Coming together in support of sustainability
After a first successful edition last year, Societe Generale, who is pioneering Sustainable & Positive Impact Finance, brought together international ESG finance leaders in Paris on November 9 to discuss what is at stake and what still needs to be done to tackle climate change, finance being at the heart of this essential shift.
Notable guests included Careen Abb, program leader of Positive Impact Finance at the United Nations Environment Program; and Philippe Le Houérou, chief executive officer at the International Finance Corporation (World Bank Group).
The guest keynote was delivered by polymath, philanthropist, and cultural sage Jacques Attali. His biography is hard to summarize: author of more than 50 books, he's the man who shaped the European Bank of Reconstruction and Development, and founded Positive Planet, the micro-finance lender which has helped more than 10 million entrepreneurs in 40 countries.
Attali spoke movingly of the ability of ESG initiatives to help people in many ways, including micro finance: "The way for vulnerable people to progress is not to depend on charity," he said, "But to start your own business."
He had tough demands for the sector, particularly around carbon dioxide pricing. Carbon credits are traded through the EU's Emissions Trading System. Industrial companies must hand in a certificate for every ton of CO2 they emit. The ETS price is low, and Attali believes a hike is overdue: "There is another negotiation in Brussels around the price" he said. "It is around 7 euros per ton. It should be 100 euros. The minimum to be efficient would be 40 euros. The UN should focus on that."
Careen Abb of the United Nations focussed on the need to bring many parties together. "It might sound trite," she said, "But the difficulty of sustainability is that you need to consider so many issues – financial, social, and developmental. The lesson is that to solve one you need to look at them all."
She called for governments to engage financial actors earlier, in the design stages of solution-building, to ensure public money is spent only when it really needs to be. Innovative thinking can solve a number of problems: "When we look at the financing gap, we may need to rely less on counterparty guarantees and more on their flows."
This call was endorsed by Didier Valet, the deputy chief executive of Societe Generale. He stressed that, "We need to pull together banks, private investors, governments, and supra-national organizations to accelerate the sustainable sector's transition through this stage."
The conference offered delegates insights into the investment criteria being used by major institutions. Willem Littel, senior manager of Capital Markets Funding at BNG, explained that his organization is issuing sustainability bonds using the system they feel is the most comprehensive: "Not green bonds, not social bonds, but we are using the triple P (people, prosperity, the planet) methodology for sustainability bonds. We use the framework set up by Telos, the Sustainability Center of the University of Tilburg. We measure over 100 quantitative indicators from official institutions and we are ranking our clients like that."
The conference covered the way ESG is changing the asset management industry, and governance issues regarding shareholders.
The consensus was that the Sustainable & Positive Impact finance needs more high-level summits like this. The United Nation's Abb put it succinctly: "Just the very fact that the conference is called Sustainable Finance & Positive Impact Finance is an important message. These conferences are when a broader segment of the market gets to feel where the movements are going, and what the next steps are. It's very good."
She added that Societe Generale should be recognized for its contribution. "Societe Generale is playing a leading role. It is on the steering group of the Positive Impact Initiative, and more broadly has shown leadership. They've issued bonds and notes integrating Positive Impact principles. Banks have a critical role to play."