What are the big trends in terms of RSE in Luxembourg?
Claire de Boursetty: I think for now insurance companies are finding their feet. They don’t know yet exactly how to go about the subject, but they are starting to at least be aware of it. Within ACA we are trying to push the subject because lots of regulations are coming. To give you an example of what we do, ACA became a supporting institution of the principles for sustainable insurance which is promoted by the United Nations Environment Programme Finance Initiative (UNEP FI).
Matt Moran: When I go and visit other countries on conferences or meet insurers through other engagements, I see companies moving towards more socially responsible investing and paying more attention to the global sustainability challenges (see the United Nations Sustainability Goals , or SDGs). The industry at large is engaged. Not only do corporates have a role to play in contributing to this global agenda, but they also need to be resilient and to see those global challenges as risks and opportunities.
In fact, it’s essential because it has such an impact on us as human beings but also on the companies themselves. In the wealth management space in Luxembourg we are dealing typically with the subsidiaries and they have a less direct influence on socially responsible investing. Notwithstanding, the next generation of wealthy clients are just more conscious of ESG and sustainable investment as a key topic. Hence, I do think it will become more and more part of the fabric here in the coming years.
The interest for the SRI is growing, why are they so convincing for customers and companies?
Claire de Boursetty: It’s obvious that there is a problem and I think people are becoming aware of this problem and more conscious. A lot of the millennials will get a big transfer of assets from the baby boomers and they are more conscious. You’ve got also more women that are involved in the financial industry and as investors - they usually tend to be more sensitive to these issues.
Matt Moran: The world is in crisis. There are numerous studies that show a strong correlation between financial performance and ESG performance. Unfortunately, at the moment it’s still a lot more words than actions. We have to change how we live quite dramatically to ensure that the social equilibrium going forward is enhanced. We are on a downward slope and we have to turn. Climate change is not simply an issue; it is an emergency. We’ve seen the Norwegian sovereign wealth fund, the biggest in the world, deciding it will no longer invest in fossil fuels. That’s a huge statement. What we do see in Luxembourg and in the whole fund industry is that now SRI and ESG investing are becoming such a prominent theme.
Matt Moran: The resilience of companies will depend on their ability to be less dependent on fossil fuels. This will require them to transition and change their way of working, to eventually become carbon neutral. What’s clear is that consciousness is rising but the shift to more sustainable development is too slow, in my view.
Claire de Boursetty: We’ve got a lot of studies that say that if you integrate sustainability within your investments in the long term, it has a positive impact. Of course, if you want to do short term profit, it’s a bit more complicated. More generally, institutional clients but also private clients will benefit from more transparency on their assets in general. Because if you want to show that you are really investing their money sustainably, you need to prove it. So, there is work to do about how to get the data, how to bring this transparency to the end client. It will be a factor of the future in deciding where you invest.