Sustainable Finance and Life Cycle Assessment PDF

MANDATORY ENVIRONMENT-RELATED INDICATORS APPLICABLE TO INVESTMENTS IN INVESTEE COMPANIES OF THE RTS OF SFDR Adverse sustainability indicator Metric Scope 1 GHG emissions 1. GHG emissions Scope 2 GHG emissions From 1 January 2023, Scope 3 GHG emissions Total GHG emissions 2. Carbon footprint Car...

MANDATORY ENVIRONMENT-RELATED INDICATORS APPLICABLE TO INVESTMENTS IN INVESTEE COMPANIES OF THE RTS OF SFDR Adverse sustainability indicator Metric Scope 1 GHG emissions 1. GHG emissions Scope 2 GHG emissions From 1 January 2023, Scope 3 GHG emissions Total GHG emissions 2. Carbon footprint Carbon footprint 3. GHG intensity of investee companies GHG intensity of investee companies 4. Exposure to companies active in the fossil fuel sector Share of investments in companies active in the fossil fuel sector 5. Share of non-renewable energy consumption and production Share of non-renewable energy consumption and non-renewable energy production of investee companies from nonrenewable energy sources compared to renewable energy sources, in % 6. Energy consumption intensity per high impact climate sector Energy consumption in GWh per million EUR of revenue of investee companies, per high impact climate sector Biodiversity 7. Activities negatively affecting biodiversity-sensitive areas Share of investments in investee companies with sites/operations located in or near to biodiversity-sensitive areas where activities of those investee companies negatively affect those areas Water 8. Emissions to water Tonnes of emissions to water generated by investee companies per million EUR invested, expressed as a weighted average Waste 9. Hazardous waste ratio Tonnes oh hazardous waste generated by investee companies per million EUR invested, expressed as a weighted average Greenhouse gas emissions See draft RTS here AXA IM - RESTRICTED 87 … & at the entity level, non-financial reporting requirements are becoming massive Corporate Sustainability Reporting Directive (CSRD) in a nutshell 50 000 European companies to be covered … that will have to implement it starting 2024 … completed by 13 European Sustainability Reporting Standards (ESRS) General principles and crosscutting standard Environment E1 - Climate Change (44 pages) 1 - General Principles (49 pages) E2 - Pollution (24 pages) 2 - General reporting, strategy, governance, and materiality assessment disclosure requirements (39 pages) E3 - Water and marine resources (18 pages) E4 - Biodiversity and ecosystems (39 pages) E5 - Resource use and circular economy (20 pages) Social S1 - Own workforce (65 pages) S2 - Workers in value chains (23 pages) S3 - Affected communities (21 pages) S4 - Consumers and end-users (20 pages) AXA IM - RESTRICTED Governance G1 - Governance, risk management and internal controls (17 pages) G2 - Business Conduct (16 pages) AXA IM - RESTRICTED AXA IM - RESTRICTED CONTENT OF THE IMPLEMENTATION DECREE OF FRENCH ART.29 OF THE 2019 ENERGY & CLIMATE LAW Principales dispositions 1. Démarche générale 2. Moyens internes 3. Gouvernance Seuils d’application Date d’application Tous Entités ayant plus de 500M€ de bilan ou d’actifs sous gestion Reporting S1 2022 sur exercice 2021 4. Stratégie d’engagement Reporting S1 2023 sur exercice 2022 5. Alignement taxonomie UE & part « fossiles » 6. Stratégie d’alignement avec l’Accord de Paris 7. Stratégie d’alignement avec les objectifs politiques internationaux sur la biodiversité Entités ayant plus de 500M€ de bilan ou d’actifs sous gestion (et, le cas échéant, pour chaque fonds de plus de 500M€ d’encours) Reporting S1 2022 sur exercice 2021 8. Prise en compte des risques ESG 9. Démarches d’amélioration continue Entités ayant plus de 500M€ de bilan ou d’actifs sous gestion See decree n°2021-663 here AXA IM - RESTRICTED Reporting S1 2023 sur exercice 2022 Séance n°5 THE STATE OF ESG REPORTING IN THE WORLD AXA IM - RESTRICTED 91 LIFE CYCLE ASSESSMENT HOW SCIENCE-BASED ACTIONS CAN POSITIVELY CHANGE THE INDUSTRY’S IMPACT AXA IM - RESTRICTED OBJECTIVE OF THE TRAINING ✓ Understand key environmental issues ✓ Undersatnd LCA core concepts and methodology to be able to understand and pilot LCA studies ✓ Understand the methodological approach (assumptions, calculation methods, scope), evaluate the robustness of the results and the conclusions presented ✓ Be able to integrate Life Cycle Thinking into your everyday work AXA IM - RESTRICTED 01 What is LCA? 02 Goal & Scope definition 03 Life Cycle Inventory 04 Life Cycle Impact Assessment 05 Integration of LCA into an Ecodesign strategy AXA IM - RESTRICTED 94 01 WHAT IS LCA? AXA IM - RESTRICTED 95 See the whole picture Focus on the right part THE LCA APPROACH Get the facts right Decide and act RAW MATERIAL PRODUCTION MANUFACTURING RECYCLING Life Cycle Assessment is recognized as the leading methodology for environmental impact evaluation. The main strengths of this tool are the following: Metrics-based approach, allowing impact evaluations and/or comparisons to be made on a quantified and credible scientific basis. 