EDHEC 2023-2024

-
Sustainable Finance

Sébastien REVAULT
[email protected]
ADVISORY
Sébastien Revault – 2023-2024 INVESTMENTS
Unforgettable

« Les hommes ont oublié cette vérité, dit le renard. Mais tu ne dois pas l'oublier.
Tu deviens responsable pour toujours de ce que tu as apprivoisé»

Antoine de Saint-Exupéry

« Men have forgotten this truth, said the fox. But you must not forget it. You
become forever responsible for what you have tamed»

Antoine de Saint-Exupéry

Sébastien Revault – 2023-2024

 Useful Information and Class rules Evaluation
Class Rules
Sébastien REVAULT – [email protected] Contact & Communication
Material & book reference

A brief overview
Research interest

Corporate governance, corporate

finance, economy, business
Head of B. Dev. and ESG @ models,impact, ESG
Société Générale
Book/Articles

Investor and advisor

Real estate positive
impact structurer

Entrepreneur

Teacher

Writter

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 Useful Information and Class rules

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AM

Sébastien Revault – 2023-2024

Chapter Outline

Useful Information and Class rules Class Rules

Assessment
What will you learn and practice?
What will you be expected to achieve?
How to learn

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 Useful Information and Class rules Evaluation
Class Rules
Class rules Contact & Communication
Material & book reference

The « Attention » of people is the gold of the 21st century

𝑇𝑖𝑚𝑒 ∗ 𝑒𝑥𝑝𝑒𝑟𝑖𝑒𝑛𝑐𝑒 ∗ 𝑎𝑡𝑡𝑒𝑛𝑡𝑖𝑜𝑛 ∝ 𝐾𝑛𝑜𝑤𝑙𝑒𝑑𝑔𝑒

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 Useful Information and Class rules Evaluation
Class Rules
Class rules Contact & Communication
Material & book reference

Three Golden Rules

BE ON TIME : Arriving late three times counts as an unexcused absence

3 Delays (D) = 1 Absence (A)

The use of laptop computers is not adviced

LEAVE YOUR GUNS AT THE DOOR

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 Useful Information and Class rules Evaluation
Class Rules
Class rules Contact & Communication
Material & book reference

LEAVE YOUR GUNS AT THE DOOR: WHY SMARTPHONES SHOULD NEVER PARTICIPATE IN MEETINGS

The researchers conducted a nationwide survey of

554 full-time working professionals earning above $30K
and working in companies with at least 50 employees.
They asked a variety of questions about smartphone
use during meetings and found:

86% think it’s inappropriate to answer phone calls

during meetings
84% think it’s inappropriate to write texts or emails
during meetings
66% think it’s inappropriate to write texts or emails
even during lunches offsite
The more money people make the less they approve
smartphone use.

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 Useful Information and Class rules Evaluation
Class Rules
Class rules Contact & Communication
Material & book reference

LEAVE YOUR GUNS AT THE DOOR: WHY SMARTPHONES SHOULD NEVER PARTICIPATE IN MEETINGS

Why do so many people—especially successful people—find

smartphone use in meetings to be inappropriate? When you
take out your phone it shows a:

Lack of respect. You consider the information on your phone

to be more important than the conversation at hand, and
you view people outside of the meeting to be more
important than those sitting right in front of you.
Lack of attention. You are unable to stay focused on one
thing at a time.
Lack of listening. You aren’t practicing active listening, so no
one around you feels heard.
Lack of power. You are like a modern-day Pavlovian dog
who responds to the whims of others through the buzz of your
phone.
Lack of self-awareness: You don't understand how ridiculous
your behavior looks to other people.
Lack of social awareness: You don't understand how your
behavior affects those around you.
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 Finance is the trade of promises

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Your dividends : Mid-term exam topics

 By group of 3, choose one of the following topics, then work :

 On a concrete study case with the following restitution (40% of final grade) :
 Oral restitution : 3min pitch on the 27th of February
 Study case (power point + word document) to be given back by the 28th of February

Proposed topics :
 How can we reconcile sustainable Finance with profitability?
 How can we empower people on sustainable Finance?
 How can Fintechs shape the world to a better sustainable world?
 How can finance reinvent itself to better support sustainable projects?
 How to align wealth management and sustainable behaviors?
 How to better develop venture philanthropy?

Sébastien Revault – 2023-2024

 Sustainability is the trade of a better world

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Could we make them work together?

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 Demystifying Finance

A little story
Source: French Book « Le Commerce des promesses », by Pierre-Noël Giraud

“You can go to sleep now.

He’s the one who can’t sleep anymore”

The moral of the story : Financial

analysis

Insolvency is not the problem of the borrower but … the lender

Investment
Expected return: a guess on uncertain future earnings valuation

Never put all your eggs in one basket

Asset
allocation

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 Useful Information and Class rules Evaluation
Class Rules
Corporate finance Contact & Communication
Material & book reference

Why ?

Who cares wins

How to maximize the value of a business in a

sustainable and responsible way ?

