José Luis Jiménez
Group Chief Investment Officer at MAPFRE
This week, the European Sustainable Finance Disclosure Regulation (SFDR) entered into force, which establishes standardized rules to be applied by participants in financial markets on transparency in terms of integrating sustainability risks, analyzing the adverse impacts on sustainability in their processes and the information on sustainability with regard to financial products. According to José Luis Jiménez, Group Chief Investment Officer at MAPFRE, “the SFDR aims to standardize information to warn against sustainability risks and provides a guide so that clients may choose ESG products.”
“The private sector is becoming increasingly more important because, ultimately, companies generate wealth and employment”
However, during the round table on sustainable finance “Climate change, a future opportunity: What to do, why and how,” organized by Broseta, he said that there are still “many doubts about how financial intermediaries, investors, insurance companies, managers, etc. must interpret these rules and the effects they will ultimately have on the prospectuses.” “In fact, it could lead to a bottleneck for regulators,” he added.
The event was also attended by Íñigo Fernández de Mesa, Vice President of CEOE and President of the Institute of Economic Studies. De Mesa said it was crucial that companies comply with ESG criteria. “This compliance has become even more important as a result of COVID, not only in terms of reputation concerns, but because it creates value for the company and makes it more resilient to changes in the economy.”
For his part, the MAPFRE executive gave a number of figures to showcase this need to fight climate change, and listed the milestones that have accelerated this increased corporate awareness, starting from the SDGs or the Paris Agreement to then focusing the vast majority of the current reconstruction Plan in this regard as a result of the pandemic. “This entire transition comes at a high cost. We’re talking about a figure of 2.6 trillion euros in order to have a more sustainable economy by 2030, of which 53 percent will come from the private sector.”
“If we don’t have a standard measuring method, it’ll be tricky to find out whether or not we’re doing the right thing”
According to Jiménez, MIFID marked a before and after “and put the EU in ‘pole position’ to regulate these aspects.” However, he believes that we’re still only halfway there, because other countries like China, for example, are not focused on this topic “and are competing with many Western companies that are indeed trying to comply with the rules.” “There is a significant asymmetry that can put many companies and many employees in a complicated situation,” he said.
In turn, the MAPFRE General Director said that we must analyze how investment companies are putting this into practice. “Thanks to our collaboration with the University of Siena, we managed to measure for the first time last year the impact we were having on the SDGs with our investments, measuring whether or not our portfolio is moving toward these goals.” “If we don’t have a standard measuring method, it’ll be tricky to find out whether or not we’re doing the right thing,” he added.
Jiménez emphasized the different strategies that companies can take, which shouldn’t get carried away by trends. He is more in favor of integration, for example, which allows for certain exceptions in certain circumstances, than of exclusion. An investor may decide not to invest in anything related to coal, but just as in a particular country, the government currently depends on this source of energy to power hospitals and be able to care for patients. According to Jiménez, exceptions can be made provided that a plan is in place to ensure this transition toward other energies.
After defending increased efficiency in active management, he touched on the importance of placing the emphasis on the S, in social, and not just focusing on the E, in environmental. He also said that MAPFRE launched the MAPFRE AM Responsible Inclusion fund for this end, in order to reward companies that are committed to including people with disabilities in the workplace. “Our aim isn’t to make money with it, it’s actually cheaper than an ETF, but we wanted empirical evidence that companies that commit to it are more resilient and get better results in the long-term. Whatever we can focus toward the social aspect will be great progress for everyone.”
And finally, he said that he was in favor of public-private collaboration for aid programs to emerge from the crisis that has plagued the world for just over a year. In particular, “the private sector is becoming increasingly more important because, ultimately, companies generate wealth and employment.”