1 CUP OF FILTER COFFEE END OF LIFE Life-cycle oriented, allowing users to consider various product stages, to highlight potential ‘burden shifting’, or unintended consequences. PACKAGING + DISTRIBUTION USE Multi-criteria: we are aligned with the PEF guidance, and cover a multiplicity of indicators in the assessment (including water use, ecotoxicity, ozone depletion, etc.) HUMAN HEALTH AXA IM - RESTRICTED NATURAL RESOURCES ECOSYSTEM QUALITY WATER FOOTPRINT CARBON FOOTPRINT See the whole picture FOCUS ON THE RIGHT PART AXA IM - RESTRICTED Focus on the right part Get the facts right Decide and act See the whole picture QUESTION YOU ASK YOURSELVES Paper or plastic grocery bags? Plastic weighs less… But paper comes from trees, not oil… But our forests are being over-used! And the paper is shipped from Brazil! But the plastic comes from China… and the paper fiber is partly recycled! But our plastic comes from US corn!... and the plastic weighs less! But… …So, paper or plastic? AXA IM - RESTRICTED Focus on the right part Get the facts right Decide and act See the whole picture LCA IS A GOOD DECISION MAKING TOOL Identify environmental issues along the value chain (hotspots) Identify improvement possibilities and production optimization Compare alternatives Set goals and measure progress Benchmark performance Manage risk Communicate And more AXA IM - RESTRICTED Focus on the right part Get the facts right Decide and act WHAT ARE THE BENEFITS OF LCA ? The holistic perspective of LCA helps prevent shifting the burden Electric vehicle = No emissions? Or are emissions simply shifted? Shifts can happen: • From one life cycle stage to another • From one region to another • From one compartment (water, air, ground) to another • From one impact to another AXA IM - RESTRICTED WHICH OPTION IS THE MOST ECOFRIENDLY? AXA IM - RESTRICTED WHICH OPTION IS THE MOST ECOFRIENDLY? AXA IM - RESTRICTED NATURAL VS. SYNTHETIC INGREDIENTS IMPACT OF 1KG NATURAL VS. 1KG SYNTHETIC INGREDIENTS MAKE UP THE FUTURE Page 27 Consumer demand for natural beauty products is on the rise Natural = Sustainability: it’s not that simple Need to consider the whole life cycle of a formula + its ingredients across multiple environmental criteria AXA IM - RESTRICTED 1 0 3 SCREENING LCA GOAL AND SCOPE ISO COMPLIANT LCA WHAT ARE THE DIFFERENT STEPS TO CONDUCT AN LCA ? GOAL AND SCOPE DATA CHECK AND DATA COLLECTION DATA QUALITY ANALYSIS AND DATA COLLECTION LCA MODELLING AND HOT-SPOT ANALYSIS LCA MODELLING AND IN-DEPTH ANALYSIS QUALITY REVIEW QUALITY REVIEW + EXTERNAL REVIEW NON-ISO COMPLIANT LCA DELIVERABLES AND FINAL MEETING ISO COMPLIANT WRITTEN LCA REPORT AND FINAL MEETING *in bold approach details that are different from non-ISO compliant LCA AXA IM - RESTRICTED LCA OPTIONS AND COMMUNICATIONS Give internal teams insights into comparative claims Identify parts of the life cycle where your product performs better or needs improvement Show impacts of different life cycle stages Screening Product LCA Screening comparative LCA Full comparative ISO-compliant LCA (peer reviewed) AXA IM - RESTRICTED Communicate externally about your own product footprint across different indicators Communicate externally about your own product footprint versus other products of your own portfolio across different indicators Communicate externally about your own product footprint versus other products THE LCA FRAMEWORK YOU NEED TO KNOW ISO NORMS 14 040 + 14 044 (2006) FOR LCA Goal and scope The functional unit The system boundaries Goal and scope definition Inventory analysis Tools and software Inventory data and databases Impact assessment The synthetic nature of impact assessment Avoiding tradeoffs (e.g., single indicator) Life cycle inventory Interpretation Numbers are not enough Life cycle impact assessment AXA IM - RESTRICTED Interpretation 02 GOAL & SCOPE DEFINITION AXA IM - RESTRICTED 107 THE LCA FRAMEWORK YOU NEED TO KNOW ISO NORMS 14 040 + 14 044 (2006) FOR LCA Goal and scope The functional unit The system boundaries Goal and scope definition Inventory analysis Tools and software Inventory data and databases Impact assessment The synthetic nature of impact