Dolphin Square, Dolphin House

Justin Travlos is Global Head of Responsible Investment at AXA IM Alts. His management of a diverse investment portfolio is governed by one underlying principle: all decisions are made in the context of understanding where risk is – from a sustainability standpoint. Here, Travlos speaks to Samantha Welsh about the growing importance of proptech, and why sustainable strategy should not be an exercise in cherry-picking ‘green’ assets but embedded across the entire portfolio

Justin Travlos

LUX: You have a track record in driving successful sustainability strategies. Where did this interest come from?
Justin Travlos: Sustainability has long been a personal interest, but it first intersected in a professional capacity in 2007, when I became the head of sustainability for the commercial property business at an Australian real estate investment trust. I worked with a brilliant team to create the foundations of a strategy that was both sustainable and able deliver returns, and is still relevant and performing today. That balance is fundamental. I’ve always seen myself at the nexus of real estate development and sustainability, and the opportunity that brings to make places more appropriate both for people and for the planet.

LUX: Where has AXA been particularly successful in managing buildings to sustainability targets?
Justin Travlos: Asset regeneration always provides a canvas to enable change, and scale helps overcome some of the complexity often associated with these projects. While meeting the latest sustainability credentials is much less complex in new builds, they often raise questions around embodied carbon. Ultimately, it is equally, if not more, important to regenerate existing assets: poor performance of existing stock is a key area of focus for government and regulators when addressing climate change, and thus a key area of transitional risk (and opportunity) for us as real estate investors. Moreover, investing across a diversified, global portfolio allows us to benefit from a number of emerging synergies.

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LUX: AXA IM Alts is Europe’s biggest real estate manager by Assets Under Management (AUM). How do you evolve a best governance strategy for a diverse portfolio of this size?
Justin Travlos: Integration into our investment processes is the key to governance: it was important that our strategy didn’t just have one best-in-class green fund or asset to showcase, but was embedded across our entire portfolio and integral to every investment decision. We look at a broader sweep of both financial and non-financial considerations, and so long as those decisions are made in the context of understanding where risk is, from a sustainability perspective, then that’s the right conversation to have.

While our strategy will continue to evolve, particularly in terms of implementation, it is formed around three the key pillars of decarbonisation, resilience and building tomorrow. Decarbonisation is about reducing our carbon footprint in line with the Paris Agreement targets. Resilience is about understanding the physical and transitional risks of climate change on our assets. And looking at both of these creates insights that inform the types of assets that we regenerate and build – shaping our investments to become building blocks for the future.

22, Bishopsgate. Photo by Edmund Sumner

LUX: Is there variation in how regions adopt responsible investment strategies?
Justin Travlos: Yes, due to the different regulations and market practice in place across the globe. In the EU, businesses are now required to embed sustainability risk management into the investment process. AXA is now reaping the rewards from the groundwork that we laid down a long time ago. But our alignment to the regulatory environment in Europe will be subtly different to what is required in America or AsiaPac. The funds that we have in Australia, for example, are much further ahead in their adoption of ESG performance indicators because the market and its regulations governing environmental management and reporting are significantly advanced.

These strategies are also underpinned by data, much of which is still imperfect. As the dataset grows and visibility improves – and advances in technology will play a big part in this – the ability to finetune performance to reset those decarbonisation benchmarks to specific asset classes in specific countries will become invaluable. It will not only provide very clear targets for asset management teams but will provide a comparative global benchmark for measuring performance, something absent from most current sustainability reporting.

Read more: Standard Chartered’s Eugenia Koh on Next Gen Investors

LUX: To what extent are asset managers using proptech now?
Justin Travlos: There’s always been a rule of thumb that if you pick up an asset that’s just been managed in the day-to-day, you can almost guarantee a 20 to 30% improvement in energy efficiency, simply by utilising the latest technology – which is obviously a win-win because it doesn’t require huge amounts of cap expenditure but does generate savings and financial returns.

Ultimately, some building infrastructure and systems may still need an entire overhaul, but proptech will be integral to assets’ value proposition going forwards, as owners and occupiers ascribe greater value to the provision of these data points to achieve their ESG ambitions.

