EDITORIAL

Exogenous shocks are magnifying and putting companies and economic actors under more and more pressure. Huge rises in energy costs. Risks of gas shortages exacerbated by the disruption of the Nord Stream pipelines and the extension of conflicts. Increase in the number and severity of extreme weather-related events over the last few months. Loss of motivation or even resignation of employees and deep changes in relation to work following the COVID crisis. Sharp increases in interest rates, making credit more expensive and causing asset values to fall. 

Faced with these new pressures, political responses have been varied... and contradictory. Firstly, to be in denial. On the environmental front, for example, the new British government is preparing to avoid Cop 27 after having organized the previous edition, but also to backtrack on the progress made in recent years, admittedly through the EU. Neom, an emblematic project of Saudi Arabia, has just been decided as the host of the Asian Winter Games in 2029, while calls for a boycott of the World Cup in Qatar for climate irresponsibility - and serious human rights violations - are growing. On the other end of the spectrum, Denmark has announced that it will pay for climate damage caused by its footprint and faced by the Least Developed Countries: in relatively modest amounts ($13 million) but based on a principle that could serve as precedence. Furthermore, the Australian government, which has historically been associated with the coal industry, has announced that it will be phasing out coal by 2035, joining the ranks of countries planning massive investments in renewable energy. 

So, is this just an announcement or a paradigm shift? In any case, the regulatory shocks will not be small for companies. In the EU, the Green Deal puzzle is gradually taking shape, with, for example, the recent approval of the anti-deforestation regulation and the launch of the anti-forced labor directive, which aim to prevent importing, selling or exporting products that do not meet the minimum expected social and environmental standards. The problem? Regulations can differ considerably, for international players to be torn between, for instance, the emphasis placed on governance by the SEC and the standardization of carbon accounting in China. 

So, on the corporate and investor side, how can we prepare for the increasing frequency of these shocks at a structural level, from all sides? We believe that part of the answer lies in the emergence of an economy that is truly regenerative for both the environment and the social fabric, combining ESG risk management and the pursuit of multi-dimensional impacts, and taking into account the interactions and interrelation between environmental and social factors, for maximum adaptability. 

• Firstly, by delving deeper into the environmental and social conditions in which our activities take place, and by implementing the principles of double materiality in our approach to risk, across all levels of the value chain,
• Secondly, by fostering meaningful relationships with stakeholders, particularly local ones, and measuring their evolution, not only to bear in mind their legitimate interests, but also to strengthen them, 
• Finally, by seeking to generate positive impact on the social, environmental and societal dimensions altogether by contributing to finding concrete solutions and by leveraging research to drive innovation.

We look forward to discussing these issues further!

Raphaël Hara,
Managing Director