assessment Avoiding tradeoffs (e.g., single indicator) Life cycle inventory Interpretation Numbers are not enough Life cycle impact assessment AXA IM - RESTRICTED Interpretation “All the really important mistakes are made on the first day.” AXA IM - RESTRICTED GOAL AND SCOPE The scope includes the following items: •Product system to be studied •Functions of the product system or, in the case of comparative studies, the systems •Functional Unit (FU) and reference flow •System boundaries •Allocation procedures •Impact categories selected and methodology of impact assessment •Data requirements; assumptions; limitations •Initial data quality requirements •Type of critical review, if any •Type and format of the report required for the study AXA IM - RESTRICTED CASE STUDY : What is the function of a light bulb? AXA IM - RESTRICTED CASE STUDY : Is this comparison fair? VS AXA IM - RESTRICTED CASE STUDY : What is the function of a light bulb? VS Provide light at a certain intensity and for a certain time AXA IM - RESTRICTED CASE STUDY : Which unit would allows to make a fair comparison? VS Provide 500 to 900 lumens for 10 000 hours AXA IM - RESTRICTED CASE STUDY : What should be compared VS Incandescent light bulb 60 W - 1 000h Fluorescent light bulb 13 W - 10 000h AXA IM - RESTRICTED CASE STUDY : Is this comparison fair? VS Iphone 12 1000h of phone calls Nokia 3310 1000h of phone calls AXA IM - RESTRICTED SYSTEM BOUNDARIES Infrastructure of the company, Transportation modes Energy, Raw Materials, Extraction Manufacturing Recycling Use Resources Waste management System Boundaries Emissions to air, water, soil AXA IM - RESTRICTED SYSTEM BOUNDARIES Cradle-to-Gate Infrastructure of the company, Transportation modes Energy, Raw Materials, Extraction Manufacturing Recycling Use Resources Waste management System Boundaries Emissions to air, water, soil AXA IM - RESTRICTED SYSTEM BOUNDARIES Cradle-to-Grave Infrastructure of the company, Transportation modes Energy, Raw Materials, Extraction Manufacturing Recycling Use Resources Waste management System Boundaries Emissions to air, water, soil AXA IM - RESTRICTED 03 LIFE CYCLE INVENTORY AXA IM - RESTRICTED 120 THE LCA FRAMEWORK YOU NEED TO KNOW ISO NORMS 14 040 + 14 044 (2006) FOR LCA Goal and scope The functional unit The system boundaries Goal and scope definition Inventory analysis Tools and software Inventory data and databases Impact assessment The synthetic nature of impact assessment Avoiding tradeoffs (e.g., single indicator) Life cycle inventory Interpretation Numbers are not enough Life cycle impact assessment AXA IM - RESTRICTED Interpretation LIFE CYCLE INVENTORY AXA IM - RESTRICTED EVALUATE DIFFERENT FLOWS SECONDARY DATA PRIMARY DATA Data from recognized and public sources (e.g. waste management data, generic data) Comes come specific measurements. rimary data Data from measurements and operational technical specifications. The main primary data are: • Energy and water consumption • Purchases (raw materials, packaging items) • Origin of materials purchased and associated transport Data from evaluation models (e.g. emissions to air from combustion, emissions to water from the use of fertilizers) AXA IM - RESTRICTED COMMON PROBLEMS A recurring problem in LCA, the databases used are in continuous development and are enriched each year with new processes. A significant part of LCA practitioner job is to create new datasets PROCESS No process in the database describes the measured flow Use of proxies AXA IM - RESTRICTED Adapt existing processes Use data from scientific literature COMMON PROBLEMS Operationally measured data may not be aligned with data presented in the database. UNITS Units available do not match the ones available in our DB Identification of parameters enabling the conversion from a flow to another. They can be linked by: • Energy LHV (PCI in French) • Density • Weight • Surface / Volume AXA IM - RESTRICTED 04 LIFE CYCLE IMPACT ASSESSMENT + KEY METHODOLOGICAL CHALLENGES IN LCA AXA IM - RESTRICTED 126 THE LCA FRAMEWORK YOU NEED TO KNOW ISO NORMS 14 040 + 14 044 (2006) FOR LCA Goal and scope The functional unit The system boundaries Goal and scope definition Inventory analysis Tools and software Inventory data and databases Impact assessment The synthetic nature of impact assessment Avoiding tradeoffs (e.g., single indicator) Life cycle inventory Interpretation Numbers are not enough Life cycle impact assessment AXA IM - RESTRICTED Interpretation COMPUTING THE LCI Electricity, low voltage, at grid/ FR 1 kWh Nuclear Energy 0,8 kWh Hydro 0,1 kWh Natural Gas 0,05 kWh Methane