“The revolution has already occurred in Europe,” says Elodie Laugel, chief responsible investment officer with Amundi, one of the leading asset management companies in Ireland. “Originally it was only niche markets, primarily institutional investors that invested in ESG products, but for the past four years it has completely expanded to all types of investors. However, outside Europe, this integration process is still reserved to institutional investors.”
Laugel says the debate in the US is very polarised and pivots on political lines. In global terms the debate is still on financial benefits but within Europe the secondary moralistic code is equally as important. “As Europe is fully behind the ESGs the latest trend is to look at the outcomes. This means companies that are already net zero or transitioning towards it are more likely to receive a warm welcome from lending institutions.”
The European Commission has implemented a Taxonomy Regulation that establishes an EU-wide classification system or “framework” intended to provide businesses and investors with a common language to identify to what degree economic activities can be considered environmentally sustainable.
Currently only 5 per cent of listed companies have achieved net zero and the emphasis is now on helping the remaining 95 per cent transition.
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According to Laugel it is the responsibility of investment companies such as Amundi to actively help companies who have committed to transitioning to net zero. “We not only seek out these companies but once invested we then get involved in the governance. It’s a powerful force,” she says.
Owen O’Driscoll, CEO of PlanDail, is a new digital platform that seeks to create a community for entrepreneurs, investors and businesses interested in impact ESG operations. His vision is on crowdfunding these impact businesses using blockchain technology to facilitate the operations. “It’s called social finance and it firmly supports both the businesses that are implementing ESG goals and the investors that want to support them.”
The investors in this case would be retail investors, or ordinary people who have completed KYC identification on the platform.
The strength of retail investors has increasingly come to prominence with the Robinhood/Reddit/Gamestop drama of last year where a community on Reddit rebelled against large hedge funds shorting the troubled Gamestop company. Pitched as a David versus Goliath battle, the fallout led to Robinhood stopping trades, several hedge funds almost toppling and a new series on NetFlix called Eat the Rich to explain just what happened.
“At PlanDail we combine the power of Web3 with digital identity and blockchain technology with the assets. We scope out the potential businesses and then use onchain governance to decide which companies get the green light,” says O’Driscoll.
And as with Laugel’s focus on not only investing but steering the company, PlanDail will do the same by requesting the successful companies to prove what they are doing and to store those verified metrics within the system.
“Old linear ways of doing business have old traditional rules,” says O’Driscoll. “We see investment as something available to all but in a transparent way. Young people want virtuous business where inputs and outputs are measured in a provable way.”
Core to transparency in PlanDail is the concept of self-sovereign identity so that companies and people are who they say they are. “And we’ve tied that to our digital asset platform where we have made it easy to use – people don’t need to know how it works, just that it does.”
Sean Lynch, founder of LitterCoin and OpenLitterMap, has been building a global litter data publishing system and game since 2008. He uses the power of smartphones to allow people to publish litter in their area using his GIS-based app. There is a leaderboard of top country publishers with Ireland featuring in the top three and sometimes on top.
He began life by trying to get grant aid from traditional forums but when crypto emerged he applied for and was successful in getting a grant from the Cardano Foundation – which in turn is funded by earning a micro tax on all transactions on that blockchain. “My vision is to reward uses of the app by giving them LitterCoin which can only be redeemed in net zero shops – it’s a virtuous circle. Cryptocurrencies are disrupting the traditional sources of finance in all ways.”