2023-04-25 08:00:00
Forest fires, energy crisis, winter drought: it is difficult to escape the manifestations of climate change in recent months. Beyond citizen actions – lowering the heating, cycling, sorting waste… – it is also possible to work for climate protection through savings, by investing in one of the 99 funds labeled Greenfin. A guarantee of the green quality of investments, this label is awarded to funds invested in eight categories of eco-activities such as renewable energies, waste management or clean transport. So many sectors offering goods and services with a concern for the protection of the environment or the management of natural resources.
These products are distributed by banks, but also by insurers: life insurance contracts have even had the obligation, since January 1, 2022, to reference at least one Greenfin-labeled fund, alongside an SRI product ( Socially responsible investment) and a solidarity fund devoting between 5% and 10% of its assets to financing the social and solidarity economy.
The total outstanding amount of Greenfin labeled products is still modest: it only reaches 35 billion euros. These are both equity funds, bond products, investment capital of real estate investments such as civil real estate investment companies (SCPI) and infrastructure funds. “The Greenfin label is very demanding. It is piloted by the Ministry of Ecological Transition and Territorial Cohesion, the labeled funds are audited each year to verify that they remain in line with the objectives set”, indicates Sandrine Ferrand, manager Greenfin labeling at Novethic, one of the three labeling bodies, alongside EY France and Afnor Certification.
SRI labeled funds can invest in fossil fuels
It should not be confused with the SRI label, today awarded to 1,174 funds weighing 773 billion euros, whose mode of operation is widely decried. SRIs can indeed invest in fossil fuel producers, which is not the case with Greenfin products. “This label excludes companies making more than 5% of their turnover in fossil fuels and the nuclear sector”, specifies Sandrine Ferrand. A rule consistent with the objective of the label, but which does not satisfy all the players, like Mirova. “Many companies in the energy sector are now committed to the energy transition, even if a large majority is still present in fossil fuels”, notes Hervé Guez, director of equity, fixed income and solidarity management, which offers six funds. labeled Greenfin. “We regret that even the most involved are automatically excluded from Greenfin funds, even though they are investing massively in renewable energies,” he continues. This is for example the case of the behemoths Engie and Iberdrola.
The label also imposes a strict rule in the construction of equity portfolios. At least 20% of the investments must be made in companies generating more than half of their turnover in eco-activities. As for stocks generating less than 10% of their turnover there, their weighting is limited to 25% of the fund. This pocket of “pale green” companies makes it possible to diversify portfolios towards sectors that are little or even not linked to the environment in the broad sense.
Based on these specifications, each management company applies its own filters to build its portfolio, integrating social and governance criteria as well as, often, a measurement of carbon emissions. “Our fund aims to be aligned with the Paris agreement to limit the temperature increase to 2 degrees above pre-industrial levels,” says Hajar Yousfi, manager of CM-AM Global Climate Change at Crédit Mutuel. Asset Management. We therefore integrate the criterion of carbon intensity, i.e. the tonnes of CO2 emitted per million euros of turnover, by comparing companies on this point within each sector” . An approach that is all the more important since eco-activities are often highly carbon-emitting since the majority of them are linked to industrial values.
Within the Mandarine Global Transition fund, “pale green” stocks only account for 7% and their share is gradually decreasing. “Dark green stocks, generating more than half of their turnover in an eco-activity, represent 79% of our portfolio, particularly in the sustainable mobility and renewable energy sector”, specifies Adrien Dumas, its manager. . For his part, Bassel Choughari, his counterpart from M Climate Solutions (Montpensier Finance), also emphasizes the greenest values. “We do not hold any shares generating less than 10% of its turnover in a green activity because we really want to respond to the theme of energy transition”, he specifies. The responsible energy sector alone represents 77% of the portfolio.
It should be noted that the Ecofi Agir pour le climat fund is the only one to be labeled at the same time Greenfin, SRI and Finansol (solidarity savings). It is diversified in equities and green bonds – the latter being loans issued by States, financial companies and companies to support projects contributing to the energy transition. “The portfolio is exposed to equities up to 67% and we took advantage of the decline at the beginning of March to reach 75%”, specifies Frédéric Guignard, the manager of Ecofi Agir pour le climat, which favors renewable energies in particular. and building values.
In terms of performance, Greenfin funds invested in equities benefit from long-term potential linked to their theme. But they suffered a decline of around 20% last year against a decline of 13% for the MSCI World index. “Green funds are mainly invested in sustainable growth stocks, especially mid-caps, and these suffered in 2022 in a context of rising interest rates and inflation”, deciphers Frédéric Guignard. Ironically, green products have suffered in particular from their disaffection with oil and gas stocks, whose prices have soared in the context of the war in Ukraine: TotalEnergies has thus gained 31.4% in 2022, while Exxon Mobil soared 80.3%. A good green conscience and the stock market do not always go hand in hand.
A fundamental trend
Greenfin funds are intended to be integrated into an international diversified portfolio, to play for long-term growth. Several factors should indeed support their development. “The climate is a structurally attractive theme, believes Bassel Choughari, manager at Montpensier Finance. Joe Biden’s plan for the climate thus promotes innovation. Investing in a Greenfin fund therefore makes it possible to participate in the energy transition without giving up performance. “. The American law on the reduction of inflation, endowed with 370 billion dollars, provides in particular for support measures for the purchase of electric vehicles or the installation of solar panels.
The United States are not the only ones to have taken up the subject. Europe unveiled the outlines of its own plan in mid-March, the Net Zero Industry Act. “This program should allow companies from the Old Continent to become competitive again by encouraging investment, reports Hajar Yousfi, manager at Crédit Mutuel Asset Management. In addition, China is also considering setting up equivalent stimuli. The theme is therefore carrier in all geographical areas.” Investors to draw conclusions.
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