Présentation Cours Finance Durable V1.5

EDHEC 2023-2024
-
Sustainable Finance
Sébastien REVAULT
sebrev@gmail.com
ADVISORY
Sébastien Revault – 2023-2024 INVESTMENTS
Unforgettable
« Les hommes ont oublié cette vérité, dit le renard. Mais tu ne dois pas l'oublier.
Tu deviens responsable pour toujours de ce que tu as apprivoisé»
Antoine de Saint-Exupéry
« Men have forgotten this truth, said the fox. But you must not forget it. You
become forever responsible for what you have tamed»
Antoine de Saint-Exupéry
Sébastien Revault – 2023-2024

Useful Information and Class rules Evaluation
Class Rules
Sébastien REVAULT – sebrev@gmail.com Contact & Communication
Material & book reference
A brief overview
Research interest
Corporate governance, corporate

finance, economy, business
Head of B. Dev. and ESG @ models,impact, ESG
Société Générale
Book/Articles
Investor and advisor

Real estate positive
impact structurer
Entrepreneur
Teacher
Writter
2/20/2024 11:50 AM Sébastien Revault – 2023-2024 3

Useful Information and Class rules
2/20/2024 11:50
AM

Chapter Outline
Useful Information and Class rules Class Rules

Assessment
What will you learn and practice?
What will you be expected to achieve?
How to learn
2/20/2024 Sébastien Revault – 2023-2024 5

Class Rules
Class rules Contact & Communication
The « Attention » of people is the gold of the 21st century
𝑇𝑖𝑚𝑒 ∗ 𝑒𝑥𝑝𝑒𝑟𝑖𝑒𝑛𝑐𝑒 ∗ 𝑎𝑡𝑡𝑒𝑛𝑡𝑖𝑜𝑛 ∝ 𝐾𝑛𝑜𝑤𝑙𝑒𝑑𝑔𝑒

Class Rules
Three Golden Rules
BE ON TIME : Arriving late three times counts as an unexcused absence
3 Delays (D) = 1 Absence (A)
The use of laptop computers is not adviced
LEAVE YOUR GUNS AT THE DOOR

Class Rules
LEAVE YOUR GUNS AT THE DOOR: WHY SMARTPHONES SHOULD NEVER PARTICIPATE IN MEETINGS
The researchers conducted a nationwide survey of

554 full-time working professionals earning above $30K
and working in companies with at least 50 employees.
They asked a variety of questions about smartphone
use during meetings and found:
86% think it’s inappropriate to answer phone calls

during meetings
84% think it’s inappropriate to write texts or emails
during meetings
66% think it’s inappropriate to write texts or emails
even during lunches offsite
The more money people make the less they approve
smartphone use.

Class Rules
LEAVE YOUR GUNS AT THE DOOR: WHY SMARTPHONES SHOULD NEVER PARTICIPATE IN MEETINGS
Why do so many people—especially successful people—find

smartphone use in meetings to be inappropriate? When you
take out your phone it shows a:
Lack of respect. You consider the information on your phone

to be more important than the conversation at hand, and
you view people outside of the meeting to be more
important than those sitting right in front of you.
Lack of attention. You are unable to stay focused on one
thing at a time.
Lack of listening. You aren’t practicing active listening, so no
one around you feels heard.
Lack of power. You are like a modern-day Pavlovian dog
who responds to the whims of others through the buzz of your
phone.
Lack of self-awareness: You don't understand how ridiculous
your behavior looks to other people.
Lack of social awareness: You don't understand how your
behavior affects those around you.
Finance is the trade of promises
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AM

Your dividends : Mid-term exam topics
 By group of 3, choose one of the following topics, then work :

 On a concrete study case with the following restitution (40% of final grade) :
 Oral restitution : 3min pitch on the 27th of February
 Study case (power point + word document) to be given back by the 28th of February
Proposed topics :
 How can we reconcile sustainable Finance with profitability?
 How can we empower people on sustainable Finance?
 How can Fintechs shape the world to a better sustainable world?
 How can finance reinvent itself to better support sustainable projects?
 How to align wealth management and sustainable behaviors?
 How to better develop venture philanthropy?

Sustainability is the trade of a better world
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AM

Could we make them work together?

Demystifying Finance
A little story
Source: French Book « Le Commerce des promesses », by Pierre-Noël Giraud
“You can go to sleep now.
He’s the one who can’t sleep anymore”
The moral of the story : Financial

analysis
Insolvency is not the problem of the borrower but … the lender
Investment
Expected return: a guess on uncertain future earnings valuation
Never put all your eggs in one basket

Asset
allocation

Class Rules
Corporate finance Contact & Communication
Why ?
Who cares wins
How to maximize the value of a business in a

sustainable and responsible way ?

