O-Fire: Banca Generali and the University of Milano-Bicocca for green taxonomy
ESG taxonomy: the role of asset management
All these issues certainly cannot leave asset management companies indifferent. It was no coincidence that three representatives of leading asset management companies were also present at the O-Fire Observatory presentation: Desirée Scarabelli, sales director and ESG Specialist at Pictet; Marta Pievani, coordinator of the ESG and Sustainability Business Unit at Generali Investments A&WM; and Teresa Gioffreda, head of GWM Client Coverage Italy at Ubs.
"Generali Investments is an ecosystem of multiple asset management companies," Pievani said, "bringing together diverse expertise and an equally diverse approach to sustainable investing." Pievani cites Sycomore AM, a pioneer in sustainable investing that has been instrumental in establishing ESG criteria in the European market over the past 20 years.
"Our first product on the sustainability front was born a full 25 years ago, in 1997," said Gioffreda of Ubs, who added, "at first we were mainly palming off exclusionary criteria, often lumped in with ethical or religious values, limiting this preference to a niche market. In the ten years since, the industry has moved toward the active use of ESG (environmental social and governance) criteria, in stock selection processes, beginning to appreciate their added value, especially in terms of risk reduction."
Gioffreda then pointed out how there has been a growing awareness among financial institutions over time "to join forces and be part of organizations that are actively working to achieve net zero emissions by 2050. "We do engagement with companies," Gioffreda added, "that is, we enter into dialogue with them trying to get them to improve in social environmental and governance factors. And we do that both on our own and collectively with other large investors to increase our impact on the goals we care about."
Also important was the testimony of Desirée Scarabelli of Pictet, a pioneer in sustainable investing, a field in which she has "tried her hand" since the 1990s. "More than twenty years ago, when throughout the financial industry there was mostly talk of investing in technology and technology companies," says Sacarabelli, "we launched the first thematic environmental fund, Pictet Water, linked to the theme of water resources."
Pictet initially encountered some skepticism in the financial community, but the facts have shown how that choice was forward-looking. "Since the launch of that fund and other products, a big thread has started," says Scarabelli, who recalls the evolution Esg investments have undergone over time. Before, management houses were focused on identifying good themes to invest in.
Then, asset management companies became increasingly aware of their active role, that is, the possibility of working themselves to push companies to implement increasingly virtuous behavior on the sustainability front. In addition, Pictet also realized the importance of having external partners to help it identify the most relevant megatrends on the Esg investment front in good time.
On the other hand, the analysis in the Report showed greater resilience of sustainable investments compared to the market and some correlation between environmental and financial performance of companies, particularly energy companies.
From its analysis of various sources (Morningstar, Bloomberg, and OECD), the Observatory found that sustainable funds had net inflows of $23 billion in the third quarter of 2022, compared with $35 billion in the previous quarter and about $80 billion in the first quarter; conventional investments (generalized market funds), on the other hand, experienced outflows of about $280 billion in the second quarter and $200 billion in the third quarter. Sustainable funds were thus more resilient to the current economic crisis.