AGEFI Luxembourg - avril 2024

AGEFI Luxembourg 34 Avril 2024 Fonds d’investissement D ans lemonde actuel, l'in- vestissement vert ne se limite pas à suivre des tendances à la mode ou à répondre à des gros titres sensationnels. C'est une réalité com- plexe qui nécessite une compréhen- sion approfondie des chaînes de valeur vertes. Daniel Lurch (portrait), PortfolioManager chez J Safra Sarasin SustainableAssetManagement, souligne que cette compréhen- sion est essentielle pour saisir toutes les oppor- tunités offertes par cette transition. Alors que la fragilité de nos ressourcesnaturellescontinue de faire les gros titres, il est im- pératif de trouver des solutions poursouteniruneéconomieverte. Cependant, les actions actuelles ne sontpasàlahauteurdesmesuresnécessaires pour éviter une crise climatique imminente et la perte de biodiversité. Les gouvernements, les indus- triesetlesindividusdoiventunirleursforcesetinten- sifier leurs efforts pour préserver notre planète. Cela crée des opportunités at- trayantes pour les investisseurs à long terme. Les entreprises qui proposent des solutions innovantes pour la transition vers une économie plus verte, et finale- ment vers une économie à faibles émis- sions de carbone, sont au cœur de cette transformation.Cesontprécisémentlesen- treprisesqui offrent des solutionsnovatrices pour lutter contre le changement climatique etaméliorerlaqualitédel'eau,dusoletdel'air qui se positionnent rapidement pour bénéficier de ces opportunités. Nous croyons fermement quel'investissementvertdoit aller au-delà des tendances à lamode et des solutionspop- ulaires qui font les gros titres. Les investisseurs ont besoin d'une compréhension appro- fondie des chaînes de valeur vertes pour libérer tout le potentiel des op- portunités qui endécoulent. La transition écologique est plus qu'une simple ac- tion louable : c'est unenécessitémondialeaux impli- cations majeures pour les investisseurs. Comme l'a souligné Frank Elderson, membre du directoire de la Banque centrale européenne et vice-président du conseil des gouverneurs, "L'humanité a besoin de la nature pour survivre, tout comme l'économie et les banques. Plus le nombre d'espèces en voie d'extinc- tion augmente, plus les écosystèmes dont nous dépendons se fragilisent. C'est un risque financier croissant qui ne peut être ignoré." Les effetsduchangement climatique, avec l'augmen- tation des températures à travers le monde, se traduisent par des conditions météorologiques de plusenplusextrêmesetfréquentes.Sileseuilde1,5°C de réchauffement est dépassé d'ici la fin de la décen- nie, celamettra en péril les économies, les sociétés et, enfinde compte, les opportunités d'investissement. Alors que les pays à revenu élevémettent enœuvre des réformes environnementales, les investisseurs risquent demanquerdesopportunitésde croissance structurelle. Cependant, cette transition verte offre de nom- breuses opportunités. Par exemple, selon les poli- tiques gouvernementales actuelles, les énergies renouvelables représenteront 80%desnouvelles ca- pacités de production d'électricité d'ici 2030, avec l'énergie solaire à elle seule représentant plus de la moitié de cette expansion. L'intégration de ces opportunités dans un porte- feuillede transitionverte repose sur la sélectiond'en- treprises proposant des solutions significativesdans leurs chaînes de valeur vertes respectives. Ces en- treprises se répartissent généralement en deux groupes : les "gagnants verts", fournisseurs his- toriques de solutions environnementales, et les "pe- tites entreprises", souvent des startups développant des technologies vertes révolutionnaires avec des perspectives de croissance solides. Le résultat est un portefeuille mondial thématique diversifié d'environ 50 fournisseurs de solutions vertes, avec un profil ESG (Environnement, Social, Gouvernance) solide et une exposition élevée aux revenus verts. En adoptant une approche active de gestiondeportefeuille,axéesurlasélectiond'actions, nousvisonsàaméliorerlaperformanceetàidentifier des opportunités dans le domaine vert. Nous sommes convaincusquedes rendements attractifs et la durabilité peuvent coexister harmonieusement. La transitionverten'est pas seulement une question de bien-faire : c'est la preuve d'une économie saine et résiliente. Les chaînes de valeur vertes cruciales pour les investisseurs By Clarisse IVAÑEZ-BIESSY, Manager - ESGExpert - HACAPartners W hile climate changemight often feel abstract or distant in our daily lives, the explicit findings of the EuropeanClimateResearch Alliance (“EUCRA”) (1) leave no roomfor doubt: Europe stands as themost rapidly warming continent on the planet. Theresponsibilityoftackling this issue has been primarily entrusted to the financial world, presenting a unique op- portunity to reframe the role of financeintheaftermathofthe2008 crisis.However,recentevidenceshows thatnumberofmisleadingsustainable-relatedcom- munication incidents has increased in the European Union