Standards, labels, ratings: how to structure green finance?
Due to the multiplication of ESG criteria, the complexity of the rating systems or the redundancy of the labels created, it is difficult to identify with precision the real green companies. However, like the food industry, investors should be able to trust quality control standards that are widely recognized as reliable. To achieve this objective, a real methodology should be put in place beforehand. However, what are the conditions for having access to the label?
Do you just have to pay 10,000 euros or 15,000 euros to perform an audit? Should these audits be carried out at public or private level? Does the financial position, assets under management (i.e. assets under management) of the relevant entity outweigh other considerations? Should we have more confidence in a top 10 European asset managers, a top 10 global managers or a type A manager, for example? In terms of analysis, is AUM 1.6 trillion more credible than a much smaller AUM? Finally, can we hope that the officially sanctioned standard will have a European or international scope? There are so many unanswered questions that cause a wide array of designations to flourish with absolutely zero credibility.
What is the relevance of the “France Relance” label?
The Ministry of Finance and the Economy recently added the “France Relance” label to the long list of French labels supposed to guarantee sustainable financial products in France. In order to reassure investors and encourage them to direct their savings towards labeled financing, this new label – a miraculous discovery unearthed at Bercy – is supposed to calm the dull anger of companies hard hit by the crisis. In reality, Bruno Lemaire gradually switches to bubbling water … In this frantic race for labels, asset managers, regardless of their size, are shaking their brand like a rattle in front of investors in an attempt to capture investments in sustainable funds. Have they all forgotten that the economic ecosystem is also governed by the laws of natural selection? Like the famous PRI (Principles for Responsible Investment), which has been in a lethargic state for over two years, what is the point of creating a new label whose life expectancy is already threatened?
Novethic finally woke up! (honestly, much admired by Green Finance)
Finally, an article (in addition to the one on the carbon footprint of paper cones for French fries) which highlights the real difficulties in going green.
What about data retention?
The SRI Label, the Greenfin Label, the France Relance Label: is this really the issue that interests us? The underlying question about posture about these standards, ratings and labels is much more serious and concerns data. Get my precious, how much data should I give up in return? And who will collect, hold, make available and use this data? As we get lost on twisting paths of ever higher standards, Luxflag, (of the Luxembourg Stock Exchange – LGX Green Exchange) continued its cheerful European way! A lesson reminiscent of the pitfalls of rating agencies who assigned AAA ratings to the left, right and center before the 2008 crisis. More than ten years later, did Bercy deliberately choose to repeat these same mistakes? It would be a scenario with a tragically predictable ending …
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