Forestry Investment, Australia

LUX: Are we collectively doing enough?
Justin Travlos: Looking forwards, I take some comfort from the fact that in just 18 months, humanity has produced not one but several vaccines to bring a population of 7 billion people back from a global pandemic. This shows what can be achieved and I hope against a backdrop of increasing evidence of the impact that climate change is having on the world that that the same sort of ingenuity, thinking and collective effort will prevail. Ultimately, the actions that we take now will have a fundamental impact on where we end up by the end of the century, which is why the urgency of this topic has become central to our approach to sustainability and responsible investment.

LUX: What advice do you have for next gen clients running a lens over family office real estate portfolios?
Justin Travlos: From an ESG perspective, there are three key questions. First, can profitability of the investment be decoupled from carbon? Second, is a change in physical risk going to limit either the operating days of the asset, or the available capital to acquire the asset at the end of the investment horizon? And third, how does the asset support its occupants?

Justin Travlos is Global Head of Responsible Investment at AXA Investment Managers Alts

Philanthropist and businessman Etienne d’Arenberg

Etienne d’Arenberg hails from one of Europe’s oldest families and is treasurer of the Arenberg Foundation, whose mission is the promotion of the understanding of European history and culture. He is a partner of family-owned Swiss private bank Mirabaud. He is also President of the Menuhin Competition Trust, and Trustee of several Swiss and UK charities. He speaks to LUX about European values, and the evolving perspectives and expectations of the next generation

LUX: Has the nature of philanthropy changed in the last two decades?
Etienne d’Arenberg: Both from my private banking experience at Mirabaud as well as from various circle of donors I belong to, I feel that there is a clear evolution in philanthropic practices. Firstly, there is an increasing involvement in philanthropic areas outside the traditional non-profit sector with growing interest from both governments and companies to partner with individual donors on specific issues. Secondly, and this is probably the consequence of the first point, there is an increasing focus on systemic change and transformative grant-making approaches that achieve greater leverage. Lastly, and this can become challenging for smaller institutions, there is a growing expectation for impact measurement and focus on KPIs.

Another trend that I see emerging in large donors’ circles – often business-owning families – is the need to align business and family platforms. The time where your company was polluting the rivers while at the same time your family foundation was giving to the WWF is over. There is a search for coherence between the different activities with a growing alignment between the business, the investment vehicle(s) and the philanthropic foundation. Interestingly, private banks in Geneva such as Mirabaud have been at the forefront of this trend with their founding families being very active in local communities, while at the same time promoting a company’s approach to addressing the most pressing social and environmental issues.

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LUX: Tell us more about your last point – are people being judged by different criteria?
Etienne d’Arenberg: We are faced with issues of huge magnitude, both on the societal and environmental front and this is especially true in times of COVID-19. If you combine this with growing access to information, I do feel that there is a real demand from the public for more sustainable business practices and generally speaking pressure for accountability. I see this pressure mounting, especially from a new generation of customers and employees.

If you run a company that is active in socially or environmentally damaging activities, the issue is that you will not be able to shift your business focus overnight. Our role as investors – and this is what we do at Mirabaud – is to accept companies that may not yet be there, but which are able to demonstrate a forward-looking vision including a clear strategy to transition to clean, circular and inclusive business models. For a family-owned or family-controlled company such as Mirabaud, this is also a wonderful opportunity to reconnect with purpose and long-holding family values.

The Arenberg Foundation organises concerts in the remote village of Lauenen, in central Switzerland.

LUX: Is inclusion and bringing people together an important element of philanthropy?
Etienne d’Arenberg: Inclusion is about embracing people irrespective of their difference, whether that’s race, ethnicity gender, sexual orientation or identification, religion or economic circumstances, and providing them with equal opportunities. This is where philanthropy plays an important role as inclusion often starts with access to education, healthcare or basic needs.

But inclusion is also about getting rid of bias, the “us versus them” old way thinking, and embracing the fact that our difference is something positive: this goes far beyond the tropic of philanthropy. I come from quite a traditional background, but I am proud to say that I do not feel threatened by a society that changes. Quite to the contrary and under the impulsion of my daughters, we have been revisiting family values and behaviours, making sure not to pigeon-hole people and being particularly mindful not to impose suffering by raw reflexes of exclusion.

Mirabaud has also committed itself to diversity and inclusion, making sure, for example, that we create an optimal workplace for women. The fact that we were one of the first Geneva private bank to welcome a female managing partner helped us to develop a solid framework for gender equality practices. This has nothing to do with tokenism as it is based on the strong conviction that a forward-looking institution needs different perspectives and experiences.