Writing a Financial Analysis Report An example of analysis grid
Guidance Notes
To buy is to trust Golden Rules
Limitations of Financial Ratios
Earning the trust of stakeholders is vital
John Stumpf fired 9 months after its nomination as “CEO of the Year” | Financial Times, Oct 2016
DIG DEEPER https://www.ft.com/content/1f429ebc-90c0-11e6-8df8-d3778b55a923
Stumpf’s departure likely to have big consequences for US banks

https://www.ft.com/content/53c20558-90d2-11e6-a72e-b428cb934b78

Writing a Financial Analysis Report An example of analysis grid
Guidance Notes
To buy is to trust Golden Rules
Limitations of Financial Ratios
Earning the trust of stakeholders is vital
French care home group Orpea plunged into crisis by mistreatment allegations
Journalist claims systematic negligence in new book based on 3-year investigation | Financial Times, Jan 2022
DIG DEEPER
French care home group Orpea plunged into crisis by mistreatment allegations
https://www.ft.com/content/f0b1a72d-94f2-4ed4-a5fe-b60302e8596b
Former Orpea boss in spotlight over share sale as care scandal deepens
bankshttps://www.ft.com/content/655e092f-fd14-4428-a56d-0eaec68c6096
Class Rules
Course material Contact & Communication
Everything will be available on Blackboard
Available on Blackboard
Students will be provided with:
- The syllabus
- Lecture notes
- Appendices
- Complementary material with some case studies and Excel files

Learning Objectives and Course Content Learning Objectives
Financial Analysis: Tentative Definition
What will you learn and practice? How to conduct a financial analysis?
Indicative Outline
After each session you can …
“Teachers open the door,

but you must enter by yourself”
READ
Reinforce the learnings with A Chinese proverb
complementary press articles and
reports
ASSESS
Test your understanding with the
critical thinking questions at the end
of the slides
APPLY
Try it out with a practical application
exercise
DIG DEEPER
Learn more with the recommended
reference book and slides at the
end of each section

Intended Learning Outcomes: What will you be expected to achieve?
How to conduct a financial analysis?
Indicative Outline
Targets
Prerequisite? Key objectives?

No prior familiarity with
finance is required
This course is designed to help you to:
You don't have to be a
numbers person! • Get a better understanding of the numbers side of your job and
the financial implications of your decisions
Why?
• Learn how to “Speak and think finance” and translate
Are you able to interpret performance into financial terms
financial reports and make
decisions based on the • Develop your critical thinking aptitudes towards finance tools and
data they provide?
be aware of their limitations
Can you demonstrate your • Master “your recommendation” - to be able to use finance to
value and return on state your case and support your recommendation
investment to the
company board? • Develop proactive working relationships with finance professionals
and increase your value to the organization
• Gain greater confidence with a working knowledge of business

financials
• Expand your professional expertise

Indicative Outline
For whom is this course intended ?
Sustainable Finance is too serious to leave it only to finance people

Education is not the learning of facts but training the mind to think
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AM

Indicative Outline
Cognitive and intellectual
Turning knowledge into action

The world does not care what you know; it only cares, and will only pay for, what you can DO with
what you know.
Fahmi Ben Abdelkader & Sébastien Revault

Critical thinking aptitudes
“Education is not the learning of facts but training the mind to think” Albert
Einstein

Creativity and innovation

As the impact of artificial intelligence and disruptive technology grows, people who can perform
tasks that machines cannot are becoming more valuable.

Teaching Methods - How will you learn and practice?
Learning is best accomplished in a sharing environment.
Students learn best when they construct their own knowledge through exploration and
discussion.
“There are no stupid questions, only stupid
answers”
Engaging students in the learning process is the first step in effectively managing a
classroom
“Tell me and I forget. Teach me and I remember. Involve me and I learn” Benjamin
Franklin
“Teachers open the door, but you must enter by yourself” A Chinese
proverb
Bridging theory and practice
"To teach something to people, it is necessary to mix what they

know with what they ignore. » Pablo Picasso

Class Rules
Teaching Methods - How will you learn and practice? Contact & Communication
My Teaching Philosophy
The « Attention » of people is the gold of the 21st century
𝑇𝑖𝑚𝑒 ∗ 𝑎𝑡𝑡𝑒𝑛𝑡𝑖𝑜𝑛 ∗ 𝑒𝑥𝑝𝑒𝑟𝑖𝑒𝑛𝑐𝑒 ∝ 𝐾𝑛𝑜𝑤𝑙𝑒𝑑𝑔𝑒

