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ESG Talk #18 - February 2026. ESG No More, or Now More Than Ever? The Investors’ Take
Sustainable investing has recently found itself at the centre of intense debate. Headlines have called it “contested”, “irrelevant”, even “over”. But behind the noise, what is actually happening in the market? Have investors really stepped back from ESG — or is sustainable investing simply entering a new, more mature phase?
In this 18th episode of Candriam Academy’s ESG Talks, we brought together long-term ESG investors to uncover how their perceptions, priorities, and practices are evolving. The discussion reveals a clear reality: ESG is changing, but it remains deeply embedded in how investors assess risk, value, and long-term resilience.
Sustainable investing has recently found itself at the centre of intense debate. Headlines have called it “contested”, “irrelevant”, even “over”. But behind the noise, what is actually happening in the market? Have investors really stepped back from ESG — or is sustainable investing simply entering a new, more mature phase?
In this 18th episode of Candriam Academy’s ESG Talks, we brought together long-term ESG investors to uncover how their perceptions, priorities, and practices are evolving. The discussion reveals a clear reality: ESG is changing, but it remains deeply embedded in how investors assess risk, value, and long-term resilience.
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00:00:00Hello and welcome everyone to this 18th edition of Kanryam's ESG talks. My name is
00:00:15Maha Nimczyk. I'm head of ESG client portfolio management at Kanryam and I have the pleasure
00:00:20of being your host today. As you may know Kanryam's ESG talk series brings together eminent experts
00:00:27from a variety of fields to share their unique insights on key issues in sustainable investing
00:00:33and in today's talk at the beginning of the year we want to take a little bit of time to ask
00:00:39where ESG stands in 2026. We all know that the past couple of years have been a time of significant
00:00:46change in the world and ESG is certainly not a discipline that can be practiced in ivory tower
00:00:52in an isolated fashion. In fact it's very connected to what's going on in the world
00:00:58and there's no denying the fact that over the past few years there has been a lot of discussion around
00:01:02the so-called ESG backlash. The question then is of course if this signals you know the end of an era
00:01:09in sustainable investing or if on the contrary the changes that we are seeing today reaffirm the
00:01:16rationale for integrating ESG considerations into investment decision making. So to explore all of
00:01:22the issues we are lucky to have three experts with us today. We have Lingue Liu who joins us from
00:01:28Stockholm where she's head of sustainability at Soderbergh and Partners, a leader in wealth management,
00:01:34pension advisory and insurance brokerage in the Nordics. Hello Lingue. Pete Klopp is based in Utrecht
00:01:42and is director of strategic relations at PGGM, a leading pension fund service provider offering
00:01:48pension management and asset management. Hello Pete. And Eleonore Baudel who joins us from Paris. Eleonore,
00:01:56you are chief sustainability officer at BNP Paribas Wealth Management, so responsible for all
00:02:02sustainability related matters across wealth management and private banking. Welcome to the three of you.
00:02:09Before we hear from you, just a note for our audience, you're welcome to ask your questions at
00:02:16any time through the Q&A functionality and we'll try to get to as many of them as we can at the end of the
00:02:23discussion. But I want to start off with a little bit of a historical perspective looking at how
00:02:29perceptions to ESG have evolved over time. Over the past 15 to 20 years or so ESG has been seen as many
00:02:37different things by different market participants. Everything from a niche, an in-fashion trend,
00:02:45a luxury and a regulatory constraint to a must-have, necessary risk management and an essential
00:02:52investment tool. So the list really goes on of what it has been perceived as. But I want to ask you,
00:02:59as practitioners in the field, what is your experience of the perceptions and attitudes
00:03:05towards ESG? Ling Ye, let me start with you. What's your view? Thank you, Marie. So first of all,
00:03:15I think over the past 20 years, we've seen ESG evolve as you alluded to, and it's quite
00:03:22transformative. It's been transforming. So from something niched into something embedded in
00:03:29mainstream investment process. And I think one reason the conversation has been quite turbulent
00:03:36is that ESG has never meant just one thing. It's actually three different philosophies or even more
00:03:43overlapped over time. So first we have the roots of ESG when the Method Church of England
00:03:56pushed their followers to basically exclude investments that didn't align with their values,
00:04:03right? So more value-based exclusions. And this is the early socially responsible investment
00:04:09tradition. Faith-based, ethics-based, and much about avoiding harm, so to say. Then come the
00:04:19second interpretation. So we have ESG as risk management. Here the industry realized that
00:04:27the traditional financial models were quite simple and too narrow. And suddenly climate risk, supply
00:04:35chain risk, governance, failure, things that previously labeled as non-financial were recognized as very
00:04:44real material financial risks. So ESG integration in this sense is just good risk management. And the
00:04:52third perspective is ESG as an opportunity. This is where sustainability or impact investing come in and
00:05:00where investors are looking for opportunities driven by the transition to be more sustainable and more
00:05:09to also contribute to a sustainable economy. When those opportunities support a broader society
00:05:17and the society's goals, then we call it impact. So over time, these three views,
00:05:26they blend together where we see fund managers use overlapping strategies. And I think we felt like
00:05:37we were heading towards a unified vision, I would call it. And a few years ago, I would have said that
00:05:45impact investing was going to be the new frontier. But the past year has shown that ESG continues to
00:05:53evolve in unexpected ways. And in practice, I think ESG has become more like statistics, a foundation in
00:06:02economics. It's not something optional, it's part of the analytical baseline. So look at renewable energy,
00:06:12for example. Regardless of the political mood swings, the economics speaks for itself. And because of this,
00:06:20ESG has quietly become more integrated into investment decisions and really our processes more than ever.
