The pursuit of sustainable development objectives necessarily involves questioning our economic model and the negative externalities it causes. For the Pictet banking group, this systemic transformation has become a standard that imposes itself on the entire finance ecosystem. Jean-Baptiste Douin, head of Pictet Wealth Management in France, describes for Forbes France the evolution of the now more proactive role of banks around these issues.
Can finance contribute to making the economy more responsible?
Finance plays an essential role in making the economy more responsible and European players in the sector are quite pioneers. Environmental movements have been lobbying in this direction for several decades, without fully achieving fundamental change. It is finally today thanks to the nerve of the financing war that we end up with a radical change: if a company does not commit to this environmental and social agenda, it simply risks not being able to finance its debt. , or even lose the confidence of its shareholders.
Furthermore, at Pictet, we are convinced that it is through new technologies that we can change society. They facilitate change for more virtuous consumption habits. Some technologies are still non-existent or not deployed on an industrial scale and it is necessary to invest upstream in order to develop them and allow rapid deployment. To achieve the goals of the Paris Agreement and keep the global temperature rise below 1.5 degrees, we have identified several examples of investment opportunities in innovative and promising renewable energy projects. , energy efficiency, green buildings and smart mobility. These technologies are a powerful instrument to limit the catastrophe that awaits us if we do not act.
Is this awareness around the climate issue new?
Previously, the strategy of the financial industry was limited to the exclusion of polluting assets from their portfolio. But today there is a strong positioning of the financial industry on climate issues. Pictet considers itself to be a committed shareholder who influences the governance of the companies it supports. If a company pollutes or contributes to investing in fossil fuels, for example, we can decide to withdraw or limit our investments.
However, the challenge is not to withdraw systematically but to try to influence the decisions taken by the management teams internally. By exercising our right to vote at general meetings to support the necessary transformations in certain key industries.
Can you tell us more about the measurement and management of environmental and societal risks at Pictet?
We view climate change as both an urgent challenge and a unique opportunity to build a better future. As an asset manager, we have a responsibility to commit to a rigorous environmental preservation agenda.
Pictet contributes to the fight against climate change through a series of clear objectives in terms of activities and investments, as well as concrete objectives aimed at significantly reducing the environmental impact of its own activities. and investments. Since 2007 we have reduced our CO2 emissions per employee by 73% and by 2025 we are targeting a 60% reduction in our direct greenhouse gas emissions from 2019 levels. In addition, since 2020 , our balance sheet is effectively free of fossil fuels.
At the same time, we believe that our investment activities have an impact on the results of climate change. We therefore have a responsibility to understand how to mitigate the negative impact and foster the positive impact. This is what motivated us to join the initiative of Net Zero Asset Managers and Science Based Targets, which set carbon neutrality objectives for asset managers.
The transition to a sustainable, zero-carbon economy will be a complex process. It will require profound changes in public policies, business practices and personal lifestyle choices. It will also require increased collaboration between nations and industries, as well as the redirection of trillions of dollars of capital towards green technologies. In our latest “Active Ownership 2021” report, we detailed all the influences capable of influencing large group strategies. We help our clients transform themselves or participate in climate transformation. It is through a collegial mastery of ESG metrics that companies will be able to benefit from the future. The aim is to put issues related to the origin of raw materials, packaging, logistics and the use of renewable energy on the agenda of general meetings.
Finally, on the social side, we actively support the promotion of an inclusive culture. As an equal opportunity employer, we seek to provide employment and promotion opportunities for everyone, regardless of any personal characteristics.
Is the financial world ready to take on these challenges?
The financial world must realize that our actions today will create risks over time. The heat wave episodes that we have experienced this summer, but also throughout recent years, show to what extent climate change is no longer theoretical but very concrete. Fear of the future is obviously a cause for taking action, but it is also essential to detail the opportunities for alternative investments and performance offered by innovation in the field of climate protection.
But action must be taken now. According to a 2021 report by consultancy PwC, one in two investors is willing to sell their stake if a company does not take action on ESG issues. This pressure will logically push companies to take an interest in it.
In a context of multiple health, geopolitical or even energy crises that we are going through, economic players could consider that ESG themes are too high a risk to assume, don’t you think?
Indeed, some manufacturers are afraid to fully embark on a sustainable transition, for fear of losing a short-term competitive advantage against their competitors. On the contrary, others believe that not integrating ESG criteria could be risky. We invite them to take a greater interest in new technologies and start-ups to better innovate on ESG themes. Our role in the financial industry is to encourage long-term innovation. This means identifying and releasing the funds necessary for the emergence of advanced technologies in the field of the environment.