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 Writing a Financial Analysis Report An example of analysis grid
Guidance Notes
To buy is to trust Golden Rules
Limitations of Financial Ratios

Earning the trust of stakeholders is vital

John Stumpf fired 9 months after its nomination as “CEO of the Year” | Financial Times, Oct 2016

DIG DEEPER https://www.ft.com/content/1f429ebc-90c0-11e6-8df8-d3778b55a923

Stumpf’s departure likely to have big consequences for US banks

https://www.ft.com/content/53c20558-90d2-11e6-a72e-b428cb934b78

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 Writing a Financial Analysis Report An example of analysis grid
Guidance Notes
To buy is to trust Golden Rules
Limitations of Financial Ratios

Earning the trust of stakeholders is vital

French care home group Orpea plunged into crisis by mistreatment allegations
Journalist claims systematic negligence in new book based on 3-year investigation | Financial Times, Jan 2022

DIG DEEPER
French care home group Orpea plunged into crisis by mistreatment allegations
https://www.ft.com/content/f0b1a72d-94f2-4ed4-a5fe-b60302e8596b

Former Orpea boss in spotlight over share sale as care scandal deepens
bankshttps://www.ft.com/content/655e092f-fd14-4428-a56d-0eaec68c6096
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 Useful Information and Class rules Evaluation
Class Rules
Course material Contact & Communication
Material & book reference

Everything will be available on Blackboard

Available on Blackboard

Students will be provided with:

- The syllabus

- Lecture notes

- Appendices

- Complementary material with some case studies and Excel files

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 Learning Objectives and Course Content Learning Objectives
Financial Analysis: Tentative Definition
What will you learn and practice? How to conduct a financial analysis?
Indicative Outline

After each session you can …

“Teachers open the door,

but you must enter by yourself”
READ
Reinforce the learnings with A Chinese proverb
complementary press articles and
reports

ASSESS
Test your understanding with the
critical thinking questions at the end
of the slides

APPLY
Try it out with a practical application
exercise

DIG DEEPER
Learn more with the recommended
reference book and slides at the
end of each section

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 Learning Objectives and Course Content Learning Objectives
Financial Analysis: Tentative Definition
Intended Learning Outcomes: What will you be expected to achieve?
How to conduct a financial analysis?
Indicative Outline

Targets

Prerequisite? Key objectives?

No prior familiarity with
finance is required
This course is designed to help you to:
You don't have to be a
numbers person! • Get a better understanding of the numbers side of your job and
the financial implications of your decisions
Why?
• Learn how to “Speak and think finance” and translate
Are you able to interpret performance into financial terms
financial reports and make
decisions based on the • Develop your critical thinking aptitudes towards finance tools and
data they provide?
be aware of their limitations

Can you demonstrate your • Master “your recommendation” - to be able to use finance to
value and return on state your case and support your recommendation
investment to the
company board? • Develop proactive working relationships with finance professionals
and increase your value to the organization

• Gain greater confidence with a working knowledge of business

financials

• Expand your professional expertise

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 Learning Objectives and Course Content Learning Objectives
Financial Analysis: Tentative Definition
Intended Learning Outcomes: What will you be expected to achieve?
How to conduct a financial analysis?
Indicative Outline

For whom is this course intended ?

Sustainable Finance is too serious to leave it only to finance people

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 Education is not the learning of facts but training the mind to think

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 Learning Objectives and Course Content Learning Objectives
Financial Analysis: Tentative Definition
Intended Learning Outcomes: What will you be expected to achieve?
How to conduct a financial analysis?
Indicative Outline

Cognitive and intellectual

Turning knowledge into action

The world does not care what you know; it only cares, and will only pay for, what you can DO with
what you know.

Fahmi Ben Abdelkader & Sébastien Revault

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 Intended Learning Outcomes: What will you be expected to achieve?

Cognitive and intellectual

Critical thinking aptitudes

“Education is not the learning of facts but training the mind to think” Albert
Einstein

Fahmi Ben Abdelkader & Sébastien Revault

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 Intended Learning Outcomes: What will you be expected to achieve?

Cognitive and intellectual

Creativity and innovation

As the impact of artificial intelligence and disruptive technology grows, people who can perform
tasks that machines cannot are becoming more valuable.

Fahmi Ben Abdelkader & Sébastien Revault

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 Teaching Methods - How will you learn and practice?

Learning is best accomplished in a sharing environment.

Students learn best when they construct their own knowledge through exploration and
discussion.
“There are no stupid questions, only stupid
answers”

Engaging students in the learning process is the first step in effectively managing a
classroom
“Tell me and I forget. Teach me and I remember. Involve me and I learn” Benjamin
Franklin
“Teachers open the door, but you must enter by yourself” A Chinese
proverb

Bridging theory and practice

"To teach something to people, it is necessary to mix what they

know with what they ignore. » Pablo Picasso

Fahmi Ben Abdelkader & Sébastien Revault

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 Useful Information and Class rules Evaluation
Class Rules
Teaching Methods - How will you learn and practice? Contact & Communication
Material & book reference
My Teaching Philosophy

The « Attention » of people is the gold of the 21st century

𝑇𝑖𝑚𝑒 ∗ 𝑎𝑡𝑡𝑒𝑛𝑡𝑖𝑜𝑛 ∗ 𝑒𝑥𝑝𝑒𝑟𝑖𝑒𝑛𝑐𝑒 ∝ 𝐾𝑛𝑜𝑤𝑙𝑒𝑑𝑔𝑒

Fahmi Ben Abdelkader & Sébastien Revault

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 Useful Information and Class rules Evaluation
Class Rules
Teaching Methods - How will you learn and practice? Contact & Communication
Material & book reference
My Teaching Philosophy

Play to learn

WHY DO ANIMALS PLAY?

Play is a door onto learning, relaxation and enjoyment

Fahmi Ben Abdelkader & Sébastien Revault
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 Teaching Methods - How will you learn and practice?

The power of making mistakes

Making mistakes is one of the most important learning tools

Identify your errors, learn from your mistakes

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 Teaching Methods - How will you learn and practice?

ONLINE COURSES ONLY – A golden rule

Before responding to any of the questions,

take a moment to collect your thoughts and think about your

answer.

Identify your errors, learn from your mistakes

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 Finance will never be an exact science

And more over sustainable Finance

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 The governing principle of this class

Dealing with uncertainty and psychology is a complex task

Finance will never be an exact science; it

deals with human behavior (financial
decisions) and future (the expected
return).