00:06:31So we just talk less about it, I think, partly because if you talk too much about it, someone will say
00:06:38screenwashing or Vogue. So now green hushing is the new black. But the analytical value hasn't changed. At this core, ESG simply means broadening the lens.
00:06:51And whenever you broaden the lens. And whenever you broaden the lens and bring more perspectives into the decision-making process, you end up with better decisions.
00:07:01All right. Thank you for that very interesting perspective on those three types of approaches as well and how they're blending.
00:07:09Eleanor, you've been working in sustainability for many years.
00:07:14Has it been a roller coaster at times in terms of how perceptions and appetite has evolved?
00:07:20We can say that, actually. And I completely agree with what Linda said, because this has been seen, I guess, by all types of investors.
00:07:32And maybe from an individual investor perspective, if I look at how this has been asked for, perceived and been interesting for our clients, I have to say,
00:07:45it has been niche for a very long time. It was only interesting and asked for by a very small amount of investors, I would say impact investors, who were convinced that ESG is an opportunity, impact is an opportunity.
00:08:01You don't have to abandon performance, financial performance, to take this ESG dimension into account.
00:08:09And they are also convinced that it can have a positive impact.
00:08:13So for them, it was it was it was it was really important from the beginning.
00:08:18But I have to say it was only a handful of of clients who were really coming to us asking about sustainable sustainable products.
00:08:27So that that really was, I would say, well, 20 years ago, 15 years ago.
00:08:35So and for the rest, I would say of the banking industry, it was seen as not core, definitely a trend.
00:08:44Clients were also asking us if it was not a new marketing ploy from us.
00:08:50So so it was a bit hard to be an ESG practitioner at the time because you had to fight against a lot of headwinds.
00:08:58And now I have to say already at the time and then I would say beginning of the 2010s, people were starting to adopt sustainable finance by entering into the thematics, sustainable thematics.
00:09:13They were really keen to invest in environment or in water.
00:09:18So this was better understood, this was easier to explain also from from a relationship manager perspective than the best in class products that were not really well understood.
00:09:30So this was an easy, an easy way to to enter into the topics.
00:09:36And then I would say if I if I look at the timing year after year, it became more democratized after 2015, after the Paris Agreement, which has really, well, brought a lot of light on the topics.
00:09:52And at the time, we started to have more products, more funds, more diversification possibilities and portfolios around sustainability.
00:10:02And this this was really the time when we started to be able to open more possibilities to have mandates, I would say, for for our clients.
00:10:12And when you start to have mandates, you have more people that are able to invest in the topic and.
00:10:19And the the whatever the cycles, I would say, across the years, it has from the start being the offer of products that made the demands.
00:10:31So we've had always a small amount of clients coming to us asking for it.
00:10:35But from the beginning on, it has been developing because we had more products and that we were proposing it to clients.
00:10:42And this is how they started adopting it.
00:10:45So if we continue along the years, I would say that with good performance of ESG products came easy acceptance.
00:10:55And well, we had we've had the very good years of 2020.
00:11:00Obviously, that was a bit of a boom for for sustainable finance.
00:11:05And then when performance started to like to lag a little bit, we saw some clients turn their back to ESG and it started.
00:11:12Well, I would say in difficult times again, where it wasn't that easy anymore to convince clients to invest in ESG because performance was lagging behind.
00:11:24But like you were saying ESG now is completely integrated into investment decisions because at least while the industry is able to give information that was not necessarily democratized then 15 years ago.
00:11:43Now people are investors have access to that type of information and they can decide whether they're taking ESG into account in their investment decisions or not.
00:11:52It's not just for professionals.
00:11:55It's also for investors.
00:11:56It's also for investors.
00:11:57And this is really important because it's transparency has become the norm.
00:12:02And it has become expected now from all practitioners so that the investor can make their investment decisions in an informed way.
00:12:14I would say in the in the last point in the interesting cycles that we've had to go through over the years is the vocabulary that we've been using around sustainability, because obviously we've had lots of different terms that have been mixed in people's minds.
00:12:31They're still being mixed, even if with regulation coming, we've had some help in that regard.
00:12:37And I think we still have work to do on this to not make it make it a jargon and make it more accessible.
00:12:45I would say we have to make very we as practitioners have to make understandable buckets for clients to understand how you have products that are taking into account the basic ESG risks, others that are more thematic, others that really have an intention to have a positive impact.
00:13:02And we have to make that clear for investors, I would say we are in that moment where we don't have to reinvent ourselves, but we really have to make it accessible so that investors can believe that they're not it's not a marketing ploy and that it is actually an opportunity for them.
00:13:28Thank you very much for that historical overview of the past 15, 20 years, and then also already this focus on, you know, what is the challenge to us as product providers, and there are certainly things that we need to work on.
00:13:43And I want to zoom in a little bit on the past, you know, 18 to 24 months.
00:13:49We saw a lot, especially in the media and the specialized press, but also in the more generalist outlets, you know, talk of an ESG backlash and anti ESG sentiment, the end of the sustainability era.
00:14:02Pete, let me turn to you. What's your perspective on all of this noise that there has been? What do you see as the root causes of this? And maybe, you know, do you think that some of the criticisms that have been made of ESG recently are justified in any way?
