“The financial materiality of ESG indicators determines their importance in our investment processes”

1 — In your impact investment processes, which cross-sector ESG indicators do you rely on to assess corporate responsibility?

Setting objectives—and therefore identifying indicators—is at the core of impact investing. First, many indicators and issues are common across sectors and widely agreed upon: gender pay equity, the proportion of women in management positions, job creation, value sharing, tax practices, and governance.

Carbon emissions are particularly critical in industry and, more broadly, in the most emissions-intensive sectors such as transport and energy. However, they should be considered a strategic issue for companies across nearly all sectors when the analysis includes Scope 3 emissions—indirect emissions across the entire value chain, both upstream and downstream, including product use. Emission reduction targets therefore apply to all companies.

At the same time, many other indicators vary in importance depending on a company’s activity or geographic exposure. Corporate responsibility assessments are built on a combination of these cross-cutting and sector-specific indicators.

2 — Which indicators are specific to certain sectors, regions, or investment strategies?

Some examples: biodiversity issues are particularly important in mining, and even for the banks that finance such activities. Workplace accident rates are especially relevant in energy and construction. Human rights issues are more sensitive in certain developing countries.

Human rights also represent a legal and reputational risk for companies, notably through due diligence obligations and potential impacts on relationships with consumers and employees.

The approach differs somewhat in the context of social and solidarity economy investments through dedicated impact funds. In this case, the search for social impact is central, and indicators are highly specific. They measure the outcomes of unlisted social enterprises, such as the number of vulnerable people supported into employment, the number of social housing units managed, the number of microcredit beneficiaries, or the number of hectares of protected biodiversity.

3 — What barriers do you face in accessing sufficiently high-quality information to build these indicators?

Corporate CSR strategies still need to improve in terms of transparency. Like many investors, we expect significant progress from the implementation of the CSRD on sustainability reporting and the CS3D on corporate due diligence.

One major challenge for companies is obtaining reliable information across their entire value chains, particularly regarding supplier practices, which is precisely the focus of CS3D. We therefore regret the partial reconsideration of these regulations under the Omnibus directive.

These regulatory requirements should compel companies to improve both the quality and the harmonization of the social and environmental information they disclose—an essential point for investors.

4 — How do you use these indicators in your shareholder engagement, and what results have you achieved?

As investors, part of our role is to encourage companies to improve their practices. This requires ongoing dialogue and clear communication of our expectations. Sharing information on indicators among stakeholders is therefore crucial.

Our engagement strategy is measured through impact. We focus particularly on companies that lag behind their sector peers or are involved in controversies. We have established a scoring system based on the quality of companies’ responses to our requests.

The lowest scores are assigned to companies that fail to respond, while the highest scores go to those that implement concrete improvements. We notably welcomed Daimler’s decision to introduce traceability across its supplier chain.

To demonstrate our level of commitment to our clients, we publish clear figures: our average negative voting rate at shareholder meetings has been around 40% in recent years, compared with approximately 20% for French asset managers on average, and we supported 81 minority shareholder resolutions in 2024.

5 — From the end investor’s perspective, what tangible benefits arise from these approaches?

These indicators are selected not only for their societal relevance but also for their financial materiality. Climate risk and biodiversity loss, when they materialize, have direct consequences for many companies’ operations.

The financial materiality of ESG indicators determines their importance in our investment processes. They are therefore key points of attention for responsible investors, not only for ethical reasons but also for financial ones, as poor anticipation of these issues can threaten a company’s financial health.

ESG analysis thus captures risks that traditional financial analysis may overlook. Ultimately, this rigorous approach should translate into stronger long-term returns for investors.