In many ways, this is a paradoxical moment: on the one hand, awareness of the acceleration of climate change and the fact that six of the nine planetary limits* have been exceeded is widely shared; on the other, the immensity of the work ahead and the difficulty of rethinking our economic system from top to bottom are fuelling the temptation to stand still, if not outright rejection of the ecological issue.
It’s an ill wind that has been blowing for some time now on the other side of the Atlantic, and it threatens to turn into a storm if Donald Trump wins the forthcoming American elections in November. In Europe, the European elections in June could well see the import of this backlash, with the rise to power of populist movements whose common denominator is the rejection of any significant progress on the environment. In many ways, 2024 is the year of all dangers.
ESG criteria: a backlash against the times
The financing needs to ensure the ecological transition of our societies are considerable. For France, they amount to €65 billion a year between now and 2050, according to the report by Jean Pisani-Ferry and Selma Mahfouz submitted to the French Prime Minister in 2023. In this context, private finance players obviously have a major role to play. In the face of the environmental emergency, they must mobilise and focus their efforts in the right place: the challenge is not so much to finance assets that are already green as to green our entire production system.
However, ESG criteria (Environment, Social and Governance), the bedrock of sustainable finance, are the subject of growing hostility in some political and economic circles. This particularly worrying phenomenon has been widely documented in the United States, where the most conservative members of the Republican Party have declared war on “woke capitalism”. Florida Governor Ron DeSantis, at the forefront of this movement, has declared that he wants to halt any collaboration with financial institutions that would value anything other than maximising return on investment. Hide this impact that I can’t see…
The great financial illusion: what cannot be measured does not exist
To resist this highly political offensive, the financial sector as a whole – without which no large-scale transition is possible – can and must strengthen its methodological foundations.
We now have tools that enable us to correctly assess the carbon impact of a given economic activity. But climate change is only one of nine global limits. Instruments for measuring the impact of the other eight exist, but they are still used far too infrequently by financial institutions and businesses.
For pragmatic reasons, we seem to have started by looking at what is easy to measure, and then simply putting aside what does not immediately fit into our methodological frameworks.
But for a financial player, what cannot be measured does not exist. There is therefore an urgent need to widely disseminate tools that enable environmental impacts in general, and not just those linked to the climate, to be objectively assessed: biodiversity, resources and climate must form the triptych of any analysis aimed at providing the best possible guidance for organisations’ environmental strategies.
The widespread use of more sophisticated assessment tools would also make it possible to put an end to the permanent suspicion of greenwashing that hangs over companies. What we need now is to support economic players in the transition rather than trying to hand out good and bad points (in this respect, while the European green taxonomy undeniably represents progress, its binary dimension could well in time fuel the polarisation of the debate on the ecological issue).
We no longer have the luxury of waiting, and even less the luxury of going backwards.
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(*) Climate change; erosion of biodiversity; disruption of the nitrogen and phosphorus cycles; changes in land use; freshwater cycle; introduction of new entities into the biosphere; acidification of the oceans; depletion of the ozone layer; increase in the presence of aerosols in the atmosphere.