#EFS: From finance leaders to change makers, Part I
The second edition of European Finance Summit – and first event of the year organized by Farvest Group – took place on March 18, 2021. Due to the current health situation, the event was held exclusively online and featured many international and local experts who focused on sustainability and ESG topics.
In his opening speech, Nicolas Mackel (CEO, Luxembourg for Finance) started: “Bill Gates has published a new book and asks one question: how to avoid a climate disaster? He gives the answer in the opening paragraph through two numbers: 51 billion and 0. 51 is the number of tons of greenhouse gases typically added to the atmosphere each year as a result of human activities, and 0 being our aim to avoid climate disaster”. The expert then focused on how to reach this target, which requires many changes and notably the shift from fossil to renewable energy. “New technologies need to be developed to make building more efficient, to improve energy consumption of industrial players, to improve the footprint of transportation, etc. This is where the power and expertise of the financial industry comes in as it connects investors and sustainable projects,” he added. He then shared several examples of recent initiatives such as the Luxembourg Green Exchange, which was a 134% increase in green listings. Moreover, according to him, banks and insurance companies are increasingly committing to the principles of sustainable investment. “We are aware that it is only the beginning of a long and difficult process, but we need to remember that it’s only been 5 years since the Paris Agreement. I’m confident that with the implementation of a robust regulatory framework, sustainable finance will mature rapidly. And the financial industry will then really walk the talk”. He concluded: “Obviously, not all investments can be sustainable as of tomorrow. It takes to transition away from fossil energy. The 0-emission goal has been set to 2050 for good and practical reasons. Yet, the faster we move to sustainable finance, the better it will be for all of us”.
A round-table discussion, entitled “The need for a green recovery” then brought together Linda Zeilina (Founder & CEO, International Sustainable Finance Centre (ISFC)), Raymond Schadeck (Chairman of the board, unature.org), Philipp von Restorff (Deputy CEO, Luxembourg for Finance) and Sachin Vankalas (General Manager, LuxFLAG). The discussion was moderated by Arnaud Gillin (Partner, Innpact) who first explained that rebuilding our economy in a different manner is a must: “we all need to work towards the Paris Agreement. Finance needs to innovate and reinvent itself”. Raymond Schadeck then highlighted that “a lot of money was wasted because of the wrong approach. Now, people are buying in this green recovery trend. Yet, many companies speak about it but still see it as a burden, due to bad communication. Many of them are still reluctant to really change and embed a sustainable business model”. Within unature.org, experts gathered more than 300 research papers on the subject and Raymond Schadeck shared several concrete examples of what nature actually brings us, from the increase in productivity, to its impact on Covid-19. Linda Zeilina agreed that nature does have intrinsic value: “we mismanaged it and have actually depreciated this asset. For years, there was a blind spot in finance regarding nature, but a lot has changed over the past two years”. She then explained that the EU was leading the way when it comes to regulation and that it needs to start with all stakeholders (planet, people and businesses). She then discussed the recent EU taxonomy which will create a system that allows to see which activities align with the Paris Agreement. She added: “the EU tries to create transparency, as investors will be able to better manage if they are provided with more information: more disclosure, data, and transparency. And therefore more information to act on”. According to Sachin Vankalas, “everybody claims to be sustainable: markets are pushing and financial products are obliged to do something about it. But do they all do the same? Does the product have a positive impact in the world? Or are activities mainstream while taking into consideration ESG factors? This is where we need to build more transparency?” LuxFLAG therefore identifies these different types of financial products: “this what investors need to know and labels such as LuxFLAG provide clarity. They will be able to take informed decisions and mobilize capital”. Finally, as explained by Philipp von Restorff, “education is key and so is having everyone on board. Time flies and there is clearly a certain degree of emergency. We need buy-in from people, yet, there is a lack of knowledge, and education is needed at all levels”. He highlighted the need for transparency, comparability and credibility. Philipp von Restorff added: “this is why we need partnerships on the international and local levels”. He concluded his part by sharing one of the latest LFF initiatives which consists in designing a sustainable financial roadmap: “we are now continuing to raise awareness and promote sustainable finance. The next step is to unlock its potential by creating a knowledge-sharing platform”. Finally, Arnaud Gillin concluded by stating that “there’s another way to consider when doing business: have a real purpose, change the perspective and the mindset. And face challenges together”.
“Sustainable Finance Information or Intoxication: Trusting What You Read” was the name of the keynote speech given by David Schrieberg (CEO & founder, VitalBriefing). He focused on the current information tsunami, as 300 hours of video are uploaded to YouTube every minute, 204 million e-mails are sent every minute, etc. He added: “Plus…six million blog posts each day. As one of my clients once said, there has never been so much information just in sheer volume. You cannot absorb it and you cannot sort it out. All the sources have different perspectives, yet you need to have your view of what will happen. You have to focus”. He also highlighted that the World Economic Forum explained that the global risk of massive digital misinformation sits at the center of a constellation of technological and geopolitical risks ranging from terrorism to cyberattacks and the failure of global governance. The expert then focused on several examples around the topic of sustainable finance and ended his presentation by sharing his own tips and tricks: Is the publisher credible? What about the author? Who is in the story? How timely is the information? “Poor grammar and spelling are not necessarily indicative of bad information, given the quality of language translation – but should trigger extra caution,” concluded David Schrieberg.