00:14:22Yeah, thank you for having me. And as far as we are concerned, you know, we try to ignore the mood swings, as I think Eleonore called it. You know, for us, that ESG is now facing a backlash is kind of deserved. You know, this is an acronym that's lost its meaning. We try not to use it anymore, internally and externally.
00:14:46If indeed ESG ends up as a catch-all and as something that is associated with extensive form-filling, a lot of regulatory burdens, regulatory overreach, perhaps, I think it's no surprise that people have turned off.
00:15:05So, is it real? Yes, it's real. There is a real backlash. Is it deserved? Yes, so. And I think we can fix this, perhaps, if we go back to basics. And I think Lingyi and Eleonore also talked about this.
00:15:23ESG is everything that's not yet financial, but real, either as a risk affecting your portfolio or as an impact opportunity.
00:15:31That distinction in itself is important if you want to overcome the backlash. If you lump everything under ESG, then you lose the distinction between what is your fiduciary duty, managing long-term risks, and what may be a policy choice, impact.
00:15:47That distinction is really important if you don't want to be painted with the same brush.
00:15:51So, what we try to do is avoid the ESG acronym, try to talk about specific transitions, either in a risk context or in an opportunity context.
00:16:05Thematics is a word that was already used, and try to boil it down to what the connection is between our financial system and the real world out there.
00:16:16You know, we believe where ESG may have gone wrong, it became very inward looking.
00:16:22Nobody really knew what was cooking anymore, partly because we never bothered to explain.
00:16:29We never bothered to explain why certain developments are material risks to our portfolio, or the other way around.
00:16:36Why our portfolio or how our portfolio can have a real world impact.
00:16:40So, it's the real that matters here, especially when it comes to communicating with our participants.
00:16:49Yeah.
00:16:51So, it's interesting.
00:16:53You make a point close to Elio North there, too, around communication and transparency.
00:16:58Elio, let me circle back to you.
00:17:00How have you seen your clients, you know, think about and be affected by, you know, this so-called ESG backlash over the past couple of years?
00:17:10Well, we have seen clients turn their back on sustainable products when the financial performance started to slow down, particularly on benchmark products.
00:17:27Because, obviously, when in 2023 you were not invested in oil and gas, because oil and gas was often not in sustainable portfolios, you were lagging behind on the financial performance.
00:17:39If you were not invested in the seven magnificence, the Amazon and Meta in 2024, you were also lagging behind, because they were really having a huge performance.
00:17:49And they're often not in sustainable portfolios, either for governance reasons or for environmental reasons.
00:17:56But this was really harmful for sustainable products in the mind of our clients.
00:18:05Now, we do see a difference, however, in the segment of clients.
00:18:10If I take the ultra-high net worth individuals, the ones that are not convinced in impact, they're usually, they have a family office that is handling their portfolio.
00:18:21And if these family offices have had no impact guidelines from the family, they're usually asked to go back to, I would say, traditional finance, because they are really looking at financial performance, I would say short-term financial performance.
00:18:36So, that would be for ultra-high net worth, but then for the less wealthy, obviously, I work in a private bank.
00:18:43So, when I say less wealthy, we're not talking about retail banking.
00:18:46It's still, well, families with significant wealth.
00:18:51They're more resilient.
00:18:53Actually, they listen to the explanation of their private banker explaining that we are in a cycle.
00:18:58And, well, cycles, obviously, they come and go.
00:19:03And so, they are, these clients, they're in for the long term.
00:19:06So, they are happy with the explanation and they stay, they don't turn their back on ESG.
00:19:10So, I would say this backlash is a bit of a confrontation between, I would say, Europeans and the U.S. as well.
00:19:20So, obviously, we have European clients who don't want to be as much exposed to ESG anymore.
00:19:30But they're expecting us, I would say French, obviously, because we're in a French bank, but Europeans as well, to hold tight on sustainability and to keep pushing and supporting the transition of companies, a transition to a more decarbonized world.
00:19:45Because this is what really matters, and it is not because there is a, I would say, hopefully temporary backlash that we should completely skip what has happened for the past 15, 20 years.
00:19:57Because it has been hard work, and it would be pretty, really, to stop that.
00:20:02And our clients are really expecting us to keep on this track.
00:20:06So, even if we feel that it's gotten harder, there are still a lot of people who are coming to us because they see that, well, being a responsible actor in the field makes sense over time.
00:20:24If you actually, if it is important at one point, and it's not important again, it means that you were not sincere in the first place.
00:20:32So, you really need to keep going.
00:20:36So, we see clients that come to us now because other banks are actually, well, I would say, taking ESG a little bit less into account.
00:20:45So, we see that keeping, I would say, faith in what we believe is what it means to be a responsible bank and financing the economy in a responsible way,
00:20:57actually, actually, it is attracting clients today, rather than making them go away.
00:21:05Right.
00:21:06Lingue, how about on your end, what have you observed in terms of the impact of the current environment on your clients' mood?
00:21:14And any echo with that, what Eleanor just shared with us?
00:21:21Absolutely.
00:21:22Both with Eleanor and with Piet.
00:21:23So, first of all, we work with both institutional investors as well as ultra high net worth individuals.
00:21:32So, from, I have those two perspectives with me.
00:21:36And I think, first of all, I just want to go back to what Piet said, that it's not about how we, it's how we talk about it that has shifted.
