Public authorities must deliver meaningful action on carbon pricing and data as the financial sector cannot resolve the climate crisis on its own, the executive director of Fonds de réserve pour les retraites (FRR), France’s €26.3bn pension reserve fund, has said.
Speaking at a Sustainable Investment Forum conference yesterday, Olivier Rousseau said there was “a big misunderstanding in terms of what can be expected of the financial sector” with regard to tackling climate change.
“It’s too easy for the governments, for the NGOs, for the media, to put all the blame and all the onus on the financial sector,” he said. “It is unrealistic, unfair, and it’s going nowhere.”
The financial sector could and must act “as the vanguard”, but public authorities needed to “put coherence in the whole picture,” he said.
Two crucial issues were data and action on carbon pricing, according to Rousseau. Environmental, social and governance (ESG) data was a public good and should be subject to compulsory disclosure by all “and available for everybody to play with,” he said.
He described as “excellent” that the US government seemed to want to require climate disclosures, as mentioned by climate envoy John Kerry recently.
Rousseau also called for public authorities to make carbon pricing more relevant to “reward and validate the steps taken by decent investors already many years ago”.
He said investors needed authorities to define a path for increases in the price of carbon, which needed to “go up, and quickly”.
“That’s one very fundamental step that needs to take place to make this real,” said Rousseau. He also said prohibiting misleading ways of communicating about sustainability was important.
“They will create a bad ESG premium. So it cannot just be the financial sector acting.”
Olivier Rousseau, executive director at FRR
He said there was a “community of decent, well-intending” investors, but that if public authorities did not act “the bad companies [will] end up in the hands of people who don’t care about ESG and life will go on and these guys will actually potentially get extra-returns as a result of well-meaning investors dumping those companies”.
“They will create a bad ESG premium. So it cannot just be the financial sector acting.”
Jean-Jacques Barbéris, head of the institutional and corporate clients division at Amundi, echoed some of Rousseau’s points, saying there was a lot the financial industry should do, but that it was not its role to “substitute policymakers”.
This was for one simple reason, he said, namely that financial sector actors were not elected “and therefore it would be a fundamental democratic problem” if they were to substitute the responsibilities of policymakers.
“It doesn’t mean that the financial industry doesn’t have its responsibilities, but it’s important to have that in perspective,” said Barbéris. “There is a great responsibility for the financial sector, but at the same time let’s focus on what we can concretely deliver and what we are legitimate to deliver.”
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