“Two factors move the market: fear and

greed”.
An old Wall Street adage

Fahmi Ben Abdelkader & Sébastien Revault

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 The governing principle of this class

Dealing with uncertainty and psychology is a complex task

Finance will never be an exact science; it deals with human behavior

(financial decisions) and future (the expected return).

“Two factors move the market: fear and greed”.

An old Wall Street adage

“Finance is the trade of promises”.

French Book « Le Commerce des promesses »
by Pierre-Noël Giraud

Fahmi Ben Abdelkader & Sébastien Revault

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 The governing principle of this class

Dealing with uncertainty and psychology is a complex task

No simple solutions for complex problems

Fahmi Ben Abdelkader & Sébastien Revault

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 Is it still worthwhile to study Sustainable Finance?

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 Learning Objectives and Course Content Learning Objectives
Financial Analysis: Tentative Definition
How to conduct a financial analysis?
Is it still worthwhile to study Sustainable Finance? Indicative Outline

Job opportunities include :

▪ Investment banking
▪ Equity research
Sustainable development :
▪ Corporate development
▪ ISR
▪ Financial analysis
▪ Impact investing
▪ Private equity / VC
▪ Venture philanthropy
▪ Credit analysis
▪ Philanthropy
▪ Merger & Acquisition
▪ Structuration
▪ Financing : structuring
▪ Asset Management
▪ Investment
Fahmi Ben Abdelkader & Sébastien Revault
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 Learning Objectives and Course Content Learning Objectives
Financial Analysis: Tentative Definition
How to conduct a financial analysis?
If I offer you your dream job? Indicative Outline

After 25 years of really hard work, you reached the stars

You are the M&A head of a large bank

Could be very
proud of your
1M€/year salary

Fahmi Ben Abdelkader & Sébastien Revault

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 Learning Objectives and Course Content Learning Objectives
Financial Analysis: Tentative Definition
How to conduct a financial analysis?
Are there not other opportunities? Indicative Outline

Star Earnings/
Worst Best Final
guy Investments
case case
M&A 1M€/y 450k€ AT 3-5M€
Head
VS
Entrepreneur 100k€ X3 X100 5M€

Private Equity 300k€ X2 X20-50 6-

Smart 15M€
guy
+10% +20-
Investor 500k€
py 30% py 10M€

1M€ +10% +20%

Real estate ROE ROE
10M€

Others

Fahmi Ben Abdelkader & Sébastien Revault

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Deep dive in sustainable finance

Research interest

Corporate governance, corporate finance,

economy, business models, impact, ESG
Head of B. Dev. and ESG @
Société Générale Book/Articles

Investor and advisor

Real estate positive
impact structurer

Entrepreneur

Teacher

Writter

Sébastien Revault – 2023-2024

Mid-exam topics

 By group of 3, choose one of the following topics, then work :

 On a concrete study case with the following restitution (40% of final grade) :
 Oral restitution : 3min pitch on the 27th of February
 Study case (power point + word document) to be given back by the 28th of February

Proposed topics :
 How can we reconcile sustainable Finance with profitability?
 How can we empower people on sustainable Finance?
 How can Fintechs shape the world to a better sustainable world?
 How can finance reinvent itself to better support sustainable projects?
 How to align wealth management and sustainable behaviors?
 How to better develop venture philanthropy?

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Introduction

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Program

The course will provide an introduction to Sustainable Finance focusing on

(i) motivation and role for sustainable finance, state of climate finance investments
(ii) climate physical and transition risks for finance and supervisory climate scenarios of
the Net Zero Banking Alliance (NZBA),
(iii)climate financial risk disclosure: international standards, data providers, and
limitations,
(iv)green finance instruments: characteristics and limits (including greenwashing),
(v) the policy, institutional and regulatory landscape for sustainable finance.

Sébastien Revault – 2023-2024

Learning outcomes

 After having taken this course, participants will be able to:

▪ LO1 Understand and discuss the main concepts, actors, policies in sustainable finance
▪ LO2 Understand and discuss the characteristics of climate physical and transition risks and
the role of climate scenarios
 More specifically, participants should be able to (skill- and competency-based outcomes):
▪ LO3 Discuss the characteristics and limitations of disclosure metrics based on carbon
footprint methodologies, and drivers of greenwashing in the ESG market, based on in class
exercises.
▪ LO4 Understand the main investments, products and services a bank could provide to
mitigate climate risks for herself and his clients

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Course content

• Rationale and motivation for sustainable investing, definitions of sustainable investing

• Climate finance: who is investing in what and where. Green finance gap.

• Climate physical and transition risks for finance, carbon stranded assets and NZBA scenarios

• Climate financial risk disclosure: GHG emissions, carbon footprints and carbon accounting:
characteristics and limitations

• Green bonds and Environmental Social Governance (ESG), characteristics and limits
(including greenwashing)

• Carbon pricing and carbon markets

• Other products/services and long term perspectives

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Course objectives
1. Understand the concept of sustainable finance and its relevance in addressing global sustainability
challenges.

2. Explore different approaches to integrating ESG factors into investment decision-making processes.

3. Analyze the role of financial institutions, investors, and policymakers in advancing sustainable finance
initiatives.

4. Evaluate the financial performance and risk implications of sustainable investment strategies.

5. Examine the development and impact of green bonds, social bonds, and other sustainable financial
instruments.

6. Learn about the principles and frameworks for measuring and reporting on corporate sustainability
performance.

7. Develop practical skills for conducting ESG analysis and implementing sustainable investment strategies.

8. Discuss emerging trends and opportunities in the field of sustainable finance.

Sébastien Revault – 2023-2024

Reading

 Principles of Sustainable Finance, Dirk Schoenmaker

 Green and Sustainable Finance: Principles and Practice, Simon Thompson
 Handbook of Environmental and Sustainable Finance, Vikash Ramiah, Greg
Gregoriou
 Sustainable Finance Fundamentals - 1st Edition, Carlos Vargas
 La gestion de patrimoine responsable, ce nouveau paradigme ? , Sébastien
Revault
 The handbook of sustainable finance – Thierry Roncalli

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The context

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Why it is key to accelerate sustainable finance?

