ESG events that have captured attention in the past year, and the evolution of attitudes to ESG-based returns, are two topics our expert panellists discuss.
Isabelle Cabie (Co-chair, Stewardship, Market Integrity and ESG Committee, EFAMA)
Christoph Dreher (Head of ESG product group, FE fundinfo)
AJ Harper (Head of sustainable finance, ETFs and asset managers, Euroclear)
Louise Piffaut (Head of ESG equity integration, Aviva Investors)
Tom Powdrill (Head of stewardship, PIRC)
Funds Europe – What ESG-related events stand out in your mind over the past year and why?
Tom Powdrill, PIRC – The float of Deliveroo was interesting. It was a very hyped tech stock with several social and governance concerns. It was a real flop as a float; it listed at the bottom end of its initial price range. But that was a good example of investors choosing not to support a float based on some pretty big ESG grounds. It showed how ESG can be a big factor in a company even before the company becomes part of an exchange.
Louise Piffaut, Aviva Investors – There were a lot of big ESG moments in the past year, but if I can single one out, it would be World Overshoot Day on July 29, 2021. Every year, it’s a different date based on the point in the year when we have used all of the resources that the Earth produces in 12 months. In 2021, we effectively used 1.7 Earths in terms of resources. That reflects how comfortable we are making returns at the cost of the planet and reinforces the need to do due diligence on the whole of the value chain, understand their impacts and mitigate them.
Isabelle Cabie, Efama – For me, it was the debate about the extension of the EU Taxonomy to gas and nuclear. It’s sensitive, but we must recognise there has long been an idea that there is a role for them in the transition from fossil fuel energy.
AJ Harper, Euroclear – First of all, the US came back into the Paris Agreement following Joe Biden’s election. Secondly, the Securities and Exchange Commission (SEC) has proposed rules to enhance and standardise climate-related disclosures for investors; that’s a game-changer. Similarly, what’s happening with FinDatEx and the European ESG template (EET) means people are saying we need to standardise the delivery of the ESG data in the funds world.
And finally, the response to the attack on Ukraine demonstrated how the world can react together. Even though we may not think of it through a standard ESG lens, this does align tremendously with the governance pillar.
Christoph Dreher, FE fundinfo – For me, it’s the push on climate issues. We are going beyond reporting and beyond just putting a simple number on emissions. It’s about the impact and the transition. There is more effort required to put the data into context and in getting an asset-management framework up and running around it.
On the regulatory side, it was truly all about SFDR [the Sustainable Finance Disclosure Regulation] and EET. These put ESG on the table for everyone, even if they were not interested in it, or had little understanding of what it entails so far. And, because it is regulatory-driven, it means a firm’s compliance and legal team is obligated to deal with it.