Italy tries on 50 shades of ESG

Eugenia Jiménez
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Italy tries on 50 shades of ESG

Over 15,000 people from the world of finance gathered in Milan to discuss the issue of sustainability and look at the trends that are making an impact in social and environmental finance on the 2019 edition of Salone del Risparmio.

Italy's biggest event in the investment management industry took place from the 2 to the 4 of April and counted on about 300 international and national speakers scattered across 100 conferences, which challenged the industry to take the lead in making a change towards a more sustainable future.

Key topics discussed in Milan included financial advisory and distribution networks; markets and asset allocation; financial services and fintech; the industry's support to real economy and welfare; behavioural finance; financial education; and ESG.

At the event, which is now in its tenth edition, the head of Italy's trade body Assogestioni laid out the challenge. "We want, we must evolve our industry to make it even more sustainable, inclusive, responsible," Tommaso Corcos said.

He also underscored the potential impact that moving towards sustainability can have on the industry by highlighting what is already happening with digital disruption. "On one hand, sustainability is an essential goal to achieve, and on the other, it can become the evolutionary driver of our industry, with an impact comparable to that of technological disruption in progress".

Italy's minister of Economy and Finances Giovanni Tria intervened at the opening session of the Salone too through a video message. He said that the combination of finance, growth, and sustainability means supporting a model of economic progress that guarantees environmental protection and promotes social development.

FOCUS ON ESG

More than half of the sessions (54 out of 100) addressed the topic of responsible investment. From this share, around 34 sessions were hosted by asset management firms while the remaining ones were hosted by industry associations like Assogestioni, consultancy firms, and financial publications.

Schroders: "What if business and finance saved the world? We bring the view of a "regenerative" innovator"

Technology. Enterprises. Finance. Can the combination of these elements be the key to finding a new balance? Eric Ezechieli, co-founder of Nativa, an accelerator of innovation for companies to become a re-generative force for the world, and David Docherty, equity portfolio manager at Schroders, explored such scenario.

Humanity's global evolution has accelerated exponentially from the post-war period to the present and technology has been the engine of this exceptional growth.

However, the Earth no longer has the capacity and resources to absorb the impact of this rapid development. Schroders discussed how it seems intuitive to think that the economic model that has brought us here is no longer compatible with a desirable future. Businesses must reprogram themselves to include people and the planet among their goals.

To tackle the environmental and demographic challenges ahead, companies must change their business model. Prioritising not only the creation of shareholder benefits, but also the rest of the population, will be increasingly important to find a balance between what companies "take" with their business and what they return in exchange.

According to Schroders, technology can help to reduce the gap between the growth of the population and the resources available. Investing in the companies that drive innovation can create unique investment opportunities as well as having positive effects on the world.

THE CHALLENGE OF CHANGE

Focusing on the challenges that any change implies, Candriam's session focused on one of the biggest changes taking place now and representing a challenge for all, climate change.

Matthieu David, head of the Italian unit of Candriam, stressed the challenges faced by financial advisers and asset managers when having to balance their focus on sustainable and responsible investments while assisting their clients' demands.

Speaking at the session, the Italian runner Paolo Venturini listed the virtues he believes are needed to face and overcome a challenge: awareness and responsibility, commitment and preparation, teamwork and ability to adapt. The athlete has been testing himself for three decades all over the world and in extreme conditions. His last project "Monster Frozen" proved his resolve in Russia's coldest place at over -52°.

ESG & EUROPEAN UNION

Sara Lovisolo, Group Sustainability manager, Borsa Italiana, and EU Technical Expert Group on Sustainable Finance and François Millet, head of Strategy, ESG & Innovation at Lyxor, talked about the impact that the evolution of European regulations will have on the asset management industry.  The recent EU green light for reform, which will require asset managers to specify whether the instruments they sell on the market are in line with ESG standards, aims at providing the European institutions with a transparent structure to ensure investors are informed about the social and environmental impact of their investments.

François Millet said: "It is essential to mobilise capital flows towards the fastest growing segment of the asset management industry, passive management. Indices and ETFs are at the heart of the transformation since they are not only consistent, but also suitable for more responsible investment and for achieving the most critical objectives".

MOBILITY

Robeco discussed on how mobility, as an emerging investment theme, offers extraordinary opportunities for long-term growth in the entire electric vehicle value chain, and how investors can benefit from this megatrend. Robeco's session also gave an overview on the evolution of transport as well as on how investors can get good returns by investing in this revolution. According to the firm, the electrification of the transport sector is opening up completely to new markets that offer significant investment opportunities. "The automotive industry alone will represent a $4bn sector by 2030, from which one third of cars will be electric vehicles. In the long run, almost all cars will be electric, without including buses, trucks, ferries and perhaps, even some planes. Along with the electrification of the transport sector, new business models in shared mobility and related services will emerge".      

SUSTAINABLE GROWTH

Alex Bellini, explorer, motivational speaker and performance coach spoke at the Salone after returning from India, the first stage of his latest exploration project 10 Rivers, 1 Ocean.

Bellini's project, which started from India, is leading him to sail alongthe 10 most polluted plastic rivers in the world to foster a new sense of understanding and respect for our planet and for the most threatened environment: the rivers' ecosystem. Around eight million tons of plastic enter the ocean every day. Around 80% of this plastic comes from just 10 rivers, those that Bellini has begun to navigate.

Bellini stressed the importance of making people aware of sustainability,which "represents a win-win system for everyone".Raising awareness is not only intended as the ability to generate it, but rather as urging action in a concrete way in order to trigger change.

The explorer's speech aimed at lifting the veil on the potential connection between his experience and the issue of sustainability, on which Pramerica SGR has recently shown some commitment, reflected on its adherence to the Principles for Responsible Investments promoted by the UN (PRI) and on the launch of ESG investment strategies during 2019.

Andrea Ghidoni, chief executive officer and general manager of Pramerica SGR, said: "The time is ripe for ESG investments but it is not a question of following a current trend; there must be widespread awareness on the importance and correct scale of this challenge.It is good that the E of ESG investments catalyses attention for the time being. But the S and the G cannot and must not be ignored, since these three components positively influence each other.

"We at Pramerica SGR want to be one of those leaders that Bellini talks about, so we intend to continue to strive with the aim to strengthen our commitment to sustainability in every area."