A triple debt  A triple hidden  Triple consequences

 Environmental
crisis  Environmental disasters
 Environmental  Social revolts/wars,
 Social
 Social migrations
 Financial
 Financing  Economic disasters,
bankruptcy, inflation

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A Financial debt

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An environmental debt

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A Social debt

Worldwide crisis Local crisis

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Finance has to change his
paradigm

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To better enter into
this new paradigm

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What is sustainability for you?

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Many words in one concept

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Why sustainability is so disruptive?

 When we talk about sustainability we talk

about why we do things and not what we do

 Why are we entering into a new paradigm?

 Book reference :
 La gestion de patrimoine responsable, ce
Nouveau Paradigme? - Sébastien Revault
 The handbook of sustainable finance – Thierry
Roncalli

Sébastien Revault – 2023-2024

What is sustainable Finance?

« Sustainable finance is more how we do support sustainable

business than which sustainable products banks sell »

You have to be ESG by deisgn

All your value chain has to be sustainable

Sébastien Revault – 2023-2024

Un écosystème révolutionnaire, créateur de valeur

✓ Structuration
✓ Accompagnement Art et Private
✓ Philanthropie collection Equity
✓ Investissements à impact
ESG Investissements
Immobilier Marché de
capitaux
Clients
&
Associés

✓ Apport d’affaires
Conseil Partenaires
✓ Wealth management
✓ Optimisations
✓ Conseil en investissements
✓ Gestion internationale
✓ Business modèles

Nous gérons, animons et optimisons la création de valeur

pour nos clients et associés
Sébastien Revault – 2023-2024
Les associés, les pilliers de R&B pour faire grandir l’écosystème

Apports d’affaire Expertises

✓ Financières / Analytiques
✓ Clients CGP
✓ Fonctionnelles / Techniques
✓ Clients/prestataires des start-up
✓ Sectorielle / Régionales
✓ Start-up
✓ Commerciales
✓ Activités propres des associés
✓ Philanthropiques

Conseil et Investissements Responsables

& Soutiens aux Asso ESG
Investissement
✓ >70% invest responsables
✓ 20% du RN en soutien à des assos

Réseaux Financements
✓ Clients particuliers ✓ Apport en compte courant
✓ Clients professionnels d’associés
✓ Partenaires ✓ + 10% en capital de R&B
✓ Prestataires externes ✓ Soutiens des projets des
✓ Cercle amical et familial associés

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Why the why?

Robots

Automatic Deliver

Organic Organize

Intimist Purpose

Humans

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Translation to finance

Robots

Product

Offer

Mission

Humans

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Deep dive in a human crisis

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Is finance responsible to all of these
disasters?

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Short history of responsible and ethical investing

Beggining of the 20th century

Profit

After the second world war

Profit x Risk

Since the begginning this century

Profit x Risk x Impact
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Banking organizations on the tightrope

 Banking organizations are resisting well but are under pressure, in fact
multiple factors are seriously harming their competitiveness:
 Ever increasing and stronger regulatory constraints
 Limited room for maneuver in the management of their activities
 Unequal treatment between countries
 Strong pressure on prices and margins
 Strong pressure on the development of responsible finance

And finally this coronavirus crisis which is shaking up all the models in
place and generating a real opportunity for transformation. An
opportunity that allows us to accelerate the transformation towards
more virtuous models.

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A hudge market!!

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A very dynamic market

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 An underexploited market

 French market, the overall wealth of the French is estimated at €13,000 billion made up of:
 €7,000 billion in real estate assets with loans of €1,500 billion
 €6,000 billion in financial assets of which approximately €4,000 billion are relatively liquid assets
 This very large influx/affluent + clientele also faces multiple problems:
 1) The investments made are not large enough to generate significant returns. Additionally,
yields are falling partly due to falling rates. Or these assets are only driven by growth in demand
(for example real estate in large cities) and uncorrelated from any basis for intrinsic profitability
 2) The different players charge very high fees, seriously reducing the profitability of investments
(from 1-2 to 7-12% for SCPIs), which reduces net returns to not much
 3) They generally do not benefit from tailor-made advice because the bankers have little time
to devote to them, moreover these bankers are focused on their operational objectives of
marketing as many products as possible with the highest margins. which can sometimes harm
the client's interest
 4) Significant volatility in moderately risky or risky assets which leads savers to prefer to let the
money sit in their account, destroying their value by almost 1.5% relative to inflation.

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Weight of ESG within traditionnal investments

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What is ESG?

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The ESG ecosystem

Sustainable investment forum

Initiatives
Principles for responsible investment
Climate action 100+
Net-zero alliances
Other initiatives

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Does regulators wish to change the
world into a more sustainable one?

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Regulatory constraints

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Sébastien Revault – 2023-2024
Sébastien Revault – 2023-2024
Regulatory topics and calendar

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European finance taxonomy

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European finance taxonomy

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European sustainable framework overview

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Perimeter reviewed

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Timetable of EU taxonomy

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Challenges posed by EU taxonomy

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EU taxonomy through the financial value chain

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Sébastien Revault – 2023-2024
A massive evolution of sustainable regulations

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Sovereign ESG taxonomy

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The worldwide bazar of ESG norms

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importance of norming and standardizing responsible investment

The issues of standards and measurements are at the heart of the success of the
sustainable themes that are currently being developed. It is essential to work on these
2 aspects to:
- Make these investments understandable to the population, whether initiated or not,
because they are the ones who decide on their investments.
- Make the results and fruits of these investments pragmatic and concrete. Investors
will be much more inclined to invest if they know concretely how these investments will
contribute to improving societal issues.
We will see in the next sections that these themes and theories are relatively new and
are therefore confronted with a multitude of standards, views, opinions and
observations that we will clarify and synthesize in order to get the best value from
them.