00:21:48It's more the consistent thing that we do here is what we do.
00:21:56What we do is good risk management.
00:21:58And good risk management is always needed.
00:22:01And ESG is part of that risk.
00:22:04So, going back to what I said about we have two different investor groups.
00:22:10So, if we look at the institutional clients, ESG has always been about risk management, I would say, whether it's financial risk or reputational risk.
00:22:22Previously, reputational risk was quite high.
00:22:25So, the balance, it has changed between the reputational risk and the financial risk, right?
00:22:34As the public debate has moved on and the reputational dimension has become less prominent, institutional investors are now focusing squarely on whether our processes capture the material financial risks that are linked to the ESG factors.
00:22:53So, not so much about the reputational risk anymore.
00:22:57What they are less focused on right now is the idea of contributing to society or being good investors in a more value-driven sense.
00:23:09For them, ESG is returning to its analytical core about risk, resilience, and long-term value protection.
00:23:16If we look at the individual investors, then the story is different because retail investment has always been emotionally driven.
00:23:28It's not something new.
00:23:30It's always been there.
00:23:31Which is why, regardless of ESG, our role as advisors and as investors with discretionary mandates, it's often to help clients maintain discipline and avoid behavioral biases.
00:23:49Because ESG brings up another emotional layer, it's deeply tied to the personal values, right?
00:23:58We have whether it's about human rights, whether it's about controversial weapons, whether it's about animal testing could also be.
00:24:10So, those are personal values.
00:24:12And for clients who want their capital to contribute to a more sustainable world, there is often a willingness to also accept the trade-offs that are involved.
00:24:23Or at least a different risk-return profile, as long as their money does not do any significant harm and has a positive impact.
00:24:34But I would still say that that's perhaps 10% of our individual investors, while the 90% remain, as also Eleanor said,
00:24:46that perhaps the family office are going back to the basics and going back to looking at what is actually driving the financial performance only.
00:24:57So, the backlash has created almost a split dynamic, right?
00:25:01Institutions becoming more pragmatic and technical and individuals becoming more value-oriented and expressive,
00:25:09at least to those individuals who stick with ESG or sustainability.
00:25:15And geographically, the divergence is even stronger.
00:25:19We see some regions taking off those labels, almost not using them at all, at least in certain regions.
00:25:29And while others are embracing sustainability as part of their long-term investment identity.
00:25:37But across all groups, I think the common thread is that people still care about making informed decisions.
00:25:46So, they just want clarity, credibility, and a narrative that match their priorities, whether it's about risk management or values.
00:25:56Right.
00:25:57And something that was already mentioned in some of your responses is the topic of regulation.
00:26:03I now want to zoom in on regulation a little bit.
00:26:06So, of course, in the EU, you know, we had an acceleration in sustainable finance regulation, notably with SFDR 1.0.
00:26:14And that really coincided also with an intensification of ESG product development and inflow, so circa 2020, 2021.
00:26:23And then last year, in terms of regulation, notably via the omnibus, we saw the regulatory pace slow down a little bit.
00:26:32We also saw the scope of directives like CSID and CS3D be toned down relative to the initial ambitions.
00:26:42Eleonore, in your view, what is the importance of regulatory incentive in ESG adoption?
00:26:52What has it been?
00:26:53What is it today in ESG adoption, but also innovation and product development?
00:27:00And maybe can regulation also function as a disincentive?
00:27:04You spoke earlier about, you know, the challenge of language around ESG and regulatory language can be difficult to understand as well.
00:27:13There are accusations sometimes of regulation not offering sufficient clarity or homogeneity.
00:27:18You know, so what is your view on this and is SFDR 2.0 that's on the horizon in terms of implementation?
00:27:26Is that helping here in any respect?
00:27:31All very good, very good questions and very actual questions.
00:27:35What I would say is that, well, when we saw SFDR come in 2021, obviously it triggered asset managers to create much more funds taking environmental and social characteristics into account, even if sometimes in a very minimal manner, very basic negative filters.
00:27:59Just by excluding a few sectors, you could claim yourself to be an Article 8 fund.
00:28:05So we saw much more funds starting to do that, which was good news because a lot of asset managers started to take that into account and broaden their range of funds.
00:28:17We also had more funds becoming Article 9, which are the funds that are really having an intention to try and have an impact, positive impact.
00:28:30And that was interesting because some clients were, well, understood, even if when you hear Article 8 and Article 9, you really don't understand what these types of funds are just by the name.
00:28:41But once you've understood, we had clients who came to us and asked for, we're asking only for Article 9 funds in terms of taking ESG into account and wanting to have a positive impact.
00:28:54So this was good news.
00:28:57Even if in the Maelstrom or world of these funds, you really had to be very careful in what was actually proposed.
00:29:04And this is where assessing the quality of the integration of ESG was really important because two Article 8 funds could really be very, very different, some quite minimal and some very, very interesting.
00:29:22So good news, I would say, but need for experts to be assessing the products to be sure that you are really in front of qualitative products and not just quasi-green washing ones.
00:29:36And what regulation also brought to us was the, in 2022 with Mayfield ESG, it was the obligation to have an ESG discussion with clients because we were obliged since August 2022 to ask our clients whether they were willing to take ESG into account in their investment decisions.
00:29:58And so this is amazing because you were obliged since now for almost four years, we were obliged to have an ESG talk with our clients.