Class Rules
Teaching Methods - How will you learn and practice? Contact & Communication
My Teaching Philosophy
Play to learn
WHY DO ANIMALS PLAY?
Play is a door onto learning, relaxation and enjoyment

The power of making mistakes
Making mistakes is one of the most important learning tools
Identify your errors, learn from your mistakes

ONLINE COURSES ONLY – A golden rule
Before responding to any of the questions,
take a moment to collect your thoughts and think about your

answer.
Identify your errors, learn from your mistakes

Finance will never be an exact science
And more over sustainable Finance
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AM

The governing principle of this class
Dealing with uncertainty and psychology is a complex task
Finance will never be an exact science; it

deals with human behavior (financial
decisions) and future (the expected
return).
“Two factors move the market: fear and

greed”.
An old Wall Street adage

Finance will never be an exact science; it deals with human behavior

(financial decisions) and future (the expected return).
“Two factors move the market: fear and greed”.

An old Wall Street adage
“Finance is the trade of promises”.

French Book « Le Commerce des promesses »
by Pierre-Noël Giraud

No simple solutions for complex problems

Is it still worthwhile to study Sustainable Finance?
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AM

Is it still worthwhile to study Sustainable Finance? Indicative Outline
Job opportunities include :
▪ Investment banking
▪ Equity research
Sustainable development :
▪ Corporate development
▪ ISR
▪ Financial analysis
▪ Impact investing
▪ Private equity / VC
▪ Venture philanthropy
▪ Credit analysis
▪ Philanthropy
▪ Merger & Acquisition
▪ Structuration
▪ Financing : structuring
▪ Asset Management
▪ Investment
If I offer you your dream job? Indicative Outline
After 25 years of really hard work, you reached the stars
You are the M&A head of a large bank
Could be very
proud of your
1M€/year salary

Are there not other opportunities? Indicative Outline
Star Earnings/
Worst Best Final
guy Investments
case case
M&A 1M€/y 450k€ AT 3-5M€
Head
VS
Entrepreneur 100k€ X3 X100 5M€
Private Equity 300k€ X2 X20-50 6-

Smart 15M€
guy
+10% +20-
Investor 500k€
py 30% py 10M€
1M€ +10% +20%

Real estate ROE ROE
10M€
Others

Deep dive in sustainable finance
Research interest
Corporate governance, corporate finance,

economy, business models, impact, ESG
Head of B. Dev. and ESG @
Société Générale Book/Articles
Investor and advisor

Real estate positive
impact structurer
Entrepreneur
Teacher
Writter

Mid-exam topics
 By group of 3, choose one of the following topics, then work :

 On a concrete study case with the following restitution (40% of final grade) :
 Oral restitution : 3min pitch on the 27th of February
 Study case (power point + word document) to be given back by the 28th of February
Proposed topics :
 How can we reconcile sustainable Finance with profitability?
 How can we empower people on sustainable Finance?
 How can Fintechs shape the world to a better sustainable world?
 How can finance reinvent itself to better support sustainable projects?
 How to align wealth management and sustainable behaviors?
 How to better develop venture philanthropy?

Introduction

Program
The course will provide an introduction to Sustainable Finance focusing on

(i) motivation and role for sustainable finance, state of climate finance investments
(ii) climate physical and transition risks for finance and supervisory climate scenarios of
the Net Zero Banking Alliance (NZBA),
(iii)climate financial risk disclosure: international standards, data providers, and
limitations,
(iv)green finance instruments: characteristics and limits (including greenwashing),
(v) the policy, institutional and regulatory landscape for sustainable finance.