Sébastien Revault – 2023-2024

A broad and poorly standardized language term

 ESG : Environnemental, Social et Gouvernance

 ISR : Investissement Socialement Responsable
 RSE : Responsabilité Sociétale des Entreprises
 Positive impact
 Investissement Responsable
 Finance positive
 Finance à impact positif ou Principes de la Finance à impact positifs
 Principes pour l’investissement responsable (PRI) www.unpri.org
 Finance verte :
 Finance responsable
 Finance durable

Sébastien Revault – 2023-2024

So much sustainable labels used

 Finansol
 CIES : Le label CIES (Comité Intersyndical de l’Epargne Salariale) www.ci-es.org
 Label ISR : Le label ISR (Investissement Socialement Responsable) www.lelabelisr.fr
 GreenFin label www.ecologie.gouv.fr/label-greenfin
 FNG-Siegel, label Allemand (38Mds€ pour 104 fonds)
 LuxFLAG label Luxembourgeois (100Mds€ pour 220 fonds)
 Nordic Swan Ecolabel, label nordique (29Mds€ pour 49 fonds)
 Towards Sustainability, label Belge (238Mds€ pour 417 fonds)
 Umweltzeichen, label Autrichien (29 Mds€ pour 123 fonds)
 Finance for tomorrow

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Companies own internal norms

- La norme ISO 26000

- Le Global Reporting Initiative
- Les Objectifs de Développement Durable dit ODD
- Les lignes directrices de la Task Force on Climate Financial Disclosure dite TCFD
- Le CDP dit Carbon Disclosure Project
- Le Sustainability Accounting Oversight Board dit SASB
- Le Climate Disclosure Strandards Board dit CDSB
- La Taxonomie Européenne sur les activités vertes
- Des rapports volontaires propres

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Worlwide bazar of taxonomies

- Européenne avec la taxonomie Européenne

- Chinoise : Green bond catalogue 2020 et SDG finance taxonomy
- Asean : Principaux pays d’Asie du sud est avec les ICMA green bonds standards
- Russe : Green finance guidelines 2020
- Japon : Green bond guidelines 2020 et transition finance guideline 2020
- Autres pays asiatiques : Malaisie, Singapore, Thaïlande, Inde, Nouvelle-Zélande
- Pays d’Amérique : Canada, Mexique, Argentine, Chili, Colombie, Costa Rica, Panama et Brésil. Il est à
noter la regrettable absence des Etats-Unis dans ces taxonomies suite à leur retrait des accords de Paris
mais qui change suite à la prise de poste de Joe Biden
- Pays d’Afrique : Egypte, Ghana, Nigeria, Kenya, Maroc, Sénégal, Afrique du sud

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Principles for responsible investment

 Principle 1: We will incorporate ESG issues into investment analysis and

decisionmaking processes.
 Principle 2: We will be active owners and incorporate ESG issues into our ownership
policies and practices.
 Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which
we invest.
 Principle 4: We will promote acceptance and implementation of the Principles within
the investment industry.
 Principle 5: We will work together to enhance our effectiveness in implementing the
Principles.
 Principle 6: We will each report on our activities and progress towards implementing
the Principles.

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Principles for responsible investment

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Does Techs, digital and new models
could help growing sustainable finance?

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Fintech mapping – where are sustainables?

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French Sustainable Fintechs

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Demography is key

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Demography is key

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Consequences in wealth turn over, who are the more
concerned by sustainability?

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What is the population perception?

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Do people trust in banks?

Note (entre
Nb votes
1 et 5)
Société Générale 1,4 693
BNP 1,2 679
Grosses
Crédit mutuel 1,4 543
banques
La banque postale 1,2 1246
LCL 1,4 616
Banques en Orange bank 2,5 284
ligne Shine 4,6 782

Autres Orange 1,2 3151

Total 2,5 2216
société du
VINCI 4,3 48 080
CAC 40 RENAULT 4 Par concession

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Different perception between communication and action

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The strong conclusion is therefore a marked gap between what banking players market
around ESG issues and the reality of things. This point is, however, not specific to ESG issues
or to banking players. However, in order to provide clarification on these major issues, the
action taken needs to be aligned with what is actually put in place because they are:
- liability issues for companies that communicate too much. This leaves the door open to
popular criticism and can go as far as discrediting the actions carried out.
- issues of transparency and readability because this contributes to creating vagueness
around extremely important issues for society which therefore find themselves oversold.
Customers then find themselves lost and disappointed with the products to which they may
have subscribed.

Sébastien Revault – 2023-2024

How has the responsibility to act

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Is sustainability linked to accountability?

Exemple on crowdfinancing platforms

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Perception from the population

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Is the more impacting topic the more popular?

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The relationship to develop with responsible bankers

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The advice, services and products that a responsible wealth
manager can provide

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Profiles and opinions concerning the responsible topics

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Profiles and opinions concerning the responsible topics

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 Covid crisis accelerated the transition
• Health and well-being: The health of chronically ill people has been undermined during
confinements, not to mention covid-19 patients. The morale of the French has also been strongly
affected, where 60% of them believe they have been impacted during this period.
• Poverty and inequalities: This crisis will indeed tend to increase inequalities between those who
had the means to resist this crisis, or even were able to take advantage of certain opportunities, and
those who find themselves in greater precariousness by losing their job, their customers, their
company.
• Education and work: He found himself turned upside down but in an unexpected way. In fact, it
was common knowledge at the start of confinement that everything could be done online
smoothly since everyone was equipped. This was without taking into account the dysfunctions, the
heterogeneous means made available, the upheaval of the private sphere, which has widened the
inequalities between those who have the means to work in good conditions and those who have
less.
• Climate change: This is a category that has perhaps been the most spared with a 6.5% drop in
CO2 emissions compared to 2019, giving the planet a little breathing space... temporarily.
• Water and aquatic life: It is also the big winner of the crisis with an increase in the marine
population due mainly to the cessation of fishing and a reduction in maritime pollution linked to
transport. Except with regard to the pollution generated by covid protections discharged into rivers
and seas.

