Luc Olivier, Fund Manager for Echiquier Climate & Biodiversity Impact Europe,1 La Financière de l’Echiquier.
The summer of 2023 was one of devastating fires. In Canada, they destroyed nearly 16.5 million hectares of forest – an area the size of Tunisia. Forests are vital carbon sinks that sequester considerable amounts of CO2 thanks to their vegetation. In Greece, the figure had reached more than 120,000 hectares by the end of the summer, and in Tenerife over 15,000 hectares went up in smoke – the equivalent of more than 20,000 football fields on this Spanish island. The phenomenon is truly out of hand: global warming is causing an increase in extreme temperatures and droughts, leading to “mega-fires” – ones that are both colossal and impossible to control. And the massive release of CO2 is further fuelling climate change.
Global warming and its repercussions continue to gather pace. The phenomenon is directly linked to biodiversity loss, and the interdependence of these two critical challenges only serves to intensify the imbalances. Companies, financial markets and, more broadly, the economy as a whole are increasingly having to take this environment into account. In 2023, global GDP could be cut by 0.6 percentage points2 for this reason alone after the hottest June, July and August on record, with an average global temperature of 16.77 degrees.3
Listed impact investing is addressing climate and biodiversity challenges, and we believe it has a decisive role to play in attracting capital to committed companies. The convergence of the challenges means that all economic sectors are deserving of support. The bold and singular choice of certain asset managers – including La Financière de l’Echiquier through Echiquier Climate & Biodiversity Impact Europe – is to encourage companies from all sectors to initiate or intensify their climate and environmental transition. A prime example is Neste, a Finnish group specialising in the refining of fossil fuels, which has embarked on a profound and rapid transformation process. Its aim is to operate solely in renewables. To achieve this, Neste has developed a fully renewable diesel from raw materials such as used cooking fats and oils. This innovation reduces greenhouse gas emissions by up to 90% compared with conventional diesel – for road transport, for instance – without requiring any change to the vehicle or infrastructure. Neste’s ambition is to cut its customers’ emissions by 20 million tonnes per year by 2030.
Another example is Tomra, a pioneer in the circular economy. This Norwegian company designs and operates packaging recovery and recycling systems, particularly for retailers. Tomra is greatly aware of the vital role played by recycling in the climate transition, and aims to double the greenhouse gas emissions avoided through its activities by 2030 – an important initiative in view of the fact that greenhouse gases envelop the Earth and trap the sun’s heat, thereby contributing to global warming.
Following in the footsteps of these companies, others are also stepping up the pace of their transition. If the aims of the Paris Agreement are to be achieved, we have to start reducing global emissions before 2025.4 These aims are behind a range of market initiatives, including Net Zero Asset Managers, an international coalition of investors that supports the objective of zero net greenhouse gas emissions by 2050 and which La Financière de l’Echiquier joined in 2021, thereby strengthening its commitment to the climate and carbon neutrality. The stakes are high, action a priority.
1 The fund is exposed to the risk of capital loss, equity risk, small and mid-cap investment risk, currency risk and discretionary management risk. For more information on its characteristics, risks and fees, please view the regulatory documents available on www.lfde.com.
2 Allianz, 2023
3 Copernicus Earth Observation system (EU), 2023