One Year of Reflection to Advance Sustainable Finance

One Year of Reflection to Advance Sustainable Finance

How to Reconcile Economic Growth, Environmental Challenges, and Social Issues?

This ambitious question has driven the Think Tank “2030, Investir Demain,” created by the media outlets ID, l’Info Durable, and L’Agefi. Launched in the fall of 2024, this platform initiative has brought together investors, corporations, researchers, public stakeholders, and experts throughout the year. The objective of this think tank is to foster discussions and reflections on the upcoming transformations in sustainable finance, share best practices and experiences, and identify concrete solutions.

To fuel these ambitious exchanges, six working groups focused on varied but highly topical themes, all centered around Environmental, Social, and Governance (ESG) criteria.

From Just Relocalization to Biodiversity

• Environment: This theme animated three groups during their reflections, addressing biodiversity (a group co-founded by Candriam), climate challenges (LBPAM), and the city of the future (Edmond de Rothschild Asset Management).
• Social: A key pillar of sustainable development, explored through the lens of relocalization as a competitiveness and sustainability issue by the group co-founded by Sycomore Asset Management.
• Governance: Particularly ESG governance as a lever of transformation for companies, tackled by the group co-founded by osapiens.

Finally, at the intersection of environment and social aspects, the management of essential resources—natural, human, and financial—was the focus of debates within the group co-founded by Ecofi.

The ideas and solutions generated through this year-long collaboration have benefited from continuous media coverage by ID, l’Info Durable, and L’Agefi. They will also be presented in a white paper published on October 14th, coinciding with a special event organized by the two media outlets. This gathering will bring together over 200 guests for debates and conferences, continuing the Think Tank’s mission: sharing best practices, finding solutions, and uniting financial actors around the major challenges of sustainable finance.

However, the leverage effect can be substantial. Holding just a few tens of thousands of euros in savings corresponds to a carbon footprint in CO2 emissions roughly equivalent to that of the average French citizen. In other words, the potential to reduce one’s individual carbon footprint is as significant as a saver as it is as a consumer.

But this observation alone is not enough. Convincing savers to integrate climate considerations into their investment decisions requires demonstrating that companies also have a critical role to play. For instance, a client-consumer will expect a brand, such as an automobile manufacturer or a real estate developer, to help transform their consumption habits by offering lower-carbon products. At the same time, they may observe that many of these publicly traded companies are actively engaged in their own transition efforts.

Most business development models are being reshaped by the imperative to decarbonize activities. All major sectors are affected—not only automotive and energy, but also construction, aerospace, agri-food, technology, and finance, among others. Early movers will be value creators. This shift toward lower-emission production methods represents a significant source of opportunity and will be marked by bold industrial bets that will create tomorrow’s champions.

While listed equity and bond markets tend to feature larger companies, investors have the opportunity to support the transformation efforts of SMEs and mid-sized companies, which face similar challenges. Within savers’ portfolios, no single asset class holds a monopoly on decarbonization—every segment can contribute.

Relocalization Must Be Understood Through Its Multiple Dimensions

Relocalization involves various aspects, including social factors, job creation, labor availability, human capital management, and consumer expectations.

This trend is a reality not only in France but across Europe. However, it will create tensions around resource access—such as critical metals—and the availability of sufficiently affordable energy sources. Productivity gaps between countries and the loss of key skills may also act as obstacles. Duplication of production chains will become necessary, though this will be inflationary. In a sense, globalization has not ended but is evolving into a multipolar system. No single country will have access to all necessary resources. Consequently, this multipolarization will lead to stronger blocs, such as BRICS+, “friendshoring,” and commercial alliances between friendly nations aiming to secure their supply chains.

We aim to identify success and failure factors by sector and governance, highlight best practices, and define the most relevant strategies. Among the key success factors observed are the development of in-house skills and the ability to establish strong partnerships based on trust with suppliers.

Within the framework of the Think Tank initiative “2030, Investing Tomorrow,” the objective will be to ask the right questions to optimize responsible investment approaches and to develop a shareholder engagement guide.

