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History is made of turning points and we are in the midst of one such moment today. A major shift is about to happen: confronted with the ecological challenge, the planets — here, the interests of citizens, consumers, companies and finance — look set to align in an unprecedented manner.
Can finance be an ally of sustainable development? It would seem counterintuitive as finance is often associated with short-term bank lending while sustainable development issues are, by definition, tackled from a longer-term perspective.
Despite that, many signals are pointing towards something of an evolution in the financial sector. It has not given up on profit, but more and longer-term finance is available from pension funds and insurance companies. This conversion to corporate social responsibility has come about because financial stakeholders now recognise that companies putting sustainable issues at the heart of their business models tend to be healthier economically.
The calculation is a simple one. Companies that act responsibly and ensure good governance minimise their risks.
Those that have ecological and human challenges in their sights will in the years to come be in pole position to provide the most relevant solutions to the major challenges facing us all. It is in particular for these reasons that some funds are spectacularly switching entirely to socially responsible investment assets. It is also why green bonds have been experiencing such extraordinary growth.
Finance has, in fact, taken note of three findings.
The first concerns the fact that ecological imperatives are adding conditions to industries’ licence to operate. Environmental taxes are increasingly being levied around the world. For example, carbon taxes based on the level of carbon dioxide emissions risk becoming the norm in various forms worldwide. States and governments are increasingly refusing to pick up the tab for negative side-effects of industrial activity.
In some countries, such as China, even more drastic measures are being taken by simply shutting down highly polluting factories.
The second finding is that companies committed to providing sustainable products and solutions — produced, in addition, in a responsible way — improve their competitiveness, generate more profits, and create long-term value. We experience this every day in our own industry. When we invest, for example, in new-generation ecological plants, we reduce the volume of raw materials used while also improving productivity.
For this reason, we must innovate, and innovate openly. Saint-Gobain directly finances initiatives, such as Greentown Labs, the largest cleantech start-up incubator in the US, which opened its Global Center for Cleantech Innovation in May last year. We are sharing our company’s knowledge and products to build the centre with materials that are as technologically advanced and sustainable as the solutions invented inside. A commitment to underpinning the ecological transition is both crucial for the community at large and profitable for the company.
This economic strategy has not been the sole domain of companies: our customers have adopted the same reasoning. When designing new eco-innovative glazing, we are selling a greener product with improved thermal insulation at the same time as a solution that reduces energy bills by 20 per cent. The market shift towards low-energy buildings is therefore a win-win for the planet and the consumer.
The third finding highlights a shift in today’s labour market. Again, industry faces a challenge to attract the best candidates at a time when there is ever greater competition for the most talented individuals. This is something I see every day in our company, whatever the country. The upcoming generations will reject employers that have not adopted the ecological imperative as their prime concern.
In France, a manifeste pour un réveil écologique (manifesto for an ecological awakening) was circulated this summer. In just a few weeks, it was signed by more than 13,000 students from the most prestigious schools and universities in France (Ecole Normale Supérieure, Ecole Polytechnique, HEC, etc.). The message is radical: “We, students in 2018, refuse to continue on a trajectory that is destroying our societies and we refuse to work for companies that do not play the sustainable development game.” The message is simple: if you deprive us of our environmental capital, we will deprive you of your human capital.
We should take these arguments very seriously. After all, the students are undeniably right: our values cannot be left at home when we set off for work each morning. This fictitious separation between our personal and professional lives is a thing of the past.
For all these reasons, it is in the best interest of finance to support the sustainable transition companies are undergoing. It can become a key ally of the radical ecological transformation that we must all implement. With a virtuous finance sector by our side, we can hope to meet these challenges.
The writer is chairman and chief executive of multinational group Saint-Gobain and author of ‘Notre combat pour le climat’
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