At the upcoming UN Climate Conference, the financial industry and asset management sector will also be closely watching. At the event referred to as COP28, taking place in Dubai, United Arab Emirates, from November 30 to December 12 this year, there will be discussions on topics highly relevant to the financial sector. The focal point of this mammoth event is the agreement from the 2015 Paris Climate Conference to reduce climate-harming emissions to zero by 2050 ("Net Zero").

The assessment of COP27 last year was mixed, according to Jean-Jacques Barbéris, the CEO of the fund company Amundi and responsible, among other things, for ESG. On the one hand, an international financing mechanism (for "losses and damages") was successfully established to assist poorer countries in dealing with climate-related consequences. However, more extensive agreements, such as an exit from all fossil fuels, especially coal, were not reached in Egypt in 2022. The EU, the United Nations, and many financial companies sharply criticized the closing statement at that time.

Concrete climate protection issues have significant implications for financing and asset management. Barbéris, for example, considers indices developed based on the Paris Agreement to be helpful. "Regarding products, we consider the Paris-Aligned Benchmark concept superior. Interest in PAB products is continually growing, and there are various products. Such products facilitate comparison and clear the underbrush."

From Barbéris's perspective, who previously worked in the French Ministry of Finance, this year's climate summit should not be viewed in isolation. It involves a sequence of topics and the development of content. "There are climate summits that focus more on emission reduction in the Western world and others that pay more attention to climate justice with the global South in mind." The summit in Dubai will again be more directed towards developed industrial nations. "So, it will again be more about the role of the financial industry."

The failed ban on fossil fuels at the last summit must be seen in context. "When looking at the decision to stop certain activities at the end of the transition, it is a collective decision. In my view, this requires public discussion and a political decision." The private sector must then deal with it.

If there is no ban on coal at the European level, from Barbéris's perspective, it is a decision – even though many banks and insurance companies voluntarily no longer finance coal companies. "I believe that is the right approach. But ultimately, the exit from fossil fuels is a governmental decision, not a business one."

In this context, he refers to the taxonomy that defines what conforming activities are and what are not. "We will accept that as a company." Overall, Barbéris firmly believes that regulation in the sustainability sector is necessary and that significant progress has been made in the last four years.

"Today I would say that it is no longer a question of more or less regulation in the ESG sector. We must also refocus on the original goals set by the European Sustainable Finance and Green Deal agendas."

In ESG regulation, one must not forget to reach investors. They must also have the means to finance the transformation. Therefore, it cannot be about more regulation at the moment but adjusting the speed and certain instruments. "It's about more efficiency."

It is also essential to work on ensuring that Sustainable Finance is no longer seen as a niche. "Ultimately, the entire financial sector must become sustainable. The transition must also be aligned with that. Otherwise, there is a risk of overly limiting capital allocation in the sustainability sector," says Barbéris.

In the private investor sector, ESG regulation must not lose sight of the customers' wishes. "It's about transparency and conveying that the goal is capital allocation for the transition. A concept that requires bringing people along."

There are now many customers who respond negatively to the question of whether they want to invest in sustainable assets, Barbéris reports. "This is also because the products and regulations are, in part, too complicated. That needs to be simplified. Legislation has partly failed in that regard." For example, taking the classification under Article 8 and Article 9 as a concept for sustainable investment and aligning that with the SFRD is not consistent. The SFRD is the EU Disclosure Regulation on information from the financial sector regarding the sustainability of investments.

Barbéris perceives the discussion among investors, asset managers, and politicians in parts of the USA as a significant setback for ESG. "There are strong divergences and hostilities. But this counter-movement also exists because the issue becomes concrete and requires tangible adjustments. The outcry in the USA proves that it has an impact." And: If ESG efforts had no effect, it would also be a futile endeavor. Second, the ESG debate in the USA is a political debate that must be seen in a broader ideological context. "ESG is held hostage by parts of the conservative forces in the USA."

Positive about the discussion in the USA is certainly that Europe is forced to think about the material issues of ESG. It compels all of us to focus more on the questions that are genuinely important. But the counter-movement in the USA does not make life easier for the global financial and asset management industry. "It's complicated for managers in the USA to explain how they work and what they do. And on the other hand, they have to submit to European ESG regulation."