Observations on Green Labels, by Bruno Boggiani, CEO of Green Finance:
On October 19, Bruno Lemaire announced the creation of the "France Relance" label. This is the umpteenth French label to guarantee that an investment fund is green, responsible, or sustainable (or all three). In the face of the unprecedented health and economic crisis we are currently experiencing, the solution put forward by Bercy (the Ministry of the Economy and Finance) aims to encourage French households to play their role in the economic recovery in France by investing in green SMEs or mid-caps. After several calls left without response (here and here…), Bruno Boggiani, CEO of Green Finance Strateggyz, is again appealing to the government.
Standards, labels, ratings: how is it possible to structure green finance?
Due to the proliferation of ESG criteria, the complexity of rating systems or the redundancy of the labels created, it is difficult to accurately identify real green companies. However, in similar fashion to the food industry, investors should be able to place their trust in quality control standards with widely acknowledged reliability. To achieve this target, a real methodology would have to be established in advance. However, what are the conditions for being granted access to the label?
Do you just have to pay a sum of EUR 10,000 or EUR 15,000 to carry out an audit? Should these audits be carried out at public or private level? Does the financial standing, AUM (i.e. Assets Under Management) of the entity concerned outweigh other considerations? Should we have more confidence in a top ten European asset manager, a top ten global asset manager or a type A asset manager, for example? In terms of analysis, is 1.6 trillion AUM more credible than a much smaller AUM? Finally, can we hope that the officially sanctioned standard will be European or international in its scope? There are so many questions that remain unanswered, resulting in a wide range of designations flourishing with absolutely zero credibility.
How pertinent is the "France Relance" label?
The Ministry of Finance and Economy has recently added the "France Relance" label to the long list of French labels which are supposed to guarantee sustainable financial products in France. With the aim of reassuring investors and encouraging them to direct their savings towards labeled financing, this new label a miraculous discovery unearthed in Bercy is supposed to calm the voiceless anger of companies hit hard by the crisis. In reality, Bruno Lemaire is gradually moving over to bubbly water… In this frenzied race for labels, asset managers, whatever their size, are shaking their brand like a rattle in the face of investors in an attempt to capture investments flowing into sustainable funds. Have they all forgotten that the economic eco-system is also governed by the laws of natural selection? Similar to the famous PRI (Principles for Responsible Investment), which has been lying in a lethargic daze for more than two years, what is the point of creating a new label whose life expectancy is already under threat?
Novethic has finally awoken! (honestly, much admired by Green Finance)
Finally, an article, (besides the one about the carbon footprint of the paper cones for French fries) which highlights the real difficulties of going Green.
What about the data retention?
The SRI Label, Greenfin Label, France Relance Label: is this really the issue that interests us? The underlying question concerning the posturing about these standards, ratings, and labels is much more serious and has to do with data. To obtain my precious, how much data must I give up in return? And who will gather, hold, make available, and use this data? While we get lost on the tortuous paths of ever-increasing standards, Luxflag, (of the Luxembourg Stock Exchange LGX Green Exchange) has gone on its merry European way! This is a lesson that reminds us of the pitfalls of the rating agencies that were handing out AAA ratings left, right, and center before the crisis in 2008. More than ten years later, has Bercy deliberately chosen to repeat those same mistakes? That would be a scenario with a tragically predictable ending...
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