Sébastien Revault – 2023-2024

How to change the world of finance

 Based on these observations, a question naturally comes to mind:

will sustainable finance be the next disruption in the banking sector?

3 inseparable key aspects then seem to outline this future transformation:

 Digital and the transformation of the customer experience of the “middle-class” or
also called affluent/affluent+ around their assets

 The strategy and business model to provide value for customers

 Implementation of an avant-garde ESG policy and evaluation of its impacts on societal

issues

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Focus on added value

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Profit is key to give back

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The banking sector has to reinvent itself

 Advisory must remain at the heart of the wealth manager's mission and must focus on
creating value to bring to the client

 It must be backed by asset management that is the most dynamic, the most secure but also
the most impactful possible

 The distribution and marketing model must be completely redesigned to be more

comprehensive, efficient and captive

 Concentration of the offer on an offer that is controlled

 Finally the pricing policy must be reviewed because it is too complex and too important
and does not completely put the customer's interest at the center of a real customer
experience

Sébastien Revault – 2023-2024

Advisory as a pillar and compass of a heritage strategy

 Advice that must provide maximum value to the client

 Focus, automation and proactivity to maximize customer

satisfaction

 What model should be implemented to maximize the added

value?

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Focus, automation and proactivity to maximize customer
satisfaction

 Digital

 Push/pull informations

 Systematization and automatisation

 Proactivity

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Focus on financial value creation

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Focus on financial value creation

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Focus on qualitative value creation

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Focus on qualitative value creation

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How to adress sustainibility topics in banking industry with our clients

 Part 1: People’s perception of responsible wealth management

 Part 2 : The relationship to develop with this responsible asset manager
 Part 3: The advice, services and products that a responsible wealth manager can
provide
 Part 4: Profiles and opinions concerning the responsible subjects

Sébastien Revault – 2023-2024

What model should be implemented to maximize the added value?

Client angle Firm added value

Priorities Advisory

Wishes Relationship

Sensitivities Meaning

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The importance of the added value in finance – Eg in real estate

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The importance of well choosing the vehicule on an investment
Achat Personnel Achat via une société civile
Bien Bien
SCPI SCPI
classique classique
Rentabilité 0 ++ + +++
Capacité d'emprunt ++ + +++ +
Problématiques Liquidité + ++ + ++
Légende :
financières Capitalisation 0 + ++ +++ 0 Mediocre
Revente à la découpe 0 +++ 0 +++ + Correct
Transmission de patrimoine + + +++ +++ ++ Bon

Flexibilité + ++ + ++ +++ Excellent

Retournement de marché + +++ + +++

Gestion des Complexité ++ + + 0
risques Gestion quotidienne 0 +++ 0 +++
Gestion associés 0 0 ++ +++
Impayés/dégradation 0 ++ 0 ++

Notation moyenne globale (/100%) 22% 58% 42% 78%

Sébastien Revault – 2023-2024

 Responsibility is also managed through a good management of assets

Immobilier Liquidités Obligation Actions

Cryptomon Matières
Immobilier Immobilier ou oblig société Actions Private
SCPI Fonds naies premières
en gestion côté étatique cotée côtées equity
Rendement brut 3,7 à 6,9% 4,0% 4,0% 0,50% 2 à 3% 3,0% 0 à 5% 2 à 3% 0% 0%
Frais up-front 8,5% 12,0% 0% 0% 0% 0% 5% 2,0% 15% 1%
Performance
Frais récurrents 1,4 à 1,9% 1,0% 0% 0% 0% 0% 4 à 5% 1 à 2,0% 5% 1%
de l'actif
Charges 1,6 à 2,0% 0,0% 1,5% 0,15% 0,7 à 1% 1,0% 1,5% 1% 0% 0%
Rendement net -0,9 à 0,0% 1,9% 2,50% 0,35% 1,3 à 2% 2,0% 0% -2 à 0% -10 à -5% -2,00%
Plus value Potentiel de PV AI 2 à 3,0% 1,5% 2 à 3% 0% 0% 2 à 4% 5 à 10% 2 à 4% 10 à 20% 3 à 7%
Perf totale nette AI 1 à 2% 2 à 3% 4 à 6% 0,35% 1,3 à 2% 3 à 6% 5 à 10% 0 à 4% 0 à 10% 1 à 5%
Volatilité 5% 10% 15% 0% 5% 15% 15% 15% 30% 20%

Sébastien Revault – 2023-2024

Distribution model are key to scale on sustainable finance

Old models New models

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Costs are key to uptier the performance

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Costs are key to uptier the performance

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Digitalization is key to
make it efficient

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What are the most impactful products and solutions today?