Learning outcomes
 After having taken this course, participants will be able to:

▪ LO1 Understand and discuss the main concepts, actors, policies in sustainable finance
▪ LO2 Understand and discuss the characteristics of climate physical and transition risks and
the role of climate scenarios
 More specifically, participants should be able to (skill- and competency-based outcomes):
▪ LO3 Discuss the characteristics and limitations of disclosure metrics based on carbon
footprint methodologies, and drivers of greenwashing in the ESG market, based on in class
exercises.
▪ LO4 Understand the main investments, products and services a bank could provide to
mitigate climate risks for herself and his clients

Course content
• Rationale and motivation for sustainable investing, definitions of sustainable investing
• Climate finance: who is investing in what and where. Green finance gap.
• Climate physical and transition risks for finance, carbon stranded assets and NZBA scenarios
• Climate financial risk disclosure: GHG emissions, carbon footprints and carbon accounting:
characteristics and limitations
• Green bonds and Environmental Social Governance (ESG), characteristics and limits
(including greenwashing)
• Carbon pricing and carbon markets
• Other products/services and long term perspectives

Course objectives
1. Understand the concept of sustainable finance and its relevance in addressing global sustainability
challenges.
2. Explore different approaches to integrating ESG factors into investment decision-making processes.
3. Analyze the role of financial institutions, investors, and policymakers in advancing sustainable finance
initiatives.
4. Evaluate the financial performance and risk implications of sustainable investment strategies.
5. Examine the development and impact of green bonds, social bonds, and other sustainable financial
instruments.
6. Learn about the principles and frameworks for measuring and reporting on corporate sustainability
performance.
7. Develop practical skills for conducting ESG analysis and implementing sustainable investment strategies.
8. Discuss emerging trends and opportunities in the field of sustainable finance.

Reading
 Principles of Sustainable Finance, Dirk Schoenmaker

 Green and Sustainable Finance: Principles and Practice, Simon Thompson
 Handbook of Environmental and Sustainable Finance, Vikash Ramiah, Greg
Gregoriou
 Sustainable Finance Fundamentals - 1st Edition, Carlos Vargas
 La gestion de patrimoine responsable, ce nouveau paradigme ? , Sébastien
Revault
 The handbook of sustainable finance – Thierry Roncalli

The context

Why it is key to accelerate sustainable finance?
A triple debt  A triple hidden  Triple consequences

 Environmental
crisis  Environmental disasters
 Environmental  Social revolts/wars,
 Social
 Social migrations
 Financial
 Financing  Economic disasters,
bankruptcy, inflation

A Financial debt

An environmental debt

A Social debt
Worldwide crisis Local crisis

Finance has to change his
paradigm

To better enter into
this new paradigm

What is sustainability for you?

Many words in one concept

Why sustainability is so disruptive?
 When we talk about sustainability we talk

about why we do things and not what we do
 Why are we entering into a new paradigm?
 Book reference :
 La gestion de patrimoine responsable, ce
Nouveau Paradigme? - Sébastien Revault
 The handbook of sustainable finance – Thierry
Roncalli

What is sustainable Finance?
« Sustainable finance is more how we do support sustainable

business than which sustainable products banks sell »
You have to be ESG by deisgn
All your value chain has to be sustainable

Un écosystème révolutionnaire, créateur de valeur
✓ Structuration
✓ Accompagnement Art et Private
✓ Philanthropie collection Equity
✓ Investissements à impact
ESG Investissements
Immobilier Marché de
capitaux
Clients
&
Associés
✓ Apport d’affaires
Conseil Partenaires
✓ Wealth management
✓ Optimisations
✓ Conseil en investissements
✓ Gestion internationale
✓ Business modèles
Nous gérons, animons et optimisons la création de valeur

pour nos clients et associés
Les associés, les pilliers de R&B pour faire grandir l’écosystème
Apports d’affaire Expertises

✓ Financières / Analytiques
✓ Clients CGP
✓ Fonctionnelles / Techniques
✓ Clients/prestataires des start-up
✓ Sectorielle / Régionales
✓ Start-up
✓ Commerciales
✓ Activités propres des associés
✓ Philanthropiques
Conseil et Investissements Responsables

& Soutiens aux Asso ESG
Investissement
✓ >70% invest responsables
✓ 20% du RN en soutien à des assos
Réseaux Financements
✓ Clients particuliers ✓ Apport en compte courant
✓ Clients professionnels d’associés
✓ Partenaires ✓ + 10% en capital de R&B
✓ Prestataires externes ✓ Soutiens des projets des
✓ Cercle amical et familial associés

Why the why?
Robots
Automatic Deliver
Organic Organize
Intimist Purpose
Humans

Translation to finance
Robots
Product
Offer
Mission
Humans

Deep dive in a human crisis

Is finance responsible to all of these
disasters?