Anne-Claire Roux (Managing Director, Finance for Tomorrow), Julien Froumouth (Sustainable Finance Adviser, ABBL), Chiara Caprioli (Senior Business Development Manager & Sustainable Finance Expert, Luxembourg Stock Exchange), Hedda Pahlson-Moller (Founder & CEO, TIIME.org) and Rik Coeckelbergs (Founder and Managing Director, The Banking Scene), who acted as moderator, then participated to another round-table discussion. The topic revolved around the sustainability goals for tomorrow’s financial sector. Chiara Caprioli first focused on how the current crisis brought ESG to a point of non-return, as it showed the impact such aspects can have. “Moreover, at the political level, the different recovery plans with a focus on green and social aspects led to a strong push for the rest of the private society and the entire economy. It represents an important paradigm shift: I simply cannot see companies not having sustainable strategies nowadays. They would be at risk and potentially be cut off by investors,” highlighted the expert. According to her, we are going from just investing into green to greening the whole economy, with much broader indicators. As explained by Hedda Pahlson-Moller, “people to be on board, otherwise there won’t be any change. All aspects of ESG are interconnected, just like the SDGs: they all support each other”. She also insisted on the need to boost diversity and inclusion: “we have to leverage new perspectives and different approaches to make these changes happen and achieve these sustainable finance goals. Mainstream finance needs to move faster, recognize its current impact and improve the ratios. According to Anne-Claire Roux, the financial sector has a part to play to tackle ecological challenges. “All stakeholders must work together, it’s our strongest conviction. Ecology is not sustainable yet, but the financial services industry does have enormous power to leverage on these practices. It can provide new tools. Climate risk should be considered as a systemic risk that banks and financial insinuations need to manage. Risk is actually the best approach: use data to measure the risks. We have developed an observatory of sustainable finance to monitor commitment”. Finally, Julien Froumouth added that Luxembourg has a strong expertise in the field of financial services, as a leading center for ESG funds, microfinance, etc. “It was the first country in Europe to launch a dedicated sustainable bond framework and implement a climate law in order to achieve its national target to reduce its greenhouse gas emissions,” he explained. Moreover, he underlined that a sustainable finance strategy was recently launched, with a specific roadmap which aims at creating awareness, development toolkits to leverage the local expertise, and to measure progress made and report on it.
Alex Panican (Head of Partnerships and Ecosystem, LHoFT) took the virtual stage and presented the FinTech European Discovery Program by welcoming several international experts who presented their innovative solutions. Youssef Ziza (Business Development & partnerships manager, Oxyliom Solutions) explained that Oxyliom delivers an integrated platform that supports all parts of identity and trust services for a modern Customer Digital Experience, supporting the various regulations around KYC and AML, but also Open Banking, PSD2, and privacy regulations such as GDPR. Then, Sarah Lokman (Head of Sustainability, Greenomy) took the digital stage to present Greenomy, which consists in digital tools aiming at helping companies measure – because most companies do not have data nor sustainability experts in-house – and improve their sustainability level, and therefore at accelerating the transition to carbon neutrality by 2050. Luc van Laarhoven (CEO, Capilex) explained that Capilex was created through market demand and real estate sector expertise: “We draw on past knowledge and experience to provide mortgages very fast at competitive rates to private individuals and companies. It is a spin-off from Atlantis Financiers N.V., a Dutch company founded in 2013 as a lender for entrepreneurs who struggled to get traditional financing”. Barbara Terra (Sales Director, Hacknowledge Luxembourg) then took the stage to present Hacknowledge, a vendor neutral cyber-security company. It monitors infrastructure 24×7 and expert security engineers detect and respond to threats using a cutting-edge VISION Cyber ManagementTM solution. Finally, Adi Berland (CEO, Kids Life Skills) presented Kids Life Skills, a non-profit organization based in Luxembourg. Its goal is to teach essential tech skills to, by teaching logical thinking, problem solving, teamwork, self-learning, creativity, etc. The organization is supported by several partners in Luxembourg.
Inès Leonarduzzi (Founder & President, Digital For The Planet) then shared her presentation, entitled “Positive finance: the state of a long term thinking”. She started: “Are we being good ancestors? The choices we make today will impact the future of the younger generations. The pandemic, for instance, actually prevents us from thinking long-term; our short-termism is becoming pathological”. She also explained that citizens, through their knowledge and expertise, have a role to play: “now is the time to take risks. Historically, financial institutions have been making the right calculations to reduce risks. We need an important shift of thinking. Therefore, there is a huge spot for positive finance! It needs to transform so that it resembles today’s reality. For instance, banks and companies active in the financial services industry could have experts in charge of the long-term perspective: he/she is here to assess and think in the name of the future generations. This expert would guarantee, at every stage, that we are good ancestors.” Inès Leonarduzzi also participated to a fireside chat discussion, along with Nasir Zubairi (CEO, LHoFT), which ended the morning session. The two experts mainly focused on the use of data and highlighted the concept of data privacy. According to Inès Leonarduzzi, “banks have so much data on us that they can easily paint psychological portraits of their clients. Through the blockchain, we should be able to protect the privacy of the person who could allow the use of his/her data without actually revealing it”. “Does privacy limit innovation?” asked the CEO of the LHoFT. “The problem is that we have fragmented rules because we did not think about it in the very beginning. We have the impression that regulation is preventing progress from happening when progress is actually a set of tools that allow people to have better comfort in life. And so is tech. Yet, we create embarrassing financial gaps between people who diffuse their data and those who wish to protect them,” added Inès Leonarduzzi. Nasir Zubairi then discussed the impact of tech on financial inclusion and asked the guest how data could be used more effectively. She focused on privacy again, stating: “we need to spend time, intelligence and money on privacy-focused technologies, and explore a world that would be fairer and more transparent”. She concluded: “privacy means people are the sovereign of their own data, and they if and how it is used and/or sold, etc. According to me, privacy is therefore more of a balance between power and deciding. I’m not necessarily hiding my data, I’m simply controlling it”.
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