ESG asset management conquers new territories every day: meeting with institutional investment professionals in Morocco
ESG assets are a real challenge for investors around the world. Karim El Hnot, Deputy Head of Investment Banking at Societe Generale Morocco, in charge of Asset Management and Omar Senhaji, Head of Societe Generale Securities Services (SGSS) Maroc tell us more about the place it occupies in Morocco.
Karim El Hnot, Deputy Head of Investment Banking at Societe Generale Morocco, in charge of Asset Management.
ESG asset management1 emerged many years ago. However, this strategy is still confidential in some regions. What about Morocco?
In Morocco, the ESG issue is gaining in importance and is highlighted in particular by the regulators (Bank Al Maghrib - the central bank, and the Moroccan Capital Markets Authority - AMMC).
With regards to the banking sector, in 2021 the central bank issued a “Directive on the framework for managing financial risks related to climate change and the environment” (2), which requires credit institutions and similar institutions to put in place a framework for managing climate change-related financial risks in order to identify, measure, manage and control these risks.
On the capital markets side, AMMC continues to push for the adoption of ESG reporting by publicly traded companies. According to the regulator’s latest annual report (2021) (3), 98% of issuers on the market publish ESG reports within regulatory deadlines. The AMMC has also published practical guidelines on the issue of Green Bonds (4) and Gender Bonds (5) in order to facilitate issues of this type.
That said, it is clear that while regulators have put in place rather advanced regulatory frameworks, the subject remains fairly confidential at the level of market participants and institutional investors.
We are not yet seeing any asset managers challenged with regards to their ESG approaches or special conditions attached to calls for tenders. Some fund managers have started marketing SRI funds2, and the Casablanca Stock Exchange has been publishing an ESG index (MASI ESG) for the past few years (6). However, this offer remains very limited in terms of assets under management.
Do you think that ESG criteria can become as important in Morocco as in North America or Europe? Why or why not?
I believe that ESG management will grow in Morocco for several reasons:
The first incentive comes from requests from regulators, which will force players to set up frameworks for ESG risk management. These requests, which currently affect mainly credit institutions and securities issuers, will soon also affect asset managers. (11)
The second element that will encourage the development of ESG policies is simply a better understanding among institutional investors of the benefits these policies can offer in terms of risk management. Our interactions with many of our institutional clients show that ESG is too often considered a marketing tool and is not seen as a differentiating approach to investment risks, particularly in the analysis of non-environmental risks (data usage, recruitment and training policies, etc.). (12)
The third and final factor at play is that Morocco is clearly putting its development on a path of sustainability and climate change awareness. The country’s energy mix is shifting rapidly towards the exploitation of renewable energies of which it has an abundant supply (7). These changes are already impacting institutional asset portfolios for “green” infrastructure projects. Climate bonds and green bonds are likely to grow in number, pushing asset managers to develop management offerings in this direction and to include ESG aspects in the construction of their portfolios. (13)
Sogecapital Gestion is one of the leading asset management companies in Morocco. Can you describe your main areas of expertise? What importance do you attach to the ESG theme?
Sogecapital Gestion is the 6th largest asset management company in Morocco in terms of assets under management, with a market share of 5.6% and managing more than 27 billion DH at 31/12/2022, i.e. nearly 2.7 billion euros3.
We offer our institutional, corporate and retail clients a wide range of UCITS4 invested in the fixed income and equity markets in Morocco.
In 2021, Sogecapital Gestion decided to include sustainable finance in its strategy and became the first Moroccan financial institution to join the network of signatories to the United Nations Principles for Responsible Investment (PRIs) (8). In 2022, Sogecapital Gestion joined the Global Impact Investor Network (GIIN) (9), becoming the first UCITS management company among the members of this network, which is particularly interested in impact investing. In concrete terms, the team has focused on writing an ESG charter and policy - which are public documents - and setting up a dedicated committee. The management and analysis team has implemented an internal extra-financial rating model based on the ESG rating method of one of the largest providers of ESG data and analysis, while incorporating the specific characteristics and limitations of the Moroccan market. With Societe Generale Maroc, we also launched the “SG Social Impact Fund” mutual fund, the first Impact Investing-themed fund in Morocco (10). The fund distributes all of the performance generated in favour of projects supported by associations. These projects are selected by a board composed of individuals who are independent of the bank.
ESG is therefore now part of our DNA and we are proud to be pioneers in this area in Morocco.
Omar Senhaji, Head of Societe Generale Securities Services (SGSS) Maroc
So, managers in Morocco are increasingly concerned with the ESG theme, but what about their key partner, the custodian?
SGSS Morocco must respond to the demand of its institutional clients in terms of ESG and can rely on the Group’s expertise in this area.
We were pleased to adapt our UCITS unit income payment services to the ESG management objectives of Sogecapital Gestion’s “SG Social Impact Fund” mutual fund.
Karim El Hnot, Deputy Head of Investment Banking at Societe Generale Morocco, in charge of Asset Management and Omar Senhaji, Head of Societe Generale Securities Services Maroc
1ESG: environmental, social and governance.
2SRI: socially responsible investment.
3Source: Asfim data, Sogecapital Gestion calculations
4UCITS: undertakings for collective investment in transferable securities
?BAM: publication of the new directive on financial risks related to climate change (ecoactu.ma)
MASI ESG INDEX Indices - Casablanca Stock Exchange Graphic and History of Evolution - Le Matin
RENEWABLE ENERGIES | Ministry of Industry and Commerce (mcinet.gov.ma)
Societe Generale: Sogecapital Gestion signs the PRIs (industry.ma)
SOGECAPITAL GESTION joins the Global Impact Investing Network (GIIN) (telquel.ma)
Responsible finance: Societe Generale Maroc launches the SG Social Impact Fund. | INCLUSIVE FINANCE (finance-inclusive.ma)
Why ESG risks should be at the top of your due diligence programme | LexisNexis BIS
- Decarbonisation, opportunities for Morocco’s development (lematin.ma)