2023-11-07 17:31:00
The Minister of the Economy, Bruno Le Maire, has ruled: TotalEnergies must no longer be included in an investment fund that claims to have the (new) ISR (Socially Responsible Investment) label. The decision may seem anecdotal; yet it is crucial in the world of asset management. And it is the result of an intense lobbying battle, lasting several months, if not years, which notably saw Bercy’s position fluctuate throughout the summer.
Climate: “The reform of the ISR label is a real political decision” (Philippe Zaouati, Mirova)
This decision is part of an overhaul of the ISR label, created in 2016 under the leadership of Bercy. At the time, the approach was rather innovative but in a context where sustainable finance was still in its infancy and the climate emergency was less significant among public opinion. Since then, the label has slowly devalued itself, despite some adjustments in 2019. It is considered both too general and above all too permissive with regard to the fossil fuel sector.
This is why Bercy decided, in October 2021, to commission a committee, bringing together all the stakeholders, under the chairmanship of Michèle Pappalardo, former General Commissioner for Sustainable Development, to propose a new benchmark for the ISR label and give it a certain credibility with financial professionals, associations and above all, with savers.
Bercy’s hesitations
It’s done following two years of work and consultations. Last spring, the committee submitted its draft new framework for consultation, with the following point of reference: the exclusion of non-conventional fossil energy producers – of which TotalEnergies is not a part – but also companies invested in new conventional fossil projects, which de facto concerns the French giant.
In July, the reform project arrived on the desk of the Minister of the Economy for validation. And then… nothing more. An ardent pressure campaign from TotalEnergies, in the name of the principle that it must be helped to finance its energy transition, but also from most “asset managers”, notably the largest, such as Amundi, a subsidiary of Crédit Agricultural and leader in asset management in Europe.
These managers were ready to “modernize” the label but remained hostile to overly restrictive exclusion rules. Clearly, they wanted the ISR label and the possibility of keeping TotalEnergies, “the” core portfolio value of most general public ISR diversified funds.
Around 170 of the 1,174 SRI-labeled funds (for total assets of 773 billion euros) have TotalEnergies in their portfolio, but they are often the largest. The asset management profession, notably via the French Management Association (AFG), therefore stepped up to the plate during the summer, seeming to convince Bercy not to go too far…
Turn on the wing
In September, the message was: yes to reform, no to the exclusion of TotalEnergies. This was without taking into account the mobilization of climate associations, such as Reclaim Finance, but also of the financial players most committed to sustainable finance. “It was simply a question of credibility. We might not keep Total in an SRI fund, even if opinions are very divided on this question”deciphers a professional.
In the opinion of the professionals interviewed by La Tribune, the exclusion of TotalEnergies was however far “to be acquired until the last moment”underlines a professional.
“This is very unexpected news”confirms to La Tribune, Philippe Zaouati, founder and general manager of Mirova, one of the pioneers of sustainable finance in France (Natixis group).
A real breakthrough
The pressure on Bercy has increased significantly in recent days, notably the open letter addressed last week to Bruno Le Maire and signed by 60 personalities, calling for companies developing new fossil projects to be excluded from the ISR label. Bercy’s regarding-face is impressive because it goes further than the committee’s initial proposal, effectively excluding all companies in the gas and oil sector.
“This is a real step forward for the entire development of responsible investment”welcomes Pascale Baussant, member of the committee, also an advisor in wealth management, very committed to sustainable finance. “For several years, Bercy did not show a very strong interest in sustainable finance. With this reform, things will perhaps change”, estimates Ladislas Smia, ESG manager at MBO+, an investment platform. The new framework, which will retain its general character, and all the details of which have not yet been completely finalized, must come into force on March 1, 2024.
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