Sustainable Investment: Marrying Greenness with the Traditional Values

2021 Claudio Cisullo

Interview with Mr. Claudio Cisullo, Founder of CC Trust Group AG

Investors are more than ever on the lookout for companies that demonstrate commitment to sustainability. However, as Claudio Cisullo of CC Trust Group explains, investors should remember that the fact that a potential investment target has green credentials does not absolve it from the requirement to represent a long-term value proposition.

Thank you for sitting down with us today, Mr Cisullo! You had quite a career before focusing on “green investing”. Was there a specific moment which influenced you to make this change?

Thank you and, indeed, I already had many years of experience in listed and private equity investing and management prior to getting involved with the topic of sustainability and green investing. First of all, when I started my activities as an internationally active investor in the late nineties, sustainability was not an investable space and only reached a mature stage in recent times. And second, I never join trends just for the sake of being a part of them. I prefer to take my time, evaluate the underlying long-term value-creation potential and select my investments after thorough exploration. But if I do invest, it is with significant funds and my whole heart – I prefer to have fewer, quality engagements than many superficial ones. The ultimate moment was when I started learning about green construction and property development, and all the untapped possibilities there are in this space.

What makes you passionate about ensuring that more people adopt these investment practices?

I am convinced that the energy performance of buildings is key to the low-carbon transformation, notably in view of the current global shortage of energy commodities and steeply rising wholesale prices for heating oil, natural gas, and electricity.

It is important to understand that I would not invest in a business only because it is green; there needs to be a long-term value proposition which can remain valid and generate profits for the long term. If you marry that with green standards, it makes perfect sense in so many regards, including cost reductions, efficiency gains, and more. Recently, with my CC Trust Smart Energy Group, I have secured the exclusive rights for a franchise in the field of energy efficiency in buildings, which can significantly reduce electricity costs for a large property such as a hospital or a government building. It is a no-brainer and I never had to convince anyone of the power of such a business concept.

For over twenty years, CC Trust has been the driving force behind many successful names in different fields. You said the entrepreneurial spirit is not bound to a specific industry, but can you tell us how single-family offices are looking at global investing post-pandemic?

In terms of industry trends, many family offices have turned to more stable types of investment and increased their exposure to real estate, for example. The advantage we have is access to capital and highly efficient decision-making structures. We can therefore move ahead dynamically and bypass traditional entry barriers, such as funding. Other than that, just like any other investor type, family offices closely watch the interest environment as well as currency fluctuations.

What are your strategies for convincing other investors or funds to follow your lead and support the “green industrial revolution”? Why do you think there’s been pushback to find people to support sustainable business ventures thus far?

To my knowledge, there has been political pushback and some response especially among the US-based venture capitalist community when it comes to funding green businesses. If you are invested in sustainable businesses because it is trendy, you will probably see less of the hype going forward. But if you are like me, invested because you profoundly believe in the value these companies generate, then there is no issue. As I am not involved with politics, I can only comment that investors have been asking for a more unified way of measuring and comparing sustainability-related performance. Standardisation efforts should therefore not come as a surprise. But of course, as with any new reporting by corporations, they tend to generate additional costs, which should be prevented.

Sustainable Investment

Given the record-high CO2 emissions from construction and the sharply rising energy prices, how does your company plan to address these concerns?

This is a crucial observation and one of the most pressing issues globally, as the buildings sector indeed consumes 30 per cent of global energy and produces nearly 15 per cent of the world’s direct CO2, and building sector emissions have reached their highest level in history. Accordingly, property developers, investors, and managers need to urgently rethink their approach to the whole lifecycle of buildings, if they haven’t done so yet. I am convinced that the energy performance of buildings is key to the low-carbon transformation, notably in view of the current global shortage of energy commodities and steeply rising wholesale prices for heating oil, natural gas, and electricity. The energy efficiency franchise I mentioned earlier is one of the key measures I have taken. We not only help reduce the carbon footprint of large buildings, but of course I have also included an energy-efficiency review across my property portfolio, as well.

Let’s talk about information asymmetry. Many investors have good intentions but lack a standardised metric to analyse whether companies are sustainable or not. What do you think could be done to bridge this gap between uninformed investors and the sustainable energy movement?

It is true that data accessibility and comparability is a challenge, especially when it comes to areas which have not been quantified in the past. That being said, each company can decide on their own how far they want to understand, monitor, and standardise any area of their operations. One of the most internationally successful businesses I have developed is Chain IQ, a professional services provider in the area of indirect procurement. We know first-hand how challenging it can be, for example, to find and monitor contractors and their sustainability-related claims. As investors and business owners, we are trying to capture the entire value chains, which is a highly complex undertaking. There is no perfect market, and information asymmetry is something we need to face, reduce, and manage to the greatest extent possible, as it is not going away.

CC Trust examines about 100 investments every year. Other than positive impact, which other parameters do you take into consideration?
Our investment criteria have evolved over the years. Recently, I have significantly reduced involvement in early-stage ventures, unless they are mine or founded by someone I regard highly. For me, it’s a matter of optimising the use of my time and energy. Generally, I focus on EBITDA-positive companies in mature and developing markets who have proven their value to the customers and need expertise and/or capital for expansion. I have no interest at all in speculative investments or following hypes.

green development

Since last year, you are the Chairman of the Board of Directors at One United Properties, a leading green property developer. What can we expect from you out of this role?

Correct. I first joined One United Properties as an investor, later as a board member and, a year ago, I was elected Chairman of the Board and re-elected again this year. I am truly fascinated by this company, which is, by the way, the leading green property developer in Romania, and by what its founders have been able to create over the past two decades. My initial objective was to facilitate its development towards world-class best practices when it comes to corporate governance, while at the same time accelerate its access to international funding. Meanwhile, we have expanded our portfolio of activities and we will see what happens next. We are only at the beginning of this new chapter.

Mr Cisullo, you are second to none when it comes to being truly “self-made”. You have worked your way from the ground up and are now one of Switzerland’s 300 wealthiest people. What are the words you live by?

One of the key principles I have made sure to follow for many years is to create win-win situations. I have no interest in short-term deals or benefiting from situations at other people’s expense. If you can create a win-win situation, you can be sure that all parties will keep their promise, or even over-deliver on what was agreed.

Executive Profile

Claudio CisulloClaudio Cisullo is a serial entrepreneur, venture capital investor and ranks among the 300 wealthiest people in Switzerland. Among other mandates, he is the Founder and Chairman of the single-family office CC Trust Group AG, the Founder and Executive Chairman of the globally active procurement services provider Chain IQ Group AG, Chairman of the leading green property developer One United Properties, Chairman of the property investment company ACC One Holding AG, member of the Board of Directors of Europe’s leading media group Ringier AG, member of the Law and Economics Foundation at the University of St. Gallen, and member of the Board of the Swiss Entrepreneurs Foundation.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The Political Anthropologist.