emissions 0,005 g Combustion 0,05 kWh + CH4 0,02 g Methane emissions 0,008 g Transport 0,05 kWh + Methane emissions 0,007 g AXA IM - RESTRICTED Extraction 0,05 kWh CALCULATING THE LCIA Database Model Electricity, low voltage, at grid/ FR ICV Collected Data CO2 CH4 N2O 79 x 2,43 g 0,02 x 2,43 g 0,0001 x 2,43 g Electricity 2,43 kWh Impact Assessment LCA Results CO2 79 x 2,43 x 1 g CO2-eq CH4 N2O 0,02 x 2,43 x 30 g CO2-eq 0,0001 x 2,43 x 265 g CO2-eq AXA IM - RESTRICTED Electricity 194 g CO2-eq IMPACT ASSESSMENT, ENVIRONMENTAL FOOTPRINT (EF) METHOD Choice of LCIA method depends on • • • • • Type of indicator desired; mid-point, end-point, single score… Single score helps to see if a big contributor is missing Maturity of the client Subject of the project; characterization factors of an indicator. EF3.0 LCIA method is recommended if the sector of interest is covered by the methodology Ozone depletion Acidification CLIMATE CHANGE Global warming Human toxicity non-cancer effects Terrestrial eutrophication Mineral resource depletion ECOSYSTEMS Freshwater eutrophication HUMAN HEALTH Human toxicity cancer effects NATURAL RESOURCES Non-renewable energy resource depletion Particulate matter Marine eutrophication Land use Ionising radiation WATER Freshwater ecotoxicity AXA IM - RESTRICTED Photochemical ozone formation Water scarcity footprint THE LCA FRAMEWORK YOU NEED TO KNOW ISO NORMS 14 040 + 14 044 (2006) FOR LCA Goal and scope The functional unit The system boundaries Goal and scope definition Inventory analysis Tools and software Inventory data and databases Impact assessment The synthetic nature of impact assessment Avoiding tradeoffs (e.g., single indicator) Life cycle inventory Interpretation Numbers are not enough Life cycle impact assessment AXA IM - RESTRICTED Interpretation 1. Data quality 2. Uncertainty of Methods 3. Regionalization 4. Other issues not accounted WHAT ARE THE DEBATES AROUND LCA TODAY ? 1. Inaccuracy or unavailability of data contributing to inaccuracy of the analysis (data from generic processes may be based on averages, unrepresentative sampling, or outdated results) 2. Uncertainty of impact methods 3. Many impact categories requiring regional differentiation for LCA (regionally explicit life cycle inventory data for emissions, water consumption, and land use, etc.) 4. Some social or environmental impacts not taken into account in LCA AXA IM - RESTRICTED 1. Data quality 2. Uncertainty of Methods 3. Regionalization 1. DATA UNCERTAINTY DATA All data collected has an uncertainty related to the measurement or collection methods used. This may be known (conventional analysis methods have a known uncertainty) but for many data it cannot be defined with precision. AXA IM - RESTRICTED 4. Other issues not accounted 1. Data quality 2. Uncertainty of Methods 3. Regionalization 1. DATA QUALITY DATA DATABASE PROCESSES Databases are built with primary data which has its own uncertainty. In addition, the fact of using a nonspecific process systematically generates a deviation from reality. AXA IM - RESTRICTED 4. Other issues not accounted 1. Data quality 2. Uncertainty of Methods 3. Regionalization 2. DATA UNCERTAINTY DATA DATABASE PROCESSES IMPACT METHODS Impact methods use statistical models to define the fate of different substances. The use of mathematical models implies necessarily deviations from what is observed. The precision of the impact methods varies from one issue to another. AXA IM - RESTRICTED 4. Other issues not accounted 1. Data quality 2. Uncertainty of Methods 3. Regionalization 4. Other issues not accounted 3. REGIONALIZATION Concentration in PM2.5 Eutrophication The consequences of pollution will not be the same depending on the baseline pollution and the type of impacts. However LCA struggles to take this into account. AXA IM - RESTRICTED 1. Data quality 2. Uncertainty of Methods 3. Regionalization 4. Other issues not accounted 4. SOME LIMITS OF LCA Some phenomena poorly evaluated in LCA external negative impacts THERMAL POLLUTION NUTRITION external positive impacts NOISE POLLUTION PLASTIC POLLUTION OVEREXPLOITATION POACHING AXA IM - RESTRICTED ALTERNATIVE AGRICULTURE …VERS UNE PRISE EN COMPTE EXHAUSTIVE DE LA DOUBLE MATÉRIALITÉ ENVIRONNEMENTALE DANS LA DÉCISION D’INVESTISSEMENT EXEMPLES D’ENJEUX IMPACTS ENVIRONNEMENTAUX NON PRIS EN ENVIRONNEMENTAUX COMPTE RISQUES FINANCIERS Perte de pollinisateurs ✓ ✓ Déforestation ✓ ? Surpêche ✓ ✓ Destruction des habitats marins ✓ ? Destruction des habitats d’écosystèmes d’eau douce ✓ ? Stress hydrique / Déplétion des ressources hydriques ✓ ✓ Prolifération d’espèces invasives ✓ ? AXA IM - RESTRICTED DÉFINITION DE L’EMPREINTE CARBONE ▪ Une empreinte carbone d'entreprise est un calcul des émissions de Gaz à Effet de Serre (GES) d'une entreprise sur l'ensemble de sa chaîne de valeur au cours d'un exercice comptable complet. ▪ Il existe 6 types de GES différents. Le plus connu est le CO2. Les autres émissions de GES sont traduites en kg d'émissions équivalent CO2 pour faciliter le bilan et la communication. ▪ L'ensemble de la chaîne de valeur d'une entreprise comprend les émissions directes, les émissions en amont et les émissions en aval. Activités Amont Société déclarante AXA IM - RESTRICTED Activités Aval DÉPLACEMENTS PROFESSIONNELS PÉRIMÈTRE CONSIDÉRÉ Scope 2 Scope 1 DÉPLACEMENTS DOMICILE-TRAVAIL DÉCHETS BIENS MIS EN LOCATION TRANSPORT Amont TRANSPORT ET DISTRIBUTION COMBUSTIBLES ET CONSOMMATION D’ÉNERGIE VÉHICULES ET INFRASTRUCTURES PROPRES ÉLECTRICITÉ, CHALEUR, FROID ET VAPEUR ACHETÉS Légende: Greenhouse Gas Protocol Objet de l’étude Scope 3 BIENS D’ÉQUIPEMENTS TRANSFORMATION DES PRODUITS VENDUS UTILISATION DES PRODUITS VENDUS APPROVISIONNEMENT EN BIENS ET SERVICES INVESTISSEMENTS Non prioritaire, non couvert par cette étude TRAITEMENT DE FIN DE VIE FRANCHISES AXA IM - RESTRICTED ACTIFS LOUÉS WHY THIS REPORT? Rationale & Context The regulatory context: • • European level : Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (regulatory technical standards to be published by 30th December 2020) French level : Art.29 of 2019 Energy & Climate Law (formerly Art.173-VI of the 2015 Energy Transition for Green Growth Act (implementation decree to be published by 31st December 2020) Why? Increase transparency on the range of methods available to investors to measure the alignment of their portfolios with lowcarbon trajectories or temperature goal -> direct use for the Climate Transparency Hub Who? Decision-makers that wish to get a good understanding of temperature alignment assessments and how they are built; and practioners that wish to get an in-depth technical understanding of the options available in building such a methodology. What? Study, analyze and compare methods and frameworks available today to investors who wish to measure the alignment of their investment portfolio with a temperature trajectory, and more particularly translate and express the degree of alignment of their portfolio in an implied temperature rise (ITR) metric. AXA IM - RESTRICTED CONTENT & RESULTS OF THE REPORT Definition of Temperature Alignment Methodologies in the Report Eleven methods were tested in this report on two indices, the Euronext LC100 and the SBF 120, in two different years, 2018 and 2019. The methodologies included in the test were selected based on their: 1. Availability at present or shortly (road-test stage); 2. Applicability at the level of an investment portfolio; 3. Comparison with trajectory and/or implied temperature rise indicator and; 4. Accessibility to all investors on a free-of-charge or paid-basis. Participating organizations: • • • • • Arabesque S-Ray Temperature Score Carbon4 Finance Temperature CDP-WWF Temperature Rating EcoAct ClimFIT Temperature Urgentem • • • • • • I Care & Consult SB2A ISS-ESG Climate scenario analysis Right. based on science S&P Trucost SDA-GEVA 2° Investing Initiative PACTA NEC metric Key messages: 1. 2. 3. 4. More of an art than a science (at the moment); A wide range of methods are used by investors and data providers, and can yield widely different results for the same portfolio; Careful with the Implied Temperature Rise metric! This type of assessments is not an end or sufficient in themselves. AXA IM - RESTRICTED MANY PERMUTATIONS OF THE SAME RECIPE Non-Exhaustive List of Questions Existing Methods Answer to How does the current Scope 1 and 2 GHGs emission intensity (per revenue) of the companies in my portfolio compare with what it should be in 2030 and 2050 under different sector-scope specific temperature trajectories? What is the temperature trajectory of a portfolio based on its constituents’ current and future climate performance (scope 1, 2 and 3, avoided emissions and forward-looking qualitative data), as measured by a score? Have the companies in my portfolio set ambitious-enough Scope 1, 2 and 3 targets and to what degree do they translate, based on sector and scope-specific precautionary temperature benchmarks derived from IPCC? Is my portfolio invested in companies that decarbonize at a sufficiently fast rate, over 2012 and 2025 (T+5), based on companies’ targets, assets’ investment and retirement plans and sub-industry historical trend extrapolation? Is my