A few questions about the climate.
It is time we ask ourselves some fundamental questions at a time when ESG topics, now referred to as “sustainable”, are quickly gaining ground in the financial world.
We are seeing a major trend emerge: the instrumentalisation of finance in the broadest sense, with its corollary: the race for compliance on the part of those involved.
Thus, for European and national political authorities, which are the strongest advocates of sustainable finance, it is no longer time to deal with the why but only with the how.
In our opinion, the resulting issue is the loss of sight of the purpose of each segment of finance. By wanting to standardise everything, legislators and regulators are inclined to demand the same thing of those involved, regardless of their profession (bankers, insurers or asset managers).
« The clearly stated ‘higher’ objective, which is increasingly being imposed, including by legislation, is to ‘save the planet’. Who can be against it? No one, of course! »
The problem with demanding everything at the same time – saving the planet, delivering financial performance and serving customers’ interests –– is that a problem of priority management emerges. The new doxa thinks it has solved the dilemma by saying that the customer’s ultimate interest is to save the planet. Sure! But timelines, objectives and expectations are not necessarily aligned.
The increasingly strong notion of “investment steering” is of concern when it comes to financial markets.
Let’s take the example of a management company. It is the only one that knows and should know the needs and expectations of its clients and has a direct or indirect mandate (through the management of a UCI) to do so.
We therefore question the relevance, legitimacy and effectiveness of the public authorities, in the broadest sense, turning themselves into asset beneficiaries with other people’s money. To each their own profession and priorities.
Another question is whether, in addition to compulsory levies, there will be compulsory savings or compulsory consumption?
To conclude on timelines, in relation to the asset management business, if we integrate the notion of long-term climate risk, the fact remains that the risk that will increase immediately is regulatory.
Executive director, Director of strategic intelligence, External relations, ESG and Research
June 30, 2021
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