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Sébastien Revault – 2023-2024
The divided company vs the connected company

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Desintermediation is key to create value

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Impact in asset management

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Impact in advisory

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Impact on the whole chain up to distribution

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Short history of responsible and ethical investing

Beggining of the 20th century

Profit

After the second world war

Profit x Risk

Since the begginning this century

Profit x Risk x Impact
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ESG strategies

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Asset values of ESG strategies

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Deep dive in humanity issues

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SDGs

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Earth temperature has changed a lot

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Temperature projected impacts

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Share of global annual deforestation

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Threatened mammal species

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Global living planet index

The Living Planet Index (LPI) is a measure of the state of the world's biological diversity based on
population trends of vertebrate species from terrestrial, freshwater and marine habitats
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Mammal species which are highly growing in Europe

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Sébastien Revault – 2023-2024
The planet carbon budget

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GHG emission pathways scenarios

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Global scenario

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Impacts of various scenarios

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Impacts of various scenarios

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Impacts of various scenarios

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Consequences

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Consequences

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Consequences

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Risks increase with warming

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Risks increase with warming

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Risks increase with warming

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Finance is key to solve the issues

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Opportunities to be financed to solve sustainable topics

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Opportunities to be financed to solve sustainable topics

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Where GHG emissions come from

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GHG emissions évolutions per main contributors

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Worldwide primary energy consumption

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Energy source mix

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Which industrie emits the most of GHG emissions

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Focus on French CO2 emissions
-10% since 2019

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Key dates

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SDGs

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EXEMPLE OF ESG STRATEGY IN A
GLOBAL BANK

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Well recognized leadership in sustainability

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A csr ambition to face the new paradigm

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Csr ambition built on 4 strategic pillars

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Reinvent banking businesses

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Proactively manage the impact of business activities

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Proactively manage the impact of business activities

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Proactively manage the impact of business activities

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Accelerated transition timelines

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Sustainable products
offer

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Exemples of social financing products

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Developping social and inclusive offer

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Scorecards and sustainable mobility

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Sustainable mobility

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Building ecosystems of innovation

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Key HR priorities

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A regular issuer in sustainable & positive impact finance

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Manage sustainability through risk management

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Integrated E&S risk management in business activities

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Sustainability in capital markets banks activities

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External perception is key

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Transition management is key

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A complex shift to manage

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It needs agility to adapt financing and corporates businesses

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It needs time to adapt financing and corporates businesses

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Worldwide primary energy consumption

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Production mix in 2050

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Market impacts and solutions

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Carbon cost and consequences

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Market price of CO2

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Carbon taxes are growing

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Investments are key

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Market impacts on ESG equity indexes

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Performance of ESG equity indexes

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Best and worst performers asset managers in ESG

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World largest asset managers

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Evolution of AuM in the world

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Evolution of AuM in the world

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Act on your wealth on a daily basis and have more impact?
 Diversify your assets

 Identify the most impactful assets

 Measure the impact produced

 Always have a clear analysis to

maximize value creation

 Be accompanied

 Distribute part of the value creation

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Financing and advisory solutions

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Issuance of GSS bonds

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Issuance of green debts

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Purposes of green debts

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ESG bonds incentives

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Advisory is also key

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Sustainable products

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Extra financial information is now
mandatory

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Extra financial accounting

 Historical perspectives
 Single vs. double materiality
 Environmental accounting
 National environmental accounts
 Corporate environmental accounts
 Sustainability accounting
 S ocial issues
 Governance factors

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From raw data to ESG pillars

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Examples of ESG criterias

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MSCI ESG key issue
hierarchy

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Refinitiv materiality matrix

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Example of ESG scoring tree

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Credit ESG ratings

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ESG credit ratings long terme perspectives

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Sébastien Revault – 2023-2024
Renewables energies in countries business mix

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European trajectory

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Carbon contained in our daily objects

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The metrics could help a lot

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Kaya equation

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Key drivers of kaya equation

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Co2 emission per person

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Total GHG emissions

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Impacts of GHG emissions on plenet limits

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Earth energy budget

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Interactions through the world

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Reportings and double materiality concepts

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Double materiality

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Financial materiality
Financial materiality focuses on how environmental, social and governance (ESG) issues impact a
company, adopting an outside-in perspective. Within this approach, companies would ask themselves:

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Impact materiality
On the other hand, impact materiality focuses on a company’s impacts on environmental, social, and
governance causes. It adopts an inherently inside-out perspective. Within this approach, companies
would ask themselves:

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Double materiality
A double materiality approach unifies both financial and impact materiality, and asserts that companies
should adopt both an outside-in and inside-out perspective.

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What is at the heart of the debate?
 Impact and financial materiality both aim to define ESG issues that are significant to a company.
However, both approaches have inherently different aims, and target audiences.
 Financial materiality caters to investors and anyone who has a financial stake in the company’s
performance. It thus seeks to assess the impact of an ESG issue on enterprise value.
 Impact materiality caters for a broader group of stakeholders, including employees, civil society, local
communities. In short, it recognises that businesses should create value for all its stakeholders, in
recognition of planetary boundaries.
 The fundamental question that confronts most businesses is whether they should be responsible for
issues beyond those that have a clear or direct financial impact.
 It can be hard to establish a direct relationship between human rights issues along the supply chain
and enterprise value, but does that mean that respect for human rights is beyond the company’s
responsibility to enforce? If we did not have carbon taxes or emissions trading systems, should
companies still reduce their contribution to the global carbon budget? If companies do not have
direct dependencies on ecosystem health, should they still ensure that their waste management
practices do not cause pollution?
 Should businesses be held accountable for issues outside of their direct influence and control?

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New accounting standards

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What is taken into consideration

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Accounting with multi-capital accounting standards

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What are the objectives

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Natural capital protocol

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Defining metrics is key but have to be synthetic

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Short history of responsible and ethical investing

Beggining of the 20th century

Profit

After the second world war

Profit x Risk

Since the begginning this century

Profit x Risk x Impact
Sébastien Revault – 2023-2024
 How to measure the overall impact?
Indicateur
Problématique à pour répondre
Epoque Contexte historique Formule Description
gérer à la
problématique
Recherche de
Pouvoir garantir un Mesure le retour sur
1ère moitié développement des
retour sur fonds La rentabilité investissement d'un
du XXè siècle industries et crise des
propres suffisant placement
années 30 déflationniste

Pouvoir mesurer le
Sortie d'une guerre Mesure de l'ampleur de
2ème moitié risque pris sur un
couteuse et très forte La volatilité variation historique du
du XXè siècle investissement ou
inflation et volatile cours d'un actif
portefeuille

1ère moitié Recherche de Pouvoir identifier Devrait mesurer l'impact

du XXIè développement des l'impact ESG sur un L'impact ??? sur l'investissement
siècle industries vertueuses investissement donné effectué?