Short history of responsible and ethical investing
Beggining of the 20th century
Profit
After the second world war
Profit x Risk
Since the begginning this century

Profit x Risk x Impact
Banking organizations on the tightrope
 Banking organizations are resisting well but are under pressure, in fact
multiple factors are seriously harming their competitiveness:
 Ever increasing and stronger regulatory constraints
 Limited room for maneuver in the management of their activities
 Unequal treatment between countries
 Strong pressure on prices and margins
 Strong pressure on the development of responsible finance
And finally this coronavirus crisis which is shaking up all the models in
place and generating a real opportunity for transformation. An
opportunity that allows us to accelerate the transformation towards
more virtuous models.

A hudge market!!

A very dynamic market

An underexploited market
 French market, the overall wealth of the French is estimated at €13,000 billion made up of:
 €7,000 billion in real estate assets with loans of €1,500 billion
 €6,000 billion in financial assets of which approximately €4,000 billion are relatively liquid assets
 This very large influx/affluent + clientele also faces multiple problems:
 1) The investments made are not large enough to generate significant returns. Additionally,
yields are falling partly due to falling rates. Or these assets are only driven by growth in demand
(for example real estate in large cities) and uncorrelated from any basis for intrinsic profitability
 2) The different players charge very high fees, seriously reducing the profitability of investments
(from 1-2 to 7-12% for SCPIs), which reduces net returns to not much
 3) They generally do not benefit from tailor-made advice because the bankers have little time
to devote to them, moreover these bankers are focused on their operational objectives of
marketing as many products as possible with the highest margins. which can sometimes harm
the client's interest
 4) Significant volatility in moderately risky or risky assets which leads savers to prefer to let the
money sit in their account, destroying their value by almost 1.5% relative to inflation.

Weight of ESG within traditionnal investments

What is ESG?

The ESG ecosystem
Sustainable investment forum

Initiatives
Principles for responsible investment
Climate action 100+
Net-zero alliances
Other initiatives

Does regulators wish to change the
world into a more sustainable one?

Regulatory constraints

Regulatory topics and calendar

European finance taxonomy

European finance taxonomy

European sustainable framework overview

Perimeter reviewed

Timetable of EU taxonomy

Challenges posed by EU taxonomy

EU taxonomy through the financial value chain

A massive evolution of sustainable regulations

Sovereign ESG taxonomy

The worldwide bazar of ESG norms

importance of norming and standardizing responsible investment
The issues of standards and measurements are at the heart of the success of the
sustainable themes that are currently being developed. It is essential to work on these
2 aspects to:
- Make these investments understandable to the population, whether initiated or not,
because they are the ones who decide on their investments.
- Make the results and fruits of these investments pragmatic and concrete. Investors
will be much more inclined to invest if they know concretely how these investments will
contribute to improving societal issues.
We will see in the next sections that these themes and theories are relatively new and
are therefore confronted with a multitude of standards, views, opinions and
observations that we will clarify and synthesize in order to get the best value from
them.

A broad and poorly standardized language term
 ESG : Environnemental, Social et Gouvernance

 ISR : Investissement Socialement Responsable
 RSE : Responsabilité Sociétale des Entreprises
 Positive impact
 Investissement Responsable
 Finance positive
 Finance à impact positif ou Principes de la Finance à impact positifs
 Principes pour l’investissement responsable (PRI) www.unpri.org
 Finance verte :
 Finance responsable
 Finance durable

So much sustainable labels used
 Finansol
 CIES : Le label CIES (Comité Intersyndical de l’Epargne Salariale) www.ci-es.org
 Label ISR : Le label ISR (Investissement Socialement Responsable) www.lelabelisr.fr
 GreenFin label www.ecologie.gouv.fr/label-greenfin
 FNG-Siegel, label Allemand (38Mds€ pour 104 fonds)
 LuxFLAG label Luxembourgeois (100Mds€ pour 220 fonds)
 Nordic Swan Ecolabel, label nordique (29Mds€ pour 49 fonds)
 Towards Sustainability, label Belge (238Mds€ pour 417 fonds)
 Umweltzeichen, label Autrichien (29 Mds€ pour 123 fonds)
 Finance for tomorrow

Companies own internal norms
- La norme ISO 26000

- Le Global Reporting Initiative
- Les Objectifs de Développement Durable dit ODD
- Les lignes directrices de la Task Force on Climate Financial Disclosure dite TCFD
- Le CDP dit Carbon Disclosure Project
- Le Sustainability Accounting Oversight Board dit SASB
- Le Climate Disclosure Strandards Board dit CDSB
- La Taxonomie Européenne sur les activités vertes
- Des rapports volontaires propres

