Meetup on ESG: The Importance of S- Sopiad- Julien Renkin

1. We simplify investment decisions
Meetup on ESG - the importance of S
ESG and Responsible investing from an investor's perspective
December 15th 2022

2. Introduction
What is responsible investment?

2
Examples of ESG issues

3. Introduction
Several forces are driving the growth of responsible investment

3
“Global ESG assets may
surpass $41 trillion by 2022
and $50 trillion by 2025,
one-third of the projected
total assets under
management globally”.
Source: Bloomberg Intelligence (BI)

4. 4

Sustainable finance survey (05/2022): the CSSF, ABBL & LSFI have launched a survey to assess knowledge and understanding of retail investors on sustainable finance.
Outcomes show that a significant part of the investors want to define ESG preferences if they invest, trust their banks to support them and require access to more information on
sustainable finance
Key findings
Client Demand
The shift to sustainable investing is driven by demand from the bottom up

5. 5

Nordea AM ESG survey (2021): The Nordea ESG Survey 2021 gathered the views of 1,200 European individual investors on ESG and sustainable investing via an online survey
conducted by CoreData Research between July and August 2021. Participants are classified into 4 different generations: Gen Z (age: 18-24), Millennials (25-40), Gen X (41-56), and
Baby Boomers (57-75). They are also split into ESG users (currently investing in ESG, 43%) and ESG non-users (currently not investing in ESG, 57%)
Client Demand
The importance of the “S”
Climate change is still in focus but social challenges are the next trend

6. Regulation
Sustainable finance framework: from issuers to end-investors via asset managers and distributors
6
NFRD → CSRD
Large or Listed companies
Manufacturers/
Asset managers
Distributors/
Financial Advisors
End-investors
Information on
environmental, social &
governance issues
% of activities aligned
with taxonomy
SFDR
Level 1 Level 2
Taxonomy
ESG MiFID
II
Collect sustainable
preferences
Organizational
requirements
Products
assessment
Entity disclosure
Product disclosure
Sustainability has risen high on the regulatory agenda. The European Commission has developed a Sustainable Finance Action Plan (SFAP) that aims to reorient
capital flows towards sustainable investments, mainstream sustainability into risk management & foster transparency.
(NFRD) Non-Financial Reporting Directive
(CSRD) Corporate Sustainability Reporting Directive


7. MiFID II applies to all businesses that operate on the European
securities market:
• Investment Banks
• Brokers and dealers (sales & trading)
• Wealth managers
• Asset managers
• Product manufacturers
• Market infrastructure providers
• Energy and Commodity firms
• Custodians
2007
MiFID 1
2018
MiFID 2
August 2022
MiFID 2 “ESG”
- EU financial Passport
- Determine investors profile
- Increase investors protection
(best execution)
- transparency regulations
(pre- and post- trade) to few
thousand admitted on a
regulated market
Markets in Financial Instruments Directive
- In addition to MIFID 2, this
new chapter of the
regulation require the
determination of the
investor sustainable
preferences.
→ Integrate these preference
into the investment advise
→ Allocate capitals to more
sustainable investments.
- Answer to the 2008
financial market crisis
- Better transparency
(extended to many other
assets)
- Clearer disclosure of fees
and their impact on the
returns,
- Specific risk profiling and
stricter allocation conditions
What is MiFID ? Who is concerned
7
Regulation
From MiFID I to MiFID II “ESG”


8. E
S G
Investor’s objectives
Investor’s risk tolerance / appetite
Investor’s time horizon
Other individual requirements
Information to clients on
the sustainable preferences
Collection of information
from clients on
sustainability preferences
E
S G
Investor
identification
Investment
objectives
Financial
situation
Knowledge
&
Experience
ESG preferences
Ability to bear loss
Sustainability preferences
E
S G
Training: provide staff
with appropriate training
on sustainability topics
Record keeping: keep
updated records of the
sustainability preferences
of the client
E
S G
Organizational requirements
E
S G
Suitability assessment:
Assessment of suitability
preferences
Products offering: review the
products offering to meet the
client’s sustainability preferences
Reporting: how sustainable
preferences have been
considered in the asset allocation
E
S G
Products assessment / review
E
S G
8
Regulation
New ESG changes in MiFID II – Overview


9. 
9
Sustainable finance survey (05/2022): the CSSF, ABBL & LSFI* have launched a survey to
assess knowledge and understanding of retail investors on sustainable finance.
Outcomes show that a significant part of the investors want to define ESG preferences if
they invest, trust their banks to support them and require access to more information
on sustainable finance
The importance of education
Lack of knowledge and expertise as the greatest hurdle to ESG investing
Nordea AM ESG survey (2021): The Nordea ESG Survey 2021 gathered the views of 1,200
European individual investors on ESG and sustainable investing via an online survey
conducted by CoreData Research between July and August 2021. Participants are
classified into 4 different generations: Gen Z (age: 18-24), Millennials (25-40), Gen X (41-
56), and Baby Boomers (57-75). They are also split into ESG users (currently investing in
ESG, 43%) and ESG non-users (currently not investing in ESG, 57%)c

10. 
10
The importance of education
What can a WealthTech do about this?

11. 1. ESG investors are hungry for more
2. The “S” is becoming the new “E”
3. Education and advisors play a crucial role in financing the
transition to a sustainable economy
Conclusion
11
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