakker

The ancient Greek historian Herodotus reminded us: “No man is free until all men are free.” American statesman Adlai Stevenson observed, “A hungry man is not a free man.” Sit down with Peter Bakker and you will not leave without knowing that a child dies every five seconds from hunger, and you can do something about it. Like climate change, if you are part of the problem, you are part of the solution.

At Davos 2010, we honour TNT CEO Peter Bakker and TNT’s 152,000 employees in 200 countries who were inspired to make a difference on both global hunger and climate change solutions. This is CSR (Corporate Social Responsibility) that embraces and takes responsibility for fixing the broken chain in the circle of life.

Seven years ago, Bakker wanted to address global hunger. TNT partnered with the World Food Program (WFP) to help transform emergency food distribution. TNT employees volunteer time, use corporate in-kind resources and raise funds to improve food distribution globally. Bakker set up the Hunger Tent at Davos in an act of civil disobedience to galvanize solutions. The Tent has become the WFP Hunger Tent established by the World Economic Forum as the exclusive site for food security sessions, gathering the best brains, leaders and experts to the issue.

In similar fashion, Bakker launched TNT’s global programme Planet Me, to address climate change. His reasoning: TNT contributes to the problem so it must be part of the solution. The 3-part programme to cut carbon emissions that includes electric truck fleets, driver training and competitions, and even innovations such as the creation of biofuel collective farms in Malawi for Jatropha plants, is an effort to stabilize the circle of life between farming, food, economics and social well-being.

TNT went further in the CSR circle and cycle of life, ranking number one on the Dow Jones Sustainability Index and creating corporate accounting methods that allow neither individual nor institution to slip away from tighter metrics for social responsibility and efficiency.
We salute Peter Bakker and TNT employees for unflinching vision and verve, for connecting the logical circle between hunger and environment, and for unceasing insistence that we be the solutions we wish to see in the world.

John François Béguin
Chairman, Swiss Style

Ariane de Rothschild has an undeniable passion

When children ask their parents for an expensive toy, the answer worldwide is often: “Do I look like a Rothschild to you?” With the exception maybe of the Rockefellers, no other family has become such a synonym for wealth in our collective memory. Yet the Rothschilds are not merely a family; they are an institution that has been at the forefront of banking and philanthropy since the mid-18th century.

Baroness Benjamin de Rothschild - “Why did we come to this crisis? This is an important question. If we can answer this, we will also have better answers for tomorrow.”

This rich and long family history can be quite intimidating, yet it stands in stark contrast to the casual and accessible attitude with which the Baroness de Rothschild received Swiss Style in a recent informal conversation in the French Alps. In jeans and a black blazer, Ariane de Rothschild seems relaxed. She smiles radiantly and puts one at ease instantly. As she talks to us about the undercurrents guiding economic activities in today’s world, Ariane’s passion is undeniable.

She is keen to discuss the lessons she learned from the Rothschild’s family history as well as the strengths of the Edmond de Rothschild Group. “Business models have been shattered,” she says. “To rebuild the models, we are looking into what made our family successful in the past.”

The advantage of diversity

Ariane de Rothschild is highly involved in the activities of the Edmond de Rothschild Group, run by her husband, Baron Benjamin de Rothschild, son of the late Edmond de Rothschild. She serves as vice-chairman of the family holding company. She is also in charge of several foundations as well as numerous other endeavours. In addition, Ariane de Rothschild is a trained banker who is well acquainted with the world of finance. She is a member of the Board of the private banks Compagnie Financière Edmond de Rothschild in France and Banque Privée Edmond de Rothschild in Switzerland. “One of our biggest strengths is our diversity,” the Baroness explains. “Our activities range from making Brie cheese to advising governments on financial issues.”

This diversity has helped the family stay rooted during the crisis. “People stopped valuing money and everyone started talking in billions of dollars, without realizing how much a billion is actually worth. My father-in-law, Edmond de Rothschild, used to say: ‘After a certain number of zeros, people don’t know what it represents anymore. They cannot conceive how much it actually is.’ We have other businesses beyond banking. When you run a farm or a foundation, one million dollars is a lot of money. This diversity has helped us stay rooted and is an important aspect of who we are.”

