The economic trends for 2021 & beyond - How will the non-financial measures impact investments?
GUBERNA Alumni Forum 10 December 2020
Ready for take-off in the GUBERNA Digital Social Lounge
All participants received 24 hours in advance their Airmeet link to the GUBERNA Digital Social Lounge. Thirty minutes before the start of the presentations, it was possible to ‘meet & greet’ the participants by going from one virtual table (booth) to the other. Once the general session started all participants left the booths and entered the large room.
Keynote speech - Insides on the economic trends for 2021 & beyond
By Jan Van Hove, Chief Economist at KBC .
The rise in economic nationalism is a more serious threat to the global economy than the Covid-19 pandemic.
Check out the full presentation.
A strategic focus on ESG issues accelerate the transition to a sustainable economy and will impact the non-financial ESG measures
The panel was composed of GUBERNA Alumni and experts, who are familiar with this topic:
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Magali Anderson, LafargeHolcim Chief Sustainable Officer
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Ann De Jaeger, VP General Council and Head Corporate Affairs, General Secretary, Danone Benelux & Alpro
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Steven Libby, Partner, EMEA Asset and Wealth Management (AWM) Leader, PwC Luxembourg
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Yves Poullet, Independent Non-Executive Director with Athora, Founder of Shagane Executive Coaching
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Jan Van Hove, Chief Economist, KBC.
All GUBERNA Alumni should include ESG change in their director’s role. Steven Libby has written an interesting paper on this subject.
Q&A session
As announced by Jo Benoit, our panel has given feedback on the questions which couldn’t be handled during the session.
How is sustainability really compatible with a market economy where the driver is more maximisation of profits (certainly for listed companies) than sustainability (ESG Goals)?
Magali Anderson - As many others, we are convinced that sustainability and profits both go together. Without a sustainable environment and societies, businesses cannot thrive and vice versa. We see that financial institutions are assessing economic activities more and more with a sustainability lens, and also in terms of risk. For instance, the TCFD’s goal is to ensure that companies disclose how exposed they are to climate risks.
Performing well in ESG ratings is an increased expectation from our investors and is benchmarked with our competitors, along with the usual financial performance. Another example is the Sustainable-Linked bond that we just signed, which was a great success.
Finally, in our case, the traditional levers that will allow us to reach our 2030 target (which was validated by SBTi when we joined the Business Ambition for 1,5Deg), have a good return on investment and will not increase the cost of our products. However, with new regulations coming, and if public financing is associated to CO2 reduction, we could expect a premium on our low-carbon products.
Steven Libby - Studies are starting to emerge that demonstrate profits need not be sacrificed when having sustainable business goals. In fact, a recent Morningstar analysis indicated that close to 60% of sustainable funds (ie with investments in companies with sustainability goals) delivered higher returns than their non-sustainable equivalents over the last decade. For sure, measurements need to be based on reliable data, and this is one of the challenges for the coming years.
Concerning the G (in ESG), do you see an increasing importance given to the respect of ‘good governance codes’?
Magali Anderson - All those are intertwined. ESG ratings look at that ‘G’ for good reasons. Without good governance codes that prevent, assess and remedy, the other aspects of ESG are at risk. Regulators are also giving Governance more importance with regulations such as the EU sustainable corporate governance initiative and a similar initiative in Switzerland
Steven Libby - Interestingly, when talking about ESG in Europe, there is much more information/media about the ‘E’ compared to more attention around the ‘S’ and the ‘G’ in the US. Nonetheless, based on our research in Europe, we know that the focus on the ‘G’ is a common factor when institutional investors screen for target investments. Good governance will therefore be critical as companies communicate about their sustainability objectives.
Sustainability knowledge is still weak in many boards. What measure could be implemented to enhance ESG awareness: appoint a CSO, create a Sustainability Committee, …?
Magali Anderson - I can share our sustainability journey as a company, which led us recently to make our climate net zero pledge. We created the Health & Safety, Sustainability Committee at Board level in 2017. It has brought the focus of the Board on those issues. Another big shift came with the appointment of the company’s first Chief Sustainability Officer last year, who sits in the Executive Committee. It puts sustainability at the heart of the company and includes this dimension in every strategic decision the company makes.
Steven Libby - I would agree with this statement. We have started training programmes directed towards boards, which provide a basic understanding of the evolution of sustainability standards and applicable related governance. In addition, we have produced an e-learning for wider dissemination throughout companies so that a tiered approach can be applied. For sustainability to truly take hold, multiple stakeholders need to be engaged in an organisation. Lastly, we have observed that sustainability initiatives are most likely to succeed when supported directly by top management, whereas delegation to an individual or subcommittee that may not be entirely empowered often fail.
Icing on the cake – Interview of a passionate Chief Sustainable Officer
As Magali Anderson couldn’t join the panel discussion due to technology reasons, Yves Poullet had the opportunity to interview her early January 2021. Discover why the topic EGC should become a part of your future governance. Watch the interview here.