portfolio invested in companies with a low Scope 1, 2 or 3 intensity per unit of production, that have historically decarbonized at a fast-enough rate, and that have set ambitious-enough targets sufficient to be considered 2°C aligned, cumulatively, over 2010-2050, compared to its company-scope specific benchmarks? Is the Scope 1, 2 and 3 emission intensity of my portfolio sufficiently low to be considered 2°C aligned, cumulatively, over 2018-2050, compared to its sectorscope specific benchmark, when assuming that portfolio emissions grow at the same rate as the IPCC SSP2 scenario ? Are the revealed plans of the companies in my portfolio sufficiently ambitious for my portfolio brown and green technology exposure to be aligned with a 2°C trajectory over 2018-2023 (T+5), compared to its company and technology- specific temperature benchmarks? AXA IM - RESTRICTED TESTING: ANALYSIS OF THE EURONEXT LC100 AND SBF120 Index-Level Results Across the Tested Methodologies AXA IM - RESTRICTED TESTING: ANALYSIS OF THE EURONEXT LC100 AND SBF120 Relationship between Temperature Scores and Science-Based Targets Percentage of companies in the LC100 2019 index with a validated SBTi (yellow) relative to the number of companies that are 2°C or below in each method (authors’ calculations) AXA IM - RESTRICTED 147 AXA IM - RESTRICTED AXA IM - RESTRICTED AXA IM - RESTRICTED AXA IM - RESTRICTED Session 6 : Panorama réglementaire et Taxonomie I. Panorama réglementaire A. Europe B. France I. Zoom sur la Taxonomie A. Définition et implication B. Etude de cas C. Conclusion AXA IM - RESTRICTED I. Panorama réglementaire Vue d’ensemble des principales réglementations en Europe et en France 152 AXA IM - RESTRICTED Principales réglementations SFDR/Disclosure : Niveau européen Taxonomie : Niveau européen Pourquoi ? Renforcer la transparence des acteurs financiers concernant la gestion des risques ESG et l’impact des produits et des décisions d’investissement des acteurs financiers Pour qui ? Quasi-totalité des institutions financières (hors certaines activités bancaires), dès lors qu’elles gèrent, distribuent ou conseillent des produits financiers Pourquoi ? Etablir un système européen de classification des activités durables, un langage commun introduisant une nomenclature des activités économiques selon leur contribution au changement climatique. Pour qui ? Loi Climat, art 29 : Niveau national Pourquoi ? Clarifier et renforcer le cadre de transparence extra-financière des acteurs de marché, complète le droit européen dans trois domaines clefs complémentaires: le climat, la biodiversité et l'intégration pleine et entière des facteurs ESG dans les dispositifs de gestion des risques, de gouvernance et d'accompagnement de la transition. Pour qui ? L’ensemble des acteurs des marchés financiers (hors certaines activités bancaires) Chevauchement entre les 2 textes AXA IM - RESTRICTED Entités soumises à la directive européenne sur le reporting extra-financier (NFRD) / de durabilité (CSRD) • > 500 employés • Seuils minimums de CA et de bilan selon les pays Panorama réglementaire de la finance durable ►Mars 2018 : Plan d’action de la Commission européenne sur la finance durable ►DG Fisma (stabilité financière et marchés de capitaux) ►3 objectifs ►Réorienter les flux de capitaux vers des investissements durables ; ►Gérer les risques financiers induits par les facteurs ESG ; ►Favoriser la transparence et une vision de long terme ►Juillet 2021 durable : Stratégie renouvelée de la Commission européenne sur la finance ►Agences de notation ►Labels transition et « ESG » ►Moyens de supervision 154 AXA IM - RESTRICTED Panorama réglementaire de la finance durable a) SFDR (Sustainable Financial Disclosure Regulation) • Renforcer les devoirs et responsabilités des investisseurs institutionnels et des gérants en matière de reporting extra-financier par le renforcement de la transparence • S’applique à la quasi-totalité des institutions et conseillers financiers, tant au niveau de l’entité qu’au niveau de leurs produits financiers • Notions-clefs : • Double matérialité : pertinence de l’information divulguée selon une perspective « inside-out » (incidences négatives) et « outside-in » (risques en matière de durabilité) = risques (financiers) induits par des facteurs ESG + impacts de l’entité/produit sur les facteurs ESG • Risque de durabilité : condition environnementale ou sociale d’un investissement qui génère un risque de perte sur celui-ci. • Incidence négative (ou « PAI – Principal Adverse Impact) : impact d’une décision d’investissement sur l’environnement ou sur les aspects