The true meaning of managing risk

In finding solutions for tomorrow, Ariane de Rothschild places emphasis on learning from the past. “Why did we come to this crisis? This is an important question. If we can answer this, we will also have better answers for tomorrow,” she opines.
Leading up to the current crisis, the basic assumption of risk-return had not been respected. “One of the biggest problems was the rate of return expected by investors. You had thousands of people playing the market and they expected unreasonably high returns regardless of market conditions,” she adds. Capital growth became people’s sole concern. “Instead of thinking in terms of capital preservation, everyone was exclusively concerned with aggressively increasing their earnings. We talk to our client in terms of risk management, instead of concentrating solely on returns,” the Baroness explains. One of the most dangerous factors leading up to the crisis was the ‘too-big-to-fail’ notion. This, to me, is unacceptable and kills the benefits of capitalism, such as entrepreneurship,” says Ariane de Rothschild.

As apparently infallible giants collapsed, some are asking whether capitalism is still a viable system. Not Ariane de Rothschild. “Capitalism creates ownership and as such, you are responsible.”
Although Ariane de Rothschild did not lose her faith in capitalism, she does not believe that it’s business as usual. “In my opinion, most business models are shattered. The stock market might be picking up, but I question this take-off. Like many people, my husband and I are worried about how long it will last and whether this recovery is sustainable. To build for the future, we are not only looking to new economic models but also to what made our family successful, businesswise.”

Concordia, Integritas, Industria

A study of the Rothschild history highlights the strengths of the family. “We are a family business, and, as such, we have a long timeline. We are not interested in next year’s profits; moreover, we think in terms of what we will be able to give to our children. This does not mean that we completely disregard the short term,” she elaborates. ”We are also responsible to our employees; yet, above all, the thirty-to-forty-year plan is what really matters. Not many companies think that far.”

The motto of the family – “Concordia, Integritas, Industria” – is the guiding light of the Rothschilds. “When looking into what made our family successful, we kept coming back to this sentence. It is the essence of what we stand for,” Ariane de Rothschild proudly states. “Although it is two hundred and fifty years old, it is nonetheless modern“.

At a first glance, this sentence might seem quite straightforward, yet this is not the case. A very powerful message is linked to the specific connotation of each word. “ ‘Concordia’ is not merely unity. It is unity within difference. The question is: ‘How do you preserve local differences, but create global unity?’”
In the late 18th century, Mayer Amschel Rothschild involved his five sons in the family business as partners. One son stayed in Frankfurt, while his brothers set up establishments in London, Paris, Vienna and Naples. Thus, since the beginning, “Concordia” has always had a special connotation that places emphasis on unity within difference.

“Because of the crisis, we have seen a surge in the concept of ethics,” the Baroness states. “Beforehand, only few people mentioned ethics and now it is on everybody’s mind. Yet ethics is all a matter of balance and this is how we conceive ‘Integritas’,” she explains. You have to be ethical towards human beings, the earth you live on, and ethical towards other cultures. However, one cannot be dogmatic about this. When you live in different countries, you realize the importance of adapting and finding a balance.”

Industria, the third element of the motto, also goes beyond the standard definition. “Industria is not only work, but work and creativity. You have to reinvent yourself to stay on top of the game,” she says. “Our tradition is anchored in innovation and this has been the case for over two centuries and several generations.”

Duty from within

Some would say being a banker and being a philanthropist is a contradiction. Yet Ariane de Rothschild would beg to differ. “We are fortunate to have inherited a unique philanthropic tradition which rests on an absolute commitment to solidarity, social responsibility and the advancement of knowledge. It is our turn and our duty to preserve this legacy.”

According to the Baroness, duty has almost become an old-fashioned word over the last 20 years. It is almost perceived as being an obligation from without. “However, I believe the opposite to be true and I educate my children to be duty bound. You cannot have privileges without giving anything back. Duty goes beyond merely writing cheques; it is about being involved and helping to find new solutions. We like to compare our return on equity in our banking activities to the return on involvement in our philanthropic endeavours. The people we invest in, the projects we support, best represent our belief in the human potential, our commitment to the value of sharing and our search of excellence.”

Article by David Sidler. Photos by Olivier Seignette