since 2012 across sectors (2) . Naming exaggera- tion, ambiguity, or omissions, alongwith the absence of meaningful assumptions and the lack of robust methodology,arejustafewexamplesofbehaviorsin- creasing the risk of greenwashing. Under the Sustainable Finance Disclosure Regula- tion (“SFDR”), disclosures are often too vague or in- consistent and are leading to an increasingly sense ofconfusionamonginvestors.ResearchandESMA’s report (3) underscored that impression (4) , highlighting that current sustainability disclosures for funds are not fulfilling their intended purpose of increasing transparency and preventing greenwashing. As a result, the number of sustainable investment fundsisrisingbutforsomeofthemwithoutevidenc- ing concrete proof of their positive impact on the people or the planet. In the interim, the variability among Environmental, Social, and Governance (“ESG”) scores provided by third-party entities remains a topic of contention. A single issuer may receive top rankings from one providerwhilebeingratedpoorlybyanother.What’s more concerning is the potential dissonance that can occur between a company’s highESGscore givenby ratingagencies,anditspotentialinvolvement in controversies. Furthermore, there are cases where companies engage in seem- ingly contradictory activities. For exam- ple,considerMajidAlFuttaim,whichnot only champions the constructionof vast indoor skiing malls, penguins shows amidst deserts, but also boasts about sustainability initiatives supposedly aligned with Sustainable Develop- ment Goals (SDGs). This juxtaposition raises ques- tions about the coherence of corporate sustainability efforts: how can the funding of soil ar- tificialization and fake snow align with SDGs? This inconsis- tency is similarly highlighted in the ESMA’s publication on Im- pactInvesting (5) ,whichmentionsthe phenomenon of “SDG-washing” (6) whereincompaniesengagewithSDGs on a superficial level. Why risk greenwashing when public opinion and regulatory actions are increasinglyvigilant? Because compliancewithfinancial regulations nec- essarily generates immediate additional costs for it. It follows that the fact for a competitor to free itself from it, gives it an undue short-term competitive advantage. Worse? For now, these practices don’t appear to have a significant systematic financial impact, whether due to reputational risk or sanctions. ESMA’s publications ongreenwashing (7) , for exam- ple, reveal no statistically significant evidence con- firming a consistent effect of greenwashing controversies on firm-level financial metrics. Does this imply that greenwashingyields rewards? While some entities may gamble on short-term gains, it’s unlikely to sustain long-term success for businesses. Why? Firstly(apartfromtheimpactofclimatechangeitself), public scrutiny is increasing in every field in relation to sustainable values. It is another observationmade through ESMA’s work: growing levels of public scrutiny suggest that investor andmarket reaction to greenwashing may change in the future. Moreover, there’s a growing appeal for sustainable values. Ac- cording to the latest survey from BNP Paribas Epargne et Retraites Entreprises, 80% of employees surveyed believe that employee savings contribute significantly togivingpurpose to their investments (8) . Some new market players understand the assign- ment: it’s not about advocatinggreenvalues but pro- viding concrete evidence to support them! This is exemplifiedbyEcobankssuchasGreengot,whichal- locate all available funds tofinancing sustainableval- ues and sustain climate transition all while maintaining a commitment to transparency. These initiativesmay alignwith the European Com- mission’s recent announcement on February 6th. To achieve climate neutrality by 2050, the Commission proposed a 90% reduction in greenhouse gas emis- sions by 2040, initiating discussions before the early June 2024 European elections. On the sustainable finance part, as the CSRD imple- mentation progresses, ESG rating agencies are now under scrutiny. There’s an initiative underway to en- hance the credibility and consistency of ESG ratings, addressing pertinent ESG risks in credit assessments andpotentialconflictsofinterestthatmayariseintheir operations. Supervising greenwashing is also on the ESMA’sagenda,withthepublicationofitsfinalreport on thematter, expected inMay this year. Furthermore, sustainability echoes throughout the Europeanregulatoryframework:theEUCommission recently adopted amendments to Directive 2005/29, concerningunfair business-to-consumer commercial practices in the internalmarket, onFebruary20th this year, aiming to combat greenwashing and safeguard consumersandtheenvironment.Theseamendments introduce new criteria to prevent companies from making misleading claims about the environmental benefits of their products and services. In France, a unanimous law was passed in March aiming at providing consumerswith better informa- tion about