Societe Generale supports financial institutions in their sustainability roadmap
In 2022, the financial sector and investors faced several challenges even as the fossil fuel and defence sectors recorded excellent results. Despite this, ESG investments* remain a key factor in achieving sustainable development goals.
Driven by increasingly prescriptive regulations, financial institutions fluctuate between wanting to go even further in their ESG approach and remaining cautious given the size of the investments at stake.
In defining and implementing a robust ESG strategy, financial institutions must come to grips with numerous challenges. Meeting complex regulatory challenges and obtaining relevant data are two major structuring factors.
In Europe, ESG regulations, whose main objective is to improve the standardisation and transparency of environmental, social and governance factors, are multiplying. In France, for example, legislations such as Article 29 of the Law on Energy and the Climate requires asset managers, insurers and mutual insurers to publish a climate and biodiversity alignment strategy in favour of Transparency. Furthermore, these regulations now incorporate the concept of double materiality to capture the negative effects probably caused by ESG investment decisions. The rapid enforcement of these regulations is one of the main concerns of financial institutions.
The complexity of these regulations is twofold because they are difficult to interpret and implement. Thus, while regulations on sustainable finance have established the necessary frameworks, the tools needed to comply with them are based on access to reliable and comparable data that remains difficult to acquire.
In the ESG ecosystem, beyond access to relevant data, the requirement for greater transparency and traceability, from design to data usage, is a key factor in making ESG investment credible.
On the climate front, the current supply of data is varied and enables us to meet overall needs in an investment universe covering large companies. However, access to exploitable and reliable data remains an area that needs to be improved for smaller companies and, more generally, in the unlisted asset universe. In addition, data that incorporates the climate into the sovereign bond market is still scarce, despite growing investor interest.
Moreover, awareness of the challenges around biodiversity protection has increased in recent months, culminating with the adoption of an ambitious roadmap at COP 15 in December 2022. Prior to this agreement, considerable work had been carried out on the convergence of biodiversity impact analysis methodologies with a view to providing high quality data to investors.
Societe Generale's clients can rely on extensive experience and proven expertise in incorporating environmental, social and governance factors into all our investment, financing and advisory solutions. They also benefit from Societe Generale Securities Services (SGSS)'s operational systems to implement and manage their investment strategies.
Societe Generale's Capital Markets division provides ESG support to financial institutions at multiple levels:
Advisory: drawing on in-depth knowledge of the challenges faced by financial institutions in implementing their ESG approach, our experts support and offer guidance several areas. For example, our services include refining a climate change investment strategy, defining an investment strategy aligned with biodiversity objectives, integrating the new ESG regulatory framework into an investment strategy, or providing data analysis to optimise the consideration of ESG factors.
Research: the sustainability research department was created in 2006. Since then, ESG has been integrated into all equity analysis and, more broadly, into the work of all research teams. Consequently, we provide a practical framework to help investors make informed decisions, by combining traditional financial metrics with relevant and actionable analysis of key ESG issues. These innovations complement numerous thematic publications issued by the research team on current ESG topics.
Products: we leverage our financial engineering capabilities across asset classes to deliver tailored solutions to our clients, aligned with their ESG investment needs and strategies, as well as their hedging and financing needs.
We offer access to an ESG index platform based on internal research or research carried out by external partners.
We are pioneers in the field of Positive Impact notes to allow clients to invest in a structured note while promoting Positive Impact Finance1.
In addition, we offer bespoke sustainability-linked derivatives and financing solutions which embed ESG criteria.
SGSS also supplements this offering with full operational support for investment professionals with their ESG needs, covering:
The provision of a management platform incorporating the ESG data chosen by the managers to define and steer their strategy, as well as pre- and post-trade controls;
The production of regulatory reports that meet SFDR2 and Taxonomy requirements or EET3 needs, as well as management reports for its investor clients;
A specific service that is currently being developed for investors in Private Markets that factors in the need to collect data from investors prior to producing the aforementioned reports;
A routing service for voting instructions at general meetings incorporating access to voting advice aligned with the strategies defined by clients;
Finally, the integration of ESG criteria contained in prospectuses for depositary controls.
Societe Generale is proud to offer a wide range of operational services and expertise to support investment companies in choosing and implementing their sustainable strategies, and fully contribute to achieving the financial industry's ESG transition ambitions.
Déborah Amsellem, ESG Advisor for financial institutions, Societe Generale & Guillaume Heraud, Global Head of Marketing, Societe Generale Securities Services
*ESG: Environment, Social and Governance
1Read Societe Generale’s Sustainable and Positive Impact Bond Framework.
2SFDR means Sustainable Finance Disclosures Regulation
3EET means European ESG Template