00:30:07And this is an incredible opportunity because it's helped to train private bankers and bankers in general around ESG because they had to speak about it with their clients.
00:30:20So every time it comes from the top, I have to say, it accelerates dissemination, pedagogy, and this was also very good news, but as you also very, well, pointed out, it was not made very easy on us because these regulatory questions are not necessarily simple.
00:30:47And this has been perceived by clients and by relationship managers as quite complicated because it was quite detailed and this was expected from the different products.
00:31:01And so clients sometimes preferred to say that they didn't have ESG preferences in their investment decisions so that they could look at ESG outside of this regulatory framework that was set.
00:31:17And feel that they were not constrained.
00:31:19Same thing for relationship managers.
00:31:22They were looking at that as a new constraint because it was actually constraining their investment universe.
00:31:27Once you have ESG preferences, you can only have, well, make your portfolios with products that have been stamped as, well, taking into account these ESG preferences with the different thresholds
00:31:44that were expected in terms of alignment with the EU green taxonomy or percentage of sustainable investment present in the product or principal adverse impacts that were taken into account.
00:31:58So those are all complicated words if you're not into finance, if you're not into sustainable finance.
00:32:04So it was a bit counterproductive for some.
00:32:11And you see that in certain countries, it has been better understood than in others.
00:32:16So we had in one country almost 95% of clients saying that they wanted to take ESG into account, when in another country we had more like 20% and in another one we had 50-50.
00:32:30So maybe it was also the way we asked the questions in this specific language.
00:32:37I don't know.
00:32:38But we really had very different acceptation levels.
00:32:42Now, obviously, we didn't really, we don't only look at what the regulation is telling us.
00:32:50And if I can just give one information is that we also support some impact questions or sustainability questions.
00:33:01And lately we have surveyed in France almost 1,200 clients and more than 40% of them told us
00:33:10that they wanted to have an impact conversation and they wanted to have impact products proposed to them.
00:33:17So this is a very, very positive signal, whatever their ESG preference, I would say regulatory ESG preferences were.
00:33:25Now, on your last question, SFDR 2.0 as we call it, that would come into force in 2028 probably.
00:33:35So one very good advance and one very good change is that we're coming, we're going from Article 8 and Article 9 products to products that really have a name that can be understood intuitively by clients.
00:33:47So we're going to have, normally, sustainable funds, transition funds, and ESG basics funds.
00:33:53This is much more understandable, intuitively, even if what funds that will will probably be very different from one from the other.
00:34:06But, well, I think it's going to be easier for the end investor, but we will still have, as distributors, I would say practitioners, new challenges to assess these funds.
00:34:20As we know that the asset managers are going to interpret the rules in different manners.
00:34:24When you're talking about a transition fund, it's going to be very interesting to see what transition means from one asset manager to another.
00:34:32And we know that some asset managers are going to do it in a very, very sincere way and professional way.
00:34:39And others might be looking at transition in a more lighter way.
00:34:44So this is going to be a new challenge for us distributors, but probably much easier to explain to our clients because of names being clearer.
00:34:53Right. Thank you.
00:34:56Peter, I'm also interested in your perspective on regulation and in particular on, you know, what has been called this regulatory slowdown with the omnibus.
00:35:06Do you feel as though there is this regulatory slowdown, this attempt by the EU to alleviate an administrative burden in particular on European issuers?
00:35:19And if that's the case, do you feel as though in your discussions with investors, there is a shift away maybe from, you know, centering around the regulatory incentives, the kind of regulatory check the box exercise?
00:35:33And does this then leave a little bit more space to talk about, you know, the fundamentals of ESG in terms of, you know, scientific and economic rationals?
00:35:43And then also, you know, beyond those discussions, I'm interested in your perspective on whether, you know, the fact that, you know, CSRD, CS3D are maybe not fully meeting their initial targets in terms of, you know, advancing data availability.
00:36:01Does that, you know, should that lead us to question the practice of ESG if, you know, we have less data or on the contrary, does this then mean that we maybe need to focus, you know, more on fundamental research in ESG?
00:36:16What's your perspective on that regulatory environment and its consequences?
00:36:21Yeah, to start with the first one, you know, we're quite happy with the regulatory U-turn and the simplification that's going on for exactly the reasons that Eleanor talked about.
00:36:29I think the distinction between regulatory incentives that aimed at transparency rather than just a sustainability label was a huge mistake, created plenty of confusion and didn't move the dollar.
00:36:42This is my fundamental problem with the whole regulatory overreach.
00:36:46We haven't changed our asset allocation.
00:36:49We haven't changed our investment practices as a result of it.
00:36:53So to that extent, regulations don't wag the dog.
00:36:58It's, you know, it is needed.
00:37:02You know, we appreciate transparency, we appreciate standardization, but it doesn't necessarily change our investment practice.
00:37:11Nor does data requirements, oddly, because we believe we need to find ways to get on top of not yet financial risks and indeed on top of interesting investment opportunities with or without regulations with data, ideally.
00:37:27But if we can't find them because of, you know, all sorts of regulations stemming out of Brussels, we'll find other ways to get those data.
00:37:35AI obviously is a big help in that regard, a huge help.
00:37:40So for us, all this is important, but not necessarily essential when it comes to pursuing, you know, the risks that the market hasn't priced in and the opportunities that we believe we need to chase to deliver on our promise of pensions with purpose.
00:38:01So we're actually quite relaxed, you know, this is coming our way.