sociaux. • Périmètre entité et produit • Inclusion de la quasi-totalité des acteurs financiers 156 AXA IM - RESTRICTED a) SFDR (Sustainable Financial Disclosure Regulation) • Article 3 : Transparency of sustainability risk policies • Article 4 : Transparency of adverse sustainability impacts at entity level • Article 5 : Transparency of remuneration policies in relation to the integration of sustainability risks Information à publier au niveau de l’acteur financier • Article 6 : Transparency of the integration of sustainability risks • Article 7 : Transparency of adverse sustainability impacts at financial product level • Articles 8 et 9 : Transparency of the promotion of E/S characteristics in pre-contractual disclosures / Transparency of sustainable investments in pre-contractual disclosures • Article 10 : Transparency of the promotion of environmental or social characteristics and of sustainable investments on websites • Articles 11 et 12 : Transparency of the promotion of environmental or social characteristics and of sustainable investments in periodic reports / Review of disclosures AXA IM - RESTRICTED Information à divulguer au niveau de chaque fonds a) CSRD (Corporate Sustainability Reporting Directive) AXA IM - RESTRICTED Panorama réglementaire de la finance durable c) “29-LEC” ►Août 2015 : initiative pionnière en matière de reporting de durabilité pour les acteurs des marchés financiers et non financiers ►Les art. "173-IV", "V" et "VI" de la loi relative de transition énergétique pour la croissance verte (LTECV) ►L’art. 173-VI modifie le Code monétaire et financier (art. L. 533-22-1) ►Informations relatives à la prise en compte des critères ESG dans sa politique d'investissement et, le cas échéant, de gestion des risques ►Flexibilité grâce au « Comply or explain » ►Pistes d’amélioration identifiées avec le bilan d’application de 159 l’article 173-VI juin 2019 🡪 6% des entités qui n’appliquent ni n’expliquent AXA IM - RESTRICTED Panorama réglementaire de la finance durable c) “29-LEC” ►Novembre 2019 : Article 29 de la loi énergie-climat ►Complète les dispositions de l'art. 173-VI ; vise également uniquement les acteurs des marchés financiers ►Tient compte des évolutions règlementaires européennes (Règlement « SFDR ») ►Clarifier et renforcer la transparence extra-financière des acteurs de marché. ►Mai 2021 : publication du décret d'application « 29-LEC » (pionnier !) ►Précisions méthodologiques et harmonisation des indicateurs ►Structure « TCFD » ►Ambition renforcée ►Précisions sur la part de données réelles/estimées ; part des encours ►Couverts ►Elargissement thématique 🡪 biodiversité ►Coopération interministérielle (Transition écologique + Finance) AXA IM - RESTRICTED 160 Panorama réglementaire de la finance durable c) “29-LEC” Le décret d’application de l’article 29 de la loi énergie-climat (LEC) a pour objet de clarifier et renforcer la transparence extra-financière des acteurs de marché. Le décret d’application définit les modalités pratiques de l’article 29, et complète le droit européen dans trois domaines clefs complémentaires : • Climat (risques et alignement) • Biodiversité (risques et alignement) • Amélioration continue • Gestion des risques • Part « fossile » 161 AXA IM - RESTRICTED II. Zoom sur la Taxonomie Définition et enjeux 162 AXA IM - RESTRICTED c) La Taxonomie européenne • Contexte : plan d’action (Action n°1) / demande des acteurs financiers / limiter la fragmentation • Classification des activités durables sur le plan environnemental (« langage commun »). • Oblige les acteurs à divulguer la part « verte » de leur activité. ⮚ Réorienter les flux financiers vers des activités durables sur le plan environnemental ⮚ Améliorer la transparence et empêcher le greenwashing ⮚ Classification commune et objective ⮚ Meilleur accès au financement (théorique) • Activité doit contribuer à l’un 6 objectifs environnementaux : 1. Atténuation du changement climatique 2. Adaptation au changement climatique Début d’application au 01/01/22 3. Protection de l’eau et des ressources marines 4. Transition à une économie circulaire 5. Prévention et contrôle de la pollution 6. Protection de la biodiversité et des écosystèmes AXA IM - RESTRICTED Début d’application (envisagée) au 01/01/23 c) La Taxonomie européenne La route est (incroyablement !) longue 2018-2020 • Le Groupe d’Experts Technique (TEG) sur la finance durable • Consultations publiques 2018-2020 DÉFINIR LES CRITÈRES TECHNIQUES ELABORER LA REGLEMENTATION • Institutions européennes • Parlement • Etats-membres • Commission européenne • Trilogues AXA IM - RESTRICTED • Les 3 institutions