Read more: Sophie Neuendorf on building a more sustainable art world

LUX: With the demands that are ever growing on the state sector, does the private sector need to step in more to support the cultural and charitable activities that were previously more supported by the state?
Etienne d’Arenberg: I don’t want to be a judge of the private sector being ‘not enough’, because whatever comes is already something and some individual donors are immensely generous. As I was mentioning before, there is an increasing need for approaches that achieve greater leverage and I believe that public-private partnership will play a greater role in addressing the need for systemic change.

The private sector can also act as a catalyst for change, raising awareness on specific issue and campaigning direct governmental support. I have been following the work of a UK charity which focuses on children food poverty: this is a very good example of an initially privately funded charity, who is actively campaigning for legislative change and working in close collaboration with government on food delivery. I am sure that we will see more on this in the future.

The Bol d’Or Mirabaud regatta on Lake Geneva

LUX: Does the next generation of wealth owners have different priorities for philanthropy?
Etienne d’Arenberg: Traditionally, family businesses or wealth owners have been quite active in their communities, and Mirabaud is no exception, both at the bank and at the partners’ level. Ask many Geneva-based NGOs, charities, cultural or sport institutions and they will tell you about its commitment.

I feel that the type of issues Generation Z cares about are a little bit different and I see this with my daughters. Their preoccupations are centred around inclusion, mental health, environment and racial equity. They will tell you bluntly that they are not prepared to work for a company that does not match their ethics or values, even if that means foregoing a number of lucrative jobs. To my view, this is quite representative of a generation that is much open to a new set of issues.

What is also changing is the active role they are ready to take. I think that the generation of philanthropists who will just sign a check is slowly over, and we will see a new generation of individuals who will want to take a much active role, starting earlier in life as volunteers, advocates or activists, and using a wider range of engagement tools.

As I said, Mirabaud has demonstrated a 200-year-old interest in the communities in which it operates and I sense that as a bank we are particularly interested in understanding this new generation, not only because they are our future clients and employees, but also because they are shaping the future we will be operating in, as a company.

Read more: Lamberto Frescobaldi on 1000 years of tradition and wine

LUX: Do Mirabaud’s philanthropic contributions focus on culture and the arts?
Etienne d’Arenberg: First and foremost, concerning contemporary art, in recent years we’ve been sponsors of FIAC in Paris among various other renowned institutions. We’ve also sponsored the Zurich Art weekend, which is, in a way, the pre-Art Basel event, in a more intimate setting. Even if we are an institution that celebrated its 200th birthday in 2019 (so we are 202 years old now) our motto is always “to be prepared for now”. As in, immediately at your service, to sponsor and to be interested in today’s world and that’s why we are interested in contemporary art. We know the value of looking into the past, and taking lessons into the future.

The second thing to remember is that culture is not something which always pertains to art. If you look at the enthusiasm of the public, art is not always the biggest thing, sports, for example, are part of the culture of a nation. We are sponsors of the largest inland regatta competition in the world, the Bol d’Or Mirabaud on Lake Geneva, and it’s a fascinating competition, because the lake has very particular wind conditions that are ever-changing, it is not a one-sided Caribbean type wind that comes constantly from one side and doesn’t change that often. Here again our motto “prepared for now” completely makes sense.

LUX: The concept of Europe is an important one for your family foundation. Why?
Etienne d’Arenberg: When we think about Europe, our family thinks of the continent which includes Switzerland and the United Kingdom, not only the European Union. The concept of Europe is indeed very important for our family, as it includes a set of value that are dear to our heart: human dignity, rule of law, equality and democracy to name a few. This sounds wonderful and noble, but the truth is that it is quite vague in practice.

What we have been trying to do with our family foundation is to revisit these values in the light of today’s challenges and explore new ways to shape our common future.

I am personally convinced that Europe has a key role to play in shaping the post-COVID recovery, and building a new social contract based on these long-lasting European values and at a very modest level, we are trying to be part of this conversation.

Etienne d’Arenberg is limited partner of family-owned Swiss private bank Mirabaud and is Head Wealth Management United Kingdom.

Find out more: arenbergfoundation.eu, mirabaud.com