00:38:08And actually, maybe let me stay then with you because you said, you know, you aim to deliver pensions with purpose.
00:38:15You also mentioned risk management and opportunity capture.
00:38:19If you had to summarize, you know, why ESG in 2026, what's, how would you define the way you see the value add of ESG or sustainability?
00:38:31We talked about the fact that ESG is probably not the most, you know, a pertinent term to use anymore.
00:38:38But how do you see and how do your clients see on average the value add of integrating sustainability considerations into investment decision making?
00:38:48And then maybe to crystallize that a little bit more, what is at risk if we, you know, are too quick to cast aside those considerations?
00:38:58Yep, I'll try to be very brief.
00:39:00Now, this is going back to our investment beliefs.
00:39:02We believe ultimately externalities will be priced in.
00:39:05If you're a universal owner, which we think we are, you know, we're invested in everything.
00:39:10A lot of externalities become internalities eventually.
00:39:14So our belief is, as Lingyi said it earlier, is for long term value creation.
00:39:19This is not a luxury.
00:39:20This is simply good risk management.
00:39:23So our participants want to see their pension savings being put to good use.
00:39:29They don't want to be evil.
00:39:31They ideally would like to see positive impact in the sectors and the themes that they care about.
00:39:35Participants opinions eventually translate into board, investment board decision making.
00:39:42They stay the course here.
00:39:46We don't think about sustainability as an add on.
00:39:49In fact, we abolished in our recent reorganization, the department for responsible investment.
00:39:55That in fact costed me my job.
00:39:57Thank you very much.
00:39:58The idea behind it was that we're all supposed to be responsible investors these days.
00:40:03Now, if you change the word sustainability into something like European strategic autonomy.
00:40:11You find out that you're going to very quickly talk about the very same thing.
00:40:16It just has a completely different ring.
00:40:19And we try to be smart, you know, street smart.
00:40:22Phrase this stuff in different terms if you need to.
00:40:26We like to talk about transitions, for example, because it has the ring of investment opportunities.
00:40:32We like to talk about not yet financial because it has the ring up.
00:40:35If you're smart, you'll be there before your colleagues are.
00:40:40We try to talk about things like energy security, materials reused and medicine, reduced medicine dependencies, because that has traction with our audience or participants more than ESG will have.
00:40:56So, for us, nothing new really, except that the wrapping is going to be different.
00:41:05Right.
00:41:06Ling Yeo, how about on your end on defining the value of sustainability considerations in 2026?
00:41:14Is it a matter of wrapping or is something changing as well in the content that is being wrapped?
00:41:25Hmm.
00:41:26Very good question.
00:41:27And a lot of good things have been said.
00:41:31I think that our core added value is very clear is to provide the analysis for our clients to make decisions aligned with their values, whether it's a risk approach or more impact approach.
00:41:52So, basically, I agree with that regulation sets a baseline, but it doesn't really align perfectly with our clients values and how they wish to invest.
00:42:03We see this every day.
00:42:06SFDR categories or the Article 8, 9, it doesn't really translate to how they wish to talk about their sustainability preferences as well as the taxonomy thresholds or sustainability investment thresholds.
00:42:21For example, let me take one example.
00:42:25It's about nuclear, nuclear weapons.
00:42:28We know that there has been quite some political changes now from regulatory landscape or at least the publications from the EU coming out.
00:42:42And there I would say that most of our clients, at least in the Nordics, perceive nuclear weapons as something unsustainable.
00:42:51That's not fitted into a sustainable portfolio.
00:42:54But my question is really whether we as investors can do something about it, do something different.
00:43:05If you come out and say that nuclear weapons should be part of, you know, conventional weapons and should be part of sustainable investments and investors should not make any biases towards or against nuclear weapons.
00:43:26What does this mean for us in terms of advisory and in terms of investments when, if our clients do not agree?
00:43:36So coming back to fiduciary duty against the regulation, I'm not sure there.
00:43:43I don't have a clear answer.
00:43:45I just posed the question that this is perhaps where at least as advisors and with our analytical tools, we can provide our clients with some insights.
00:43:57So perhaps they can get a better understanding of what the issue is about and how complex this issue is, right?
00:44:05So our role is to bridge the gap by using our ESG screening, our analytical capabilities to translate each client's priorities into concrete investment decisions.
00:44:20In practice, this means going beyond regulatory definitions and tailoring portfolios in a way that genuinely reflect what matters to them, whether it's about avoiding certain risks or supporting specific themes or ensuring their capital do not do significant harm.
00:44:40Regulation creates a structure, but it's the analysis that creates the relevance and brings the insights that also make the clients understand where do we come in to add value and how can we help them to invest in a way that is aligned with their values and their priorities.
00:45:02Right.
00:45:04Right. And you just mentioned the role of analysis and that you're conducting analysis to allow your clients then to be able to make the best decision based on their values.
00:45:15I want to stay a little bit on that and stay on analysis of, you know, asset managers and third party funds.
00:45:24Maybe starting with you, Eleonore, I'm interested in how, you know, concretely you have changed or are evolving your fund selection practices.
00:45:37What do you look for when selecting asset managers and then specifically third party fund?
00:45:43What's the importance to you of fundamental ESG analysis, but also engagement, dialogue and voting in the asset managers processes?
00:45:55Are you looking at this particular time for any kinds of approaches or themes?
00:46:00Can you give us a little bit of practical insight into that part of your day to day activity?
