Editorial - February 2024
Temps de lecture : min
Advisers are not the ones paying
The fiduciary responsibility debate is back on the agenda, in particular with the “anti-ESG” backlash in the US.
In Europe, however, the debate has long been closed and the watchword is “steering investment”. But the problem with steering investment is that advisers, its most ardent supporters, seem to have little grasp of what a client, a saver or even a market is – and are not the ones paying. For them, the end justifies the means and that necessarily involves constraint. To be sure, being the self-pronounced saviours of the world is more rewarding than meeting clients’ expectations.
« As financial activities become more and more regulated, constraint becomes an increasingly powerful lever. »
Recent years have shown that the administrative machine is up and running and that nothing, or almost nothing, will stop it. Today, all supervisory, regulatory and now audit and control functions are tasked with achieving the Paris Agreement objectives by decarbonising every economic activity in existence, as quickly as possible. ESG reporting, which was initially “transparency” reporting – intended to keep clients properly informed – is becoming broader and evolving for financial players into an obligation to act.
Indeed, regulatory compliance risk is becoming the most significant non-financial risk. The client, despite officially being the most important party, is the one asked to keep on the straight and narrow – and asset management companies have no choice but to adapt. Contrary to what some think, these companies and their clients are not hell-bent heartless capitalists – especially in a world of mutual interests. But, as always, the devil is in the detail and economic reality is what counts. Rest assured! The transition is key to the ecology and will come about – just not at the pace you dream of.
Asset management companies and investors already used naturally to factor a whole swath of non-financial criteria into their decisions. At the time, these criteria had a strong geopolitical component. The big change in recent years is that the climate and its concrete expression – enforced decarbonisation – dwarf all other subjects. It remains to be seen who will foot the bill for this.
Director of Strategic Intelligence, External Relations, and coordination on sustainable finance
Fébruary 12, 2023
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