“Every person is the right person to act. Every moment is the right moment to begin”
Jonathan Schell
Sustainable development is universally defined as ‘meeting the need of the present without compromising the ability of future generations to do the same.’ On paper it sounds simple, but the journey to a sustainable organisation is a steeplechase with many obstacles and bumps in the road. As I think about the sustainability challenge, I look at it broken down into 4 “C’s”: Collaboration, Control, Communication and Commitment.
Collaboration
This decade will be the one where governments and businesses act together to tackle the climate emergency alongside other environmental and societal challenges. It is a collaborative effort.
- The financial sector cannot replace governments. And governments cannot fix the problem alone. Both have their role to play to define ambition, to make binding commitments and to structure delivery. Private and public sector collaboration is critical.
- Collaboration also extends to working with customers as they seek to transition into more sustainable products, working closely with the companies we invest in. As insurers, we provide solutions for the dramatic effect of climate change from flooding, drought, hurricanes, and crop damage, but we want to go much further. We want to stimulate our customers to make more sustainable choices – 25% of our products stimulate our customers in the transition towards a more sustainable world
- We work together closely with the companies we invest in. Sustainability is not about perfection; it is about progress. It is not about walking away from companies that are transitioning but about supporting and motivating them in that transition to make the right choices. As an insurer, we have a long-term responsible approach and important choices to make about where and how we invest. We are directing EUR 10 billion towards investments making a direct contribution to the transition towards a more sustainable world by 2024.
- We divide investments into three buckets. We exclude “brown” – coal, shale gas and arctic drilling. And we favour “green” like renewable energy. We have invested over the last 5 years EUR 1 billion in green energy, wind and solar. We invest more and more in sustainable buildings and public private partnerships in green infrastructure. But in between brown and green, there are 50 shades of grey where Ageas wants to stimulate and accelerate transition.
Control
- Supra-National regulation is needed. Governments must work together to provide a framework of regulations to level the global playing field. Responsible finance without a legal framework is not cost efficient. ESG deserves better!
- ESG ratings are still at a nascent state of development and yet the corporate world is shouting out for reliable certification. Standardization in taxonomy and consolidation in assessment is needed.
Communication
- Shareholders and analysts struggle to quantify ESG in their valuation models. A universal metric for the Social Cost of Carbon might help. Communications around CO2 emissions will be standardized and simplified, allowing investors to make a true and reliable comparison between those that are delivering on their sustainability commitments and those who are not.
Commitment
In responsible finance, climate change and sustainability more broadly are viewed from the perspective of a risk turned into an opportunity. Sustainability and profitability are not mutually exclusive.
Our commitments as a Group are to put sustainability at the heart of everything we do. In future proofing our business, thinking long-term is not a nice to have but a given. And as an insurer we are well used to looking 40 years ahead in the context of our Life insurance portfolio. We are putting sustainability considerations at the heart of our decision making to innovate, understand risk, drive growth, and build a more inclusive and sustainable future.
We have achieved the CO2 neutral label for all our businesses within our control, but we recognise that our own footprint is limited. So, we can do so much more. We have 45 million customers and a EUR 100 billion balance sheet to invest. We believe that CO2 reduction should be complemented with CO2 capture and removal from the atmosphere, combining both will make a transition better digestible for societies and economies.
Time is not on our side – talking switches to action now. Governments have set the ambition, and the ambition should only move up! At the COP27 meeting, they will further sharpen the plans to get everyone on board. Almost all colleagues I meet in a wide range of industries and service companies, have set up great initiatives. Innovation and creativity mushrooms everywhere! The race has started!
Some call it a sprint. In the context of acting swiftly, with a sense of urgency. Others prefer the term marathon. It is certainly a long-term run that needs participants to pace themselves and to conserve energy to reach the end goal. But that assumes there IS an end goal. For me, it is more accurately defined as a relay. The baton gets passed from one generation to the next – each expected to make their own mark, to preserve and protect, to ensure that what they pass on is better than what was inherited. The race to save the planet has no final tape to pass through – it is a continuum. But on one thing we all agree, the time to act is now.
Do we really want this generation to be the one that drops the baton?
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Hans De Cuyper,CEO of Ageas and non-independent executive member of the Board of Directors.
This article reflects solely the views and opinions of the authors. The ECGI does not, consistent with its constitutional purpose, have a view or opinion. If you wish to respond to this article, you can submit a blog article or 'letter to the editor' byclicking here.
