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Sustainability

Advancing the French & European ESG agenda

Transition planning requires a “broad church” approach

Panel members: Karen Degouve, Head of Sustainable Finance at the Fédération Bancaire Française; Benjamin Scialom, Senior Manager, Sustainability Services KPMG; Lotta Marchal, Head of SPO Sales Europe for EthiFinance; and Michel Pinto, Advisory Panel Member at the Climate Bonds Initiative.

  1. The market should not only focus on “green” companies but also support firms with a more challenging decarbonisation journey. A “broad church” approach is therefore needed.
  2. Transition plans should clearly state SMART targets, ideally be linked to executive compensation, include an implementation plan, and outline how the transition is being governed.
  3. Science-based plans and benchmark assessments – such as SBTi1, IAEA2 and CBI3 – play a critical role in enhancing credibility and comparability of transition plans. They are therefore an important stamp of approval to aim for.
  4. Green bonds are expected to remain an important asset class for financing green and transitioning activities. Going forward, corporate “net zero” or “environmental” ratings could become paramount in assessing all new debt issuances.

ESG regulation should be seen as an opportunity

Panel members: Adriana Cruz Felix, Responsable équipe analytique SPO Europe at Moody’s; Felipe Gordillo-Buitrago, Senior Impact & ESG Specialist at Mirova; Aldo Romani, Head of Sustainable Finance at the EIB; and Jean-Baptiste Giacomuzzo, Sustainable Structurer, Bpifrance.

  1. While ESG regulatory compliance can be challenging, it also represents an opportunity for markets, helping to enhance positive competition as well as stimulating further positive change in the economy.
  2. It arguably also helps sustainable analysis in the capital markets by introducing a common language. For instance, new regulation such as the CSRD4, should make it easier to compare transition plans from different companies and organisations.
  3. It is also important to see regulation as a gradual process, a challenge that evolves as the market evolves – and helps improve it. It will consequently be iterative: your first Taxonomy report is unlikely to be the final product.
  4. The EU Green Bond Standards are likely to become a “gold standard” for the European green bond market, with issuers adhering to it likely to attract incremental demand and, possibly, as a result improved pricing conditions. It will however not monopolise the market.

The transition of the mobility sector cannot happen through EV vehicles alone

Panel members: Jean-Charles Bernard, Managing Director, Edmond de Rothschild; Paul Badaro, M&A Director, Edmond de Rothschild; Théo Kotula, ESG Analyst at AXA Investment Managers; and Romain Gillet Associate Director EMEA, Automotive Powertrain & Compliance S&P global Mobility.

  1. It is important to note the breadth of innovations currently emerging in the transport sector by small, medium, and large corporates; and the importance of investors and debt providers supporting these developments.
  2. While EVs and the supporting infrastructure are often in focus, innovations in the fluvial/maritime space, as well as SAF (Sustainable Aviation Fuel), will also have a key role to play in reducing emissions.
  3. Green bonds will remain an important tool to drive funding towards the right projects, but issuers and investors will also increasingly focus on social co-benefits of green issuances in this and other sectors.

 

Additional information

  1. Science Based Targets initiative
  2. International Atomic Energy Agency
  3. Confederation of British Industry
  4. Corporate Sustainability Reporting Directive

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