Mirova's deputy CEO Anne-Laurence Roucher explains how the asset manager offers investment strategies that drive sustainability, business transformation and strong financial performance. She also emphasises the importance of biodiversity when considering environmental issues
How has Mirova helped insurance clients to drive sustainability over the past year?
We have helped them to structure their analysis of environmental, social and governance (ESG) factors. In addition, we have actively worked with French insurers on a specific law, which is known as Article 173 of the Law for the Energy Transition and Green Growth, and helped insurers to undertake a carbon footprint and ESG analysis of their portfolios.
These measures all encouraged insurers to think about sustainability. Most insurers were at first pretty sceptical about the process.
They initially thought their fiduciary duty is to focus on delivering financial returns for their clients, and if they turn away from this objective, they were not fulfilling part of their fiduciary duty.
However, insurers have begun to understand their fiduciary duty has a wider meaning, which is taking a long-term view, where ESG issues are a significant driver of investment value.
Has Covid-19 raised insurers' awareness of the need to focus on ESG factors?
Covid-19 has firstly led us to question our relationship with nature. Covid-19 might be a zoonotic disease, and if it is a zoonotic disease, this relates to deforestation and the way we live.
The pandemic has also exposed socio-economic inequalities as people on lower incomes have been more affected by the pandemic than higher income classes.
Covid-19 has forced us to reconsider the way we live with respect to our planet; it has also questioned our social model with growing inequalities and over globalised economy.
When it comes to high carbon emitting sectors, is divestment or engagement the best approach?
I think it really depends on an investor's legacy. At Mirova, we have no legacy. We can focus on investing what matters most to us: combining a superior ESG impact with strong financial performance.
On the other hand, there are investors with legacies, and typically insurance companies. This is a topic we are discussing with them because we think having engagement around transitioning companies makes sense.
In my view, there are many occasions where divestment is needed because you need to send a clear message.
There are also companies with potentially "stranded" business models, in fossil fuels for instance, that are actively changing their business models, knowing it will take time. Staying invested in those companies, which are companies of the past transitioning to the future, makes sense alongside engagement.
How is Mirova helping insurers achieve high yields in this current low interest rate environment?
It is true equities and bonds are not best positioned to deliver high yields per se now. We offer a large set of investment solutions, including in the non-listed space, and particularly in the infrastructure and land and oceans management space, where yields are higher.
We are currently raising our fifth-generation fund, the Mirova Energy Transition 5, which will invest in European energy transition infrastructures, with a focus on renewable energy and low-carbon mobility sectors. The fund's target net return over a 10-year period on an annual basis is 8%-9%, with a targeted annual yield of 5%.
In your opinion, what aspects of climate change are most concerning?
We can almost put a price on climate change and there is no longer any need to demonstrate investments which take into account climate change will impact investment value. The issue with climate change is the speed: we are not moving fast enough to shift our economic model to limit the temperature increase to 2°C.
There is another environmental key issue that has been somehow overlooked by mainstream investors: biodiversity. With regards to biodiversity losses, they are huge and potentially priceless.
We have launched several initiatives at Mirova around biodiversity and nature preservation, one of them being contributing to the Taskforce on Nature-related Financial Disclosures (TNFD).
