ESG, SRI, Sustainable and Green… Is there a future for sustainable finance beyond marketing?

The question emerges more acutely as the crystallization of the environmental battle surrounding German energy company RWE’s projects for the Garzweiler open-pit lignite mine once again exposes the shortcomings and contradictions of “sustainable energy”. strategies’ have been developed and widely disseminated by an insignificant fraction of global financial players. Or how to rediscover that many actors are important players in Sustainability, as exemplified by two AGEFI journalists this week (“The Great Mining Project of RWE Places banks and managers facing their conflicts”, 23-01-23). Funding is found in Europe and around the world, those in the RWE bank pool, those among its institutional shareholders… It is firmly established on a set of details, exceptions and placements in full compliance with the exclusion policy.

Let’s understand us well. The idea here is not to blame one actor at the expense of another. Especially since it is inherent in any intellectual construction, any strategy, in any field to introduce flaws and limitations. Or further, the contradictions exposed by RWE’s projects are not limited to the financial world – the Garzweiler mine expansion project and the destruction of the Lützerath hamlet did not receive the approval of the German coalition government in October 2022. Is the environmentalist party involved?

But if there is one element that the debate around the RWE project has brought up again, it is the signal sent by the large wave of reclassification of “impact funds” into simple so-called Article 8 SFDR funds, many of them voluntary. Management through 2022 Ahead of tightening rules effective January 1, 2023: At a time when the rules require financial advisors to ask their clients about their preferences from a sustainable financial perspective, policies on both sides aim to target the financial spectrum, huge marketing /remains commercial.

Admittedly, the scale of the challenges posed by climate change and the need to create more inclusive societies globally is not only dizzying, but also a complexity that cannot be reduced to one-size-fits-all (and unbiased) answers. To take this example alone, can we really consider the electric car a solution, knowing that the development of batteries involves the exploitation of rare earth resources and therefore inevitably has a negative impact on established ecosystems? And to emphasize one type of “renewable” energy over another, do we always measure the environmental costs of deploying them over their entire life cycle?

Admittedly, the calls of the moment – and the outbreak of the Ukraine conflict provided a terrible example of this – can quickly conflict with structural necessities: apart from the RWE case, we can specifically recall that certain voices could include arms production in the spectrum of ESG activities came up a day after the start of the Ukrainian conflict to propose. It is true that the climate change imperative cannot be solved with a public big bang (as it seems desirable to some), but it will only be solved with the support of all sectors, sometimes on a detour. their transition to more sustainable models.

Not just the definition, but many elements that make it difficult to implement clear, coherent and “impactful” sustainable strategies for both emerging market companies and asset management companies. . Especially in these areas, choosing more than others means risking mistakes, disappointment, or alienating some of your customers and partners, which means accepting the price of a missed opportunity…

But faced with a proliferation of controversies and scandals, one can be sure that Finance cannot continue to hide behind Byzantine exclusionary policies in the light of day and ESG aggregates that offer the advantage of hiding the most glaring deficiencies in one area. in others to norms and standards (harmony is generally not considered fundamental). At a time when clients are being urged to question their ESG options, it will certainly need to prove its own beyond the colorful brochures printed on glossy paper. To avoid this difficulty, he runs the risk of becoming involved in scandals and controversies indefinitely. Until he discredits himself and discredits all the social and societal struggles he chooses to take on.

Since we’re talking about demonstrating our options here, we’ll close these few lines by reminding you that we at Octo AM chose to base our SRI-labeled strategy on the logic of universe reduction. NGOs known for their expertise. By developing and improving an assessment tool based on objective, “measurable” criteria, arguably controversial and perfect, but which at least allows everyone to understand the efforts of such an organization, day by day we will improve our way of looking at societal issues traditionally covered by ESG we are working rather than the talent of the company’s communications teams in these areas.