In this context, several critical questions arise: How can biodiversity impacts and dependencies be assessed at the local level? How can a company’s overall impact on biodiversity be accurately represented? How should this impact be interpreted within the specific ecological framework in which the company operates (e.g., water risks, forest biomes, protected areas)? And finally, how can relevant data be obtained to support this analysis?

Accessing appropriate data is particularly challenging because assessing a company’s biodiversity impact requires extending the analysis to its entire value chain. This complexity increases the further upstream one goes within the supply chain.

Both the representation and interpretation of this data within its ecological context present significant challenges for evaluating a company’s biodiversity impact. Several questions remain open at this stage: How can an industrial group’s production network be effectively mapped, taking into account production sites, potential plantations, goods flows, and their respective impacts on forests, water resources, indigenous populations, and protected areas? Which mapping approaches are most suitable when the insights needed boil down to a binary decision (In/Out), a score, or a comparison among actors?

The work of the biodiversity working group will need to identify viable solutions to enable investors to incorporate location-based issues into their analysis of companies’ activity impacts.

The second factor relates to a governance shift, often involving the founder’s children who may be more sensitive to certain causes or business models, implementing policies that align better with current challenges. Finally, some companies must adapt to survive, as they face significant constraints linked to the environmental transition.

From this perspective, establishing a robust ESG governance framework becomes essential. To drive this transformation, companies need a clear structure, defined processes, and authority—elements difficult to achieve without appropriate governance. A clear divide is observed between large corporations, which have organized themselves to varying degrees of effectiveness and scope, and mid-sized companies (ETIs) and SMEs, which lag considerably behind on this complex topic that demands resources and time.

Climate change and adapting to planetary boundaries represent a civilizational shift. Transformation is inevitable. The core principle of the CSRD directive is to bring transparency and enable companies to identify how their various activities impact the planet. Yet, improvement is impossible without measurement. Therefore, regulation is indispensable, and companies that fail to adapt will cease to exist.

The challenge is significant in terms of limiting global warming, as methane has a greenhouse gas impact approximately 80 times greater than CO₂ over a ten-year period.

Specifically, this project involves installing cogeneration units on former coal mines. Decompression wells have been strategically placed throughout the entire network of abandoned mine galleries, which extends over 100,000 kilometers in northern France. Capturing methane at the outlets enables the generation of green electricity, benefiting from a regulated tariff set by the French government for a period of fifteen years. Additionally, the project produces green gas, distributed via GRT Gaz’s network, as well as green heat supplied to local communities under a long-term contract with the city of Béthune.

Edmond de Rothschild participated in this initiative through a bond issuance by Française de l’Énergie (FDE). This bond, issued in 2021, aimed to deploy cogeneration units at mine gas capture sites. The bond was subsequently extended with additional debt. Edmond de Rothschild has invested nearly €85 million in FDE, supporting not only this project but also others across different countries and technologies.

However, there is substantial research available on biodiversity loss, which represents a tangible risk that companies must address. Corporate approaches to biodiversity tend to focus on very specific issues—such as pesticides, deforestation, plastic pollution, or palm oil—but biodiversity is rarely considered in a comprehensive manner. It is not yet a criterion factored into supplier selection. The approach remains largely compliance-driven, aiming to meet regulatory requirements. For example, most companies affected seek primarily to limit their impacts, but have not yet embarked on biodiversity restoration initiatives.

Each stakeholder group—public authorities, companies, and financiers/investors—has a crucial role to play. Establishing dialogue with all parties is essential. The development of regulatory frameworks is necessary, and their enforcement must be rigorous, though without stifling corporate growth. The European Commission’s publication last February of the Omnibus Directive can be seen as a setback. Among other things, it scaled back the ambition of the Due Diligence Directive, limiting it to direct suppliers only, and weakened the Corporate Sustainability Reporting Directive (CSRD), as 80% of companies originally subject to transparency obligations will no longer be covered.

Public authorities must design effective incentives to encourage citizens and companies to adopt best practices. We expect concrete and relatively straightforward initiatives from regulators.

Content prepared by Florent Berthat – Agefi, Ludivine Garnaud – Agefi, and Thomas Saint-Léger – ID L’Info Durable.