UE • Consultations publiques 2020-2022 (2023 ?) ADOPTER LA REGLEMENTATIO N ET LES CRITERES 164 c) La Taxonomie européenne Qui est impliqué ? Commission Parlement UE Parlement européen Etats-membres UE Taxinomie Sociétécivile civile Société (ONGs, académiques) Experts techniques AXA IM - RESTRICTED Secteur privé Fédérations et (fédérations, acteurs privés entreprises, institutions financières) 165 c) La Taxonomie européenne Les enjeux : quelles obligations légales ? Pour qui ? Entreprises • > 500 employés (250 dès 2025 ?) • CA (statique), CapEx (dynamique), OpEx • Eligibilité : 2022 ; alignement : 2023 Acteurs financiers (produit) • Produits spécifiques (durables, environnementaux) • Communiquer la part "taxonomique" • 2022 Acteurs financiers (entité) • Banques, assurances, gestionnaire d’actifs • Ratio d’actifs / d’investissements verts (GAR/GIR) • Eligibilité : 2022, 2023 ; alignement : 2024 AXA IM - RESTRICTED 166 c) La Taxonomie européenne APPLICATION POUR LES ENTREPRISES 1) Identification des activités - Identification (codes NACE et description) - Certaines activités ne sont pas identifiées dans le périmètre de certains objectifs 1. Identification des activités 2) Contribution substantielle - Critères d’examen techniques (quanti, quali) - Qualifier la performance environnementale de l’activité économique 2. Contribution substantielle 3) Non préjudice important (« DNSH – Do Not Significant Harm » ) - Pas de dommages aux 5 autres objectifs : réponse par oui/non => si non, activité non durable - Critères d’examen techniques (quanti, quali) 4) Respect des garanties minimales S’assurer du respect des Principes directeurs de l’OCDE, Nations unies, Convention de l’OIT, etc. 5) KPIs Pour chaque objectif environnemental : • % des activités éligibles et alignés en fonction des KPIs suivants : • Chiffre d’affaires • CapEx • OpEx (si pertinent) AXA IM - RESTRICTED 3. « DNSH » 4. Respect des garanties minimales 5. KPIs (éligibilité + alignement) c) La Taxonomie européenne APPLICATION POUR LES ACTEURS FINANCIERS (AU NIVEAU DE L’ENTITE) Calculer les Green Asset / Investment Ratios (GAR) : part des actifs (investissements / financements) associée à des activités conformes à la Taxonomie AXA IM - RESTRICTED c) La Taxonomie européenne La Taxinomie européenne révolutionne-t-elle la finance ? Impact potentiel sur les financements Intérêts politiques AXA IM - RESTRICTED 169 II. Zoom sur la Taxonomie Application concrète 170 AXA IM - RESTRICTED Étude de cas : application concrète de la Taxinomie UE ►1 groupe = 1 partie prenante (2’) ►Etat-membre (FR, DE, PL) ; fédération d’entreprises / entreprise ; acteur financier / fédération financière ; ONGe ; Commission européenne ►Analyse du règlement (20’) ►Art. 1 à 4 (périmètre d'application) – pp. 13-16 ►5-8 (obligations et entités soumises) – pp. 16-17 ►9 (objectifs environnementaux) – p. 17 ►17 (non préjudice important / do not harm) – p. 23 ►19 (élaboration des critères techniques) – p. 24 ►22 (mesures et sanctions) – p. 26 ►27 (calendrier) – p. 31 ►Chaque groupe présente sa position officielle (20’) ►Quels sont les lignes rouges / potentiels compromis ? ►Êtes-vous arrivés à un accord ? (15’) ►Présentation et restitution collective : qui, quoi et quand ? AXA IM - RESTRICTED 171 Étude de cas : application concrète de la Taxinomie UE *Entreprises non-financières cotées (CAC40 et DAX) **Institutions financières 172 AXA IM - RESTRICTED II. Zoom sur la Taxonomie Conclusions 173 AXA IM - RESTRICTED Conclusion de la session ►Une classification basée sur la science (bien que très politisée !) ►Une obligation de transparence (et non de « performance » / part verte minimum) ►Six objectifs environnementaux (pas uniquement climatique) ►Trois indicateurs (CA, CapEx, OpEx) ►Pas une liste obligatoire dans laquelle investir (ni un outil de gestion des risques ou une stratégie finance verte) 174 AXA IM - RESTRICTED Conclusion de la session ►Ambition : la planète n’attend plus (et il y aura toujours quelqu’un pour saper vos plans !) ►Ferme, mais ouvert aux compromis (connaissez vos lignes rouges, jaunes, vertes... difficile de trouver un accord entre 27 états membres !) ►Dialoguez avec toutes vos parties prenantes (et connaissez vos alliés): (investisseurs, fédérations, ONGs, communautés locales, académie, autorités publiques) ►Soyez patients (persévérez) ►Rangez votre égo (la 10è fois sera la bonne !) 175 AXA IM - RESTRICTED Bonus : qu’avez-vous retenu ?! AXA IM - RESTRICTED Session 7 : “Wrap-up” / Q&A + Examen final (QCM) AXA IM - RESTRICTED All questions are welcome ! AXA IM - RESTRICTED Merci ! AXA IM - RESTRICTED