00:46:07Sure. Thanks. Yeah, that's that's indeed our day to day activity and has been for more than 15 years assessing third party funds in open architecture because we're proposing them in open architecture to our clients.
00:46:22So what's the topic we have today has been the same as the one we had in 2010, which is when you have asset managers come to you saying that they have an SRI fund or sustainable or green or whatever fund.
00:46:35You need to know what green sustainable SRI means to them in order to know, well, to compare objectively how they're actually integrating ESG or whatever we want to call it in their investment process.
00:46:47So what I would say is that what we're looking for is how sincere the approach is from the asset management perspective.
00:46:54We want to know what type of negative filters they're putting in place, how they're assessing the environmental, social governance practices of all the companies in their investment universe.
00:47:06So that's besides just taking some sectors out maybe of their investment universe, they have a good view on all of the companies that actually compose their investment universe.
00:47:17You mentioned it, but we want them to act as responsible shareholders because we want them to be voting when they are, when they, when they, when they have shares, we want them to engage.
00:47:31So engage in the dialogue with companies, whether they're shareholders or bondholders.
00:47:35And we obviously need them to report on these activities, report on their engagement activities, report on their ESG integration.
00:47:46All of this is key because we need the transparency.
00:47:49Why do we need that?
00:47:51Because there is still a suspicion of greenwashing.
00:47:54I would say under greenwashing, there is also impact washing, there is SDG washing, there is everything washing.
00:48:00So we need the transparency to show that there is nothing to hide and that there is really something in there.
00:48:08I would say that sustainable funds have always been more transparent than regular funds.
00:48:14They've always shown a lot of their portfolio in their, in their fact sheets.
00:48:20They've always, well, they've always been very transparent.
00:48:23And this is key that it continues because if you're, if you're selling and if you're providing information on saying that you're, you're, you're being sustainable or you're integrating ESG, you have to show what it actually did on your investment.
00:48:38So saying that you're doing it is great showing how you did it and what it actually concretely did with your portfolio is even better.
00:48:47So this is what we're looking at when we're assessing all of the funds in our portfolio.
00:48:51So I have to say that when, when you're looking at all of the funds that we see from an ESG perspective, the more fundamental and non benchmark the fund, the better, because this is where there is a real conviction from asset managers that is being expressed in, in what the companies that are being chosen in the, in the funds.
00:49:14So this, this, this, this is really important.
00:49:17Um, the one help we have today and going back to regulatory is that we have a lot more data today than what we had before.
00:49:24Uh, so we can, we can use this regulatory data that is now being published by asset managers to actually control what they've been telling us for years, uh, with our own lenses, because obviously the data that we have, we, uh, we take it.
00:49:43And we assess it with what is important to us.
00:49:46So if I give you an example, um, when you are looking at, uh, the United, the United Nations global compact violators, so companies who are violating the labor laws or human, human rights or environmental protection or corruption.
00:50:03Um, not all of, not all asset managers have the same definition of what is a violator, what is not.
00:50:11So how, how bad you need to be to be a violator.
00:50:14So that's really interesting for us to look at portfolios today and see if what they're telling us, what asset managers telling us is actually holding to the kind of standards that we are expecting.
00:50:26So this, this, this is really, um, a big advantage of having access to the type of data that we have since the regulation, um, was implemented.
00:50:34It is not enough definitely, but it is, it is really, really interesting.
00:50:38Now you were asking if we were looking at particular themes, um, I would say, obviously we're very much looking at, well, what transition means because transition is really important.
00:50:50We, we, we, we cannot go from, I would say the, the world of yesterday to the world of tomorrow by not transitioning and not helping companies in this transition.
00:50:59So, um, this is key and doing it in a really, uh, sincere way, uh, as I was saying before, we're looking at natural capital.
00:51:09Uh, we're looking at biodiversity and obviously we're looking at all of the products that are, that come in the market and claim to be, um, looking at biodiversity.
00:51:19But with, um, I would say the, um, uh, difficulty that with certain teams like this one, sometimes the name is attractive because the client would say, oh, great.
00:51:32I'm investing.
00:51:33I'm, I'm, I'm, I'm going to have a positive impact on biodiversity.
00:51:35But in reality, most of the biodiversity funds that we've seen come on the market for the past years are more looking at, um, you, the, the financial implication of, uh, being exposed to biodiversity.
00:51:48So you're actually going to be, I would say a bit, um, less exposed from a financial point of view, but you're not necessarily protecting these if I'm.
00:51:59Well, putting it this way.
00:52:01So it's, it's a bit, um, uh, not really delivering on the promise of the name.
00:52:07So we have to be very careful on the kind of themes we're proposing to our clients and what, what is behind the team.
00:52:13Uh, now from, um, maybe to finish on that, from a basic regulatory point of view, what we're looking at and because regulation helped us, we're obviously looking for the consideration of the PEI 10 and PEI 14, which are, um, taking into consideration the United global, United Nations global compacts.
00:52:34And also, um, exposure to controversial weapons.
00:52:38So we really want asset managers to have those two as a basics because, uh, we don't want our clients to be exposed to obviously controversial weapons and as little as possible to, uh, United global, United Nations global compact violators.
00:52:53So, um, um, I would say themes, they move over time.
00:52:58Uh, we follow them, but we don't adopt them as soon as they come out, uh, without looking very thoroughly at the way they're actually being implemented by asset managers.
00:53:08Right.