Ratio
Mesure Détails Indicateur commun
d'efficacité
CO2 Economie de CO2 Couts de CO2 €
Couts + Inv /
Environnemental Investissements
Investissements Investissements € Actifs
effectués
Emplois Nombre d'emplois créés Couts des emplois €
Couts + Inv /
Sociétal Investissements
Investissements Investissements € Actifs
effectués
Investissements
Gouvernance Investissements Investissements € Inv / Actifs
effectués

Indicateur Investissements Efficacité ∑(Couts + Inv)

∑€
composite Sébastien Revault – 2023-2024 ESG ESG / ∑ Actifs
Mandatory PAI
indicators

Sébastien Revault – 2023-2024

ESG risk and scoring

Sébastien Revault – 2023-2024

 Focus on environmental indicators
 Emissions & pollution (1) CO2 emissions (metric tons per capita); (2) GHG net emissions/removals by LULUCF
(Mt of CO2 equivalent); (3) Methane emissions (metric tons ofCO2 equivalent per capita); (4) Nitrous oxide
emissions (metric tons of CO2 equivalent percapita); (5) PM2.5 air pollution, mean annual exposure
(micrograms per cubic meter);

 Natural capital endowment & management: (1) Adjusted savings: natural resourcesdepletion (% of GNI); (2)
Adjusted savings: net forest depletion (% of GNI); (3) Annualfreshwater withdrawals, total (% of internal
resources); (4) Forest area (% of land area); (5)Mammal species, threatened; (6) Terrestrial and marine
protected areas (% of total territorialarea);

 Energy use & security: (1) Electricity production from coal sources (% of total); (2) Energyimports, net (% of
energy use); (3) Energy intensity level of primary energy (MJ/$2011 PPPGDP); (4) Energy use (kg of oil
equivalent per capita); (5) Fossil fuel energy consumption(% of total); (6) Renewable electricity output (% of
total electricity output); (7) Renewableenergy consumption (% of total final energy consumption);

 Environment/climate risk & resilience: (1) Cooling degree days (projected change innumber of degree Celsius);
(2) Droughts, floods, extreme temperatures (% of population,average 1990-2009); (3) Heat Index 35 (projected
change in days); (4) Maximum 5-day rainfall,25-year return level (projected change in mm); (5) Mean drought
index (projected change,unitless); (6) Population density (people per sq. km of land area)

 Food security: (1) Agricultural land (% of land area); (2) Agriculture, forestry, and fishing,value added (% of
GDP); (3) Food production index (2004-2006 = 100);
Sébastien Revault – 2023-2024
 Focus on social indicators
 Education & skills: (1) Government expenditure on education, total (% of government expenditure); (2) Literacy rate,
adult total (% of people ages 15 and above); (3) School enrollment, primary (% gross);

 Employment: (1) Children in employment, total (% of children ages 7-14); (2) Labor force participation rate, total (% of
total population ages 15-64) (modeled ILO estimate); (3) Unemployment, total (% of total labor force) (modeled ILO
estimate);

 Demography: (1) Fertility rate, total (births per woman); (2) Life expectancy at birth, total (years); (3) Population ages
65 and above (% of total population);

 Poverty & inequality: (1) Annualized average growth rate in per capita real survey mean consumption or income, total
population (%); (2) Gini index (World Bank estimate); (3) Income share held by lowest 20%; (4) Poverty headcount
ratio at national poverty lines (% of population);

 Health & nutrition: (1) Cause of death, by communicable diseases and maternal, prenatal and nutrition conditions (%
of total); (2) Hospital beds (per 1,000 people); (3) Mortality rate, under-5 (per 1,000 live births); (4) Prevalence of
overweight (% of adults); (5) Prevalence of undernourishment (% of population);

 Access to services: (1) Access to clean fuels and technologies for cooking (% of population); (2) Access to electricity (%
of population); (3) People using safely managed drinking water services (%of population); (4) People using safely
managed sanitation services (% ofpopulation);

Sébastien Revault – 2023-2024

 Focus on governance indicators
 Human rights: (1) Strength of legal rights index (0 = weak to 12 = strong); (2) Voice and accountability (estimate);

 Government effectiveness: (1) Government effectiveness (estimate); (2) Regulatory quality (estimate);

 Stability & rule of law: (1) Control of corruption (estimate); (2) Net migration; (3) Political stability and absence of
violence/terrorism (estimate); (4) Rule of law (estimate)

 Economic environment: (1) Ease of doing business index (1 = most business-friendly regulations); (2) GDP growth
(annual %); (3) Individuals using the internet (% of population);

 Gender: (1) Proportion of seats held by women in national parliaments (%); (2) Ratio of female to male labor force
participation rate (%) (modeled ILO estimate); (3) School enrollment, primary and secondary (gross), gender parity
index (GPI); (4) Unmet need for contraception (% of married women ages 15-49);

 Innovation: (1) Patent applications, residents; (2) Research and development expenditure (% of GDP); (3) Scientific and
technical journal articles;

Sébastien Revault – 2023-2024

Impact on the whole chain up to distribution

Sébastien Revault – 2023-2024

To better enter into
this new paradigm

Sébastien Revault – 2023-2024