environmental impacts, establishing a bonus/malus system, and prohibiting advertising by fast-fashion companies. Regardingthefinancialperformance,assetsconform- ing to green certification standards such as LEED for real estate demonstrated a remarkable 21.4% higher average market sales price per square meter com- pared to their non-LEED counterparts over the last three years (9) . Last but certainlynot least, sanctions are to be feared. A striking example occurred in the United States in late September, where the SEC imposed its largest penalty in its history for greenwashing: DWS Asset ManagementAmericas(DIMAS),wasorderedtopay a$19millionfineforoverstatingitsintegrationofESG into the investment decision-makingprocess (10) . InFrance,on27 th September2023,theCourdeCassa- tionruledthatgreenwashingcouldbedeemedaform of unfair competition. This implies that beyondregu- lators’ penalties, investors unfairly impacted by their competitors’ greenwashing tactics nowhave options topursue damages for unfair competition. Withoutashiftinstrategy,greenwashingpractitioners will face consequences, be it fromcompetitionor reg- ulations. Thecrucialquestionremains:willend-investors,con- sumers, and European citizens be equipped to navi- gate through themyriadof newstandards, reporting requirements, and initiatives aimed at fostering a more sustainable economy? Perhapsthegenuineopportunityforthefinancialsec- tor to make a meaningful contribution to the fight against climate change lies precisely in this: guiding European citizens to gain a clearer understanding of howtheir funds are allocated. 1) EUCRA, European climate risk assessment EEA Report, January 2024. 2)EBA,ProgressReportonGreenwashingMonitoringandSupervision, 31May2023. 3)ESMA,ProgressReportonGreenwashing,31May2023. 4)PWC,GreeningyourFinancialproducts,February2022. 5) ESMA, Impact Investing – Do SDG funds fulfill their promises?, 1 February2024. 6)Heras-Saizarbitoria,Organizations’engagementwithsustainablede- velopmentgoals:Fromcherry-pickingtoSDG-washing?,9August2021. 7) ESMA, The financial impact of greenwashing controversies, 19 De- cember2023. 8) BNP Paribas Epargne et Retraites Entreprises, BNP Paribas Cardif, CommuniquédePresse,19March2024. 9) Cushman &Wakefield, Green Is Good: Sustainable Office Outper- forms inClassAUrbanMarkets,August2021. 10) L’Agefi, La SEC inflige 25millions de dollars d’amende àDWS, 25 September2023. Greenwashing impunity, for how long? R ising costs are puttingmargins of fi- nancial institutions under pressure. Whether you are talking about data costs or costs related to applications owner- ship, needs for scalable, agile and cost-effec- tive solutions have hardly ever been as prevailing. Despitewaves of financial regu- lations already facedduring last decade, the regulatory landscape keeps on evolving swiftly, and so do clients requirements. NotallfunctionsoperatedinternallywithinFinancial Institutions bring competitive advantage. Think of services and data related to compliance, taxation, securities & issuers master file, portfolio pricing, financial sanctions, UCITS eligibility, to name a few. Nowconsider howcosts of data and related services could be optimized. Discussions about tokenized assets also raise eye brows at Financial Institutions, especially questions aroundon-chainpaymentsintegratedintoanentirely digitized transactions experience. The blockchain technology has a lot to offer to Financial Institutions if approached fromthe appropriate angle. While awaitingawide adoptionof digital currencies (CBDCs), our researches show how leveraging on- chain transactionswithout usingany formof tokeni- zed money is possible. This opens up immense potential, for instance to ease up funds distribution with tokenized fundshare classes andon-chainpay- ments, both of which may be delivered through mutualized services platform(s). Blockchain technology has the potential to improve alternative investment funds’ liquidity, and to address some of their day-to-dayoperations hurdles by facilitatingpayments and reconciliations for capi- tal-calls, reimbursements, etc. We believe mutualized services, while amortizing costs of applications “build” and “run” over several players, do provide a sound path, both financially and functionally wise. At the same time, a modular applicationbuildupapproachwillenableeachplayer to finely define what mutualized features to partici- pate into, whereas bespoke features development will remain possible. This can be delivered for instance through white- labeledapplications.Andparticipantscanunlockfur- ther potential through collaborativeworkinggroups where concerns and ideas form a common know- ledge base benefiting to all. Weplantoorganizeaneventtodiscussthesesubjects and to present what and howcould this be set up. Please, do not hesitate to contact us. Jean-Paul LETOMBE Worldline Europe S.A. (Luxembourg) Jean-Paul.Letombe@worldline.com Mutualized services: an appropriate answer to pressurizedmargins