00:53:11And, um, Lingyu, um, can you give us in maybe just a couple of minutes, some of the key tenants of your approach to asset manager selection?
00:53:20Absolutely.
00:53:23Um, so for us, um, we look at, um, asset managers, how they integrate sustainability and which philosophy they have or use when they approach sustainability.
00:53:37So basically we look at two buckets, um, the positive selection side, that is ESG integration.
00:53:44And the other one is, uh, active ownership or responsible ownership.
00:53:49Um, and I think ESG integration is quite intuitive, uh, clear.
00:53:54It's more aligned and easier to align with the recurrent regulation.
00:53:59Um, so I will put more emphasis on the active ownership part.
00:54:03Um, active ownership is something that we see is integrated into the investment process, but probably more as current environment allows, uh, more as a PAI.
00:54:17So principal adverse impact, um, management, managing the exposure you have to different PAIs.
00:54:25Right.
00:54:26Um, and they're really, what we look at is, okay, when, um, how, how do you structure the active ownership or the responsible ownership?
00:54:37Because this poses different challenges and opportunities for the asset manager.
00:54:43For example, if the asset manager owns the stewardship and the active ownership process, then, um, this has the benefit of, um, the asset manager, the fund manager,
00:54:57uh, probably being in the meetings with the companies that, uh, uh, flagged or screened as controversial or has some kind of controversial issue that, um, is against or,
00:55:27probably the holding and the company to go in a certain direction.
00:55:33So the stewardship or the responsible ownership process can be more effective in this way.
00:55:40But what we see the negative side, the downside of this, is that when the fund manager is
00:55:49perhaps not the subject matter expert in the subject that is covered by this stewardship
00:55:56theme, then there is a lack of trust in the asset manager, in the financial materiality
00:56:10of them bringing it up, and lack of trust in their understanding of the issue at hand and
00:56:19how the company should tackle this issue.
00:56:23So there we see the upside could be the other structure of the responsible ownership, which
00:56:31is to have a separate stewardship team.
00:56:35And this stewardship team could be much more posed to subject matter themes and subject
00:56:43matter expertise that allows for this kind of more trust-building engagement processes.
00:56:51But then the fund manager also needs to come into the engagement and into the conversations
00:56:59and the dialogue to actually bring in the power that the fund manager holds.
00:57:05So this is really complicated material where we, in our analysis, we don't say that we prefer
00:57:14one structure over the other, but rather we want to see, okay, what is the actual philosophy
00:57:22of the fund manager and why is the structure of the sustainability integration and the structure
00:57:29of the active ownership in the way?
00:57:32And how does this structure and how does these different conditions allow the fund manager to practice his or her philosophy
00:57:44and approach to sustainability in a way that is trustworthy, in a way that minimizes the risk
00:57:52for greenwashing, in a way that is really aligned with what we want to provide to our clients?
00:57:59Right, thank you so much.
00:58:03Very useful insights, especially as I think some of the members of the audience are also in that same position
00:58:12of having to analyze asset managers and select funds either on an institutional or individual level.
00:58:19Unfortunately, we are out of time, but I think it's just a testament to all the interesting insights
00:58:25that you had to share this morning.
00:58:27I do want to quickly wrap up the call, but just going around the table once again and just asking you
00:58:36for, you know, three key words that you think or terms or ideas that you think would be particularly useful
00:58:45useful for the audience to keep in mind as they are continuing to think about sustainability in investing
00:58:54and especially thinking about where to take it from here.
00:58:59Pete, let me start with you.
00:59:01What would be your three key words or key ideas to take with us today?
00:59:05Yeah, going back to the title of this meeting, you know, is you know more or now more than ever?
00:59:11I would say now more than ever, you know, systems are failing.
00:59:14And if you doubt the materiality of that, sorry, check out Norgus Bank's analysis stress test
00:59:23of the risks of fragmentation, geopolitical fragmentation, climate and AI concentration.
00:59:29So this is for real, this is not fashion, it's physics, it's not a fact, it's a fact.
00:59:38So leave the nonsense behind.
00:59:43Right.
00:59:43Thank you very much.
00:59:44That's, I think, a great summary to have the ideas of where the ideas that we've discussed today
00:59:50have led us.
00:59:51Eleonor, how about you?
00:59:53Well, I would say transition for, I mean, this is going to be one thing that we all have to look at.
01:00:01I would also say natural capital because it has been overlooked.
01:00:05It is, I mean, it is going, it is much more looked at now.
01:00:09It really needs to be central because it is.
01:00:13And then I would say the last part is whoever you are and whatever your business is,
01:00:20ask questions on sustainability, because don't just believe what people tell you,
01:00:25but be curious and ask questions because this, no one knows everything about, about sustainability.
01:00:31You just need to learn a bit every day and so that you can have your own opinion on,
01:00:36on what is needed and what you want to do.
01:00:41And Lingue, three keywords from you.
01:00:44I will keep it short.
01:00:45So three keywords, then it's economics, perspective and impact.
01:00:51Right.
01:00:52Thank you very much.
01:00:54Thank you to our three experts today for joining us and so generously sharing your insights.
01:01:01I hope you in the audience felt them useful.
01:01:04We weren't able today due to time to get to all of the audience questions,
01:01:09but we will make sure that the speakers that they were asked to do get them
01:01:15for follow up opportunities.
01:01:19So thank you again, everyone for joining today and have a good rest of your day.
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