The decrees
related to the new official SRI label promoted by the government authorities in
France were published at the end of December. but its implementation will be
difficult given the questions arising relating to its setup.
This label
was sought by certain large asset managers who wanted to label their entire
range as SRI after an annoying episode with a team from France Télévisions. The
team was astonished that certain SRI-labelled funds on the market held
companies in their portfolios that clearly should not have been there.
Instead of
proposing a stricter label. the government authorities partly followed the
proposals of these major players. by approving less strict analysis
methodologies than certain existing labels and which can give rise to varying
interpretations. For years. most SRI asset managers have favoured a
best-in-class approach. which. for this type of management. qualifies companies
that are "the best in the category". That includes. for instance.
most companies on the CAC 40. Under these conditions. it is difficult to
recommend a label with stricter conditions. which would eliminate de facto
certain large companies that regularly receive awards for their actions whilst.
elsewhere. they have still have a lot to do to be recognised by labels with
stricter conditions.
The Paris
market therefore offers an approach so that the general public can more easily
understand socially responsible investment. whilst accepting that the required
conditions are achievable by the greatest number of these companies. which
allows asset managers to continue to manage without modifying their practices
for greater portfolio diversity...
This closely
resembles recent European decisions to reduce the obligations for emitters of
NOX or CO2. so that all European car manufacturers comply with the legislation.
And that
does not take account of the current changes affecting all asset managers. who
now must always take into account environmental and social constraints.
Otherwise. their investors may not understand why certain companies are still
in their portfolio. Asset managers (including in unlisted investments) can no
longer invest without taking these ESG criteria into account.
So why
promote an SRI label that brings nothing new to the table and that most asset
managers will be able to obtain? The Paris market clearly remains several years
behind and is adapting with difficulty to a market that has already evolved. as
many French (smaller) and foreign asset managers have developed theme-based
products with a desire to demonstrate the rationality of the strategy
implemented in order to achieve these well-identified ESG objectives.
The Paris
market could have moved well ahead by offering a strict. theme-based label that
investors could better identify with. Unfortunately the Paris market has chosen
a less restrictive path. though it means the label may be underused or
disappear entirely due to a lack of participants. It's a shame that after more
than three years. this is where things stand!
Olivier de Guerre
PhiTrust
