Investment managers must team up on ESG

Europe
On the 11/13/20 at 7:32AM

by

Adrien Paredes-Vanheule

More commonality, less divergence. Here is the message sent by four asset management firms’ CEOs who took part to the 26th European fund and asset management association’s investment forum on Thursday.

CEO panelists at the Efama forum confronted viewpoints on several topics, including the post-Covid work environment for the asset management industry. Natixis Investment Managers CEO Jean Raby expressed his surprise over statements made about working from home being necessarily the future way of working at asset management companies. “Approaches on working from home are very diverse among employees of our affiliates. Many of our staff want to go back to the office but cannot because of decisions taken by local governments. This sometimes creates a perception of incoherence,” he explained. Raby said he has also been stunned by the high level of innovation the current environment created. If Natixis IM’s CEO remains “a bit worried” regarding productivity during remote work period, he nonetheless keeps a rather quite positive stance on the matter. According to Robeco’s CEO Gilbert Van Hassel, it is still too early to see how things will pan out. “The current situation proves that flexible work works very well and can be part of the future. But it will not be for everyone at asset management companies,” he said.

The Covid-19 outbreak has also amplified asset managers’ focus on environmental, social and governance criteria (ESG). But confusion somewhat lingers in the measure of social impacts from managers’ investments, pointed out UBS Asset Management’s EMEA CEO Aleksandar Ivanovic. “Tangible and clear measures exist to assess the environmental impact, we need to discuss with regulators to have similar measures for the social component,” he argued. In the opinion of Candriam CEO Naïm Abou-Jaoudé, the E and S parts are interdependent and addressing issues linked to them require a more global effort. “We need to act collectively on ESG at all levels to have common reporting standards and ESG language.”  Robeco’s Van Hassel invited investors to not look at investments only through the wealth prism (risk-return) anymore but to also consider well-being.

ESG in the US, the next ‘real topic’

However, Natixis IM’s Raby called on asset managers to “not make false promises” as he underlined they cannot solve all ESG issues by themselves. “If there is an emergency to act today, the energy, green and digital transition will last long,” he said. Besides, he pleaded for the inclusion of nuclear energy in the green sectors of the forthcoming EU green taxonomy. Raby also stresses regulatory divergence growing vis-à-vis ESG, especially between Europe and the US. The US department of labour currently constraints local pension schemes to favour return maximisation to the expense of non-financial criteria in their investments. “We all hope that the new US government will change its view on this. If it does not, that will become a real topic,” Raby said, while recalling that the US remain the largest asset management market, even with the emergence of China. Candriam’s Abou-Jaoudé showed more optimism. He is confident in Europe paving the way for the rest of the world thanks to the different upcoming ESG/green investment regulations (NFRD, SFDR, taxonomy, etc). Robeco’s peer Van Hassel even considers the sustainable finance disclosure regulation “as important as MiFID II” for the financial sector.