Worlwide bazar of taxonomies
- Européenne avec la taxonomie Européenne

- Chinoise : Green bond catalogue 2020 et SDG finance taxonomy
- Asean : Principaux pays d’Asie du sud est avec les ICMA green bonds standards
- Russe : Green finance guidelines 2020
- Japon : Green bond guidelines 2020 et transition finance guideline 2020
- Autres pays asiatiques : Malaisie, Singapore, Thaïlande, Inde, Nouvelle-Zélande
- Pays d’Amérique : Canada, Mexique, Argentine, Chili, Colombie, Costa Rica, Panama et Brésil. Il est à
noter la regrettable absence des Etats-Unis dans ces taxonomies suite à leur retrait des accords de Paris
mais qui change suite à la prise de poste de Joe Biden
- Pays d’Afrique : Egypte, Ghana, Nigeria, Kenya, Maroc, Sénégal, Afrique du sud

Principles for responsible investment
 Principle 1: We will incorporate ESG issues into investment analysis and

decisionmaking processes.
 Principle 2: We will be active owners and incorporate ESG issues into our ownership
policies and practices.
 Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which
we invest.
 Principle 4: We will promote acceptance and implementation of the Principles within
the investment industry.
 Principle 5: We will work together to enhance our effectiveness in implementing the
Principles.
 Principle 6: We will each report on our activities and progress towards implementing
the Principles.

Principles for responsible investment

Does Techs, digital and new models
could help growing sustainable finance?

Fintech mapping – where are sustainables?

French Sustainable Fintechs

Demography is key

Demography is key

Consequences in wealth turn over, who are the more
concerned by sustainability?

What is the population perception?

Do people trust in banks?
Note (entre
Nb votes
1 et 5)
Société Générale 1,4 693
BNP 1,2 679
Grosses
Crédit mutuel 1,4 543
banques
La banque postale 1,2 1246
LCL 1,4 616
Banques en Orange bank 2,5 284
ligne Shine 4,6 782
Autres Orange 1,2 3151

Total 2,5 2216
société du
VINCI 4,3 48 080
CAC 40 RENAULT 4 Par concession

Different perception between communication and action

The strong conclusion is therefore a marked gap between what banking players market
around ESG issues and the reality of things. This point is, however, not specific to ESG issues
or to banking players. However, in order to provide clarification on these major issues, the
action taken needs to be aligned with what is actually put in place because they are:
- liability issues for companies that communicate too much. This leaves the door open to
popular criticism and can go as far as discrediting the actions carried out.
- issues of transparency and readability because this contributes to creating vagueness
around extremely important issues for society which therefore find themselves oversold.
Customers then find themselves lost and disappointed with the products to which they may
have subscribed.

How has the responsibility to act

Is sustainability linked to accountability?
Exemple on crowdfinancing platforms

Perception from the population

Is the more impacting topic the more popular?

The relationship to develop with responsible bankers

The advice, services and products that a responsible wealth
manager can provide

Profiles and opinions concerning the responsible topics

Profiles and opinions concerning the responsible topics

Covid crisis accelerated the transition
• Health and well-being: The health of chronically ill people has been undermined during
confinements, not to mention covid-19 patients. The morale of the French has also been strongly
affected, where 60% of them believe they have been impacted during this period.
• Poverty and inequalities: This crisis will indeed tend to increase inequalities between those who
had the means to resist this crisis, or even were able to take advantage of certain opportunities, and
those who find themselves in greater precariousness by losing their job, their customers, their
company.
• Education and work: He found himself turned upside down but in an unexpected way. In fact, it
was common knowledge at the start of confinement that everything could be done online
smoothly since everyone was equipped. This was without taking into account the dysfunctions, the
heterogeneous means made available, the upheaval of the private sphere, which has widened the
inequalities between those who have the means to work in good conditions and those who have
less.
• Climate change: This is a category that has perhaps been the most spared with a 6.5% drop in
CO2 emissions compared to 2019, giving the planet a little breathing space... temporarily.
• Water and aquatic life: It is also the big winner of the crisis with an increase in the marine
population due mainly to the cessation of fishing and a reduction in maritime pollution linked to
transport. Except with regard to the pollution generated by covid protections discharged into rivers
and seas.

How to change the world of finance
 Based on these observations, a question naturally comes to mind:
will sustainable finance be the next disruption in the banking sector?
3 inseparable key aspects then seem to outline this future transformation:

 Digital and the transformation of the customer experience of the “middle-class” or
also called affluent/affluent+ around their assets
 The strategy and business model to provide value for customers
 Implementation of an avant-garde ESG policy and evaluation of its impacts on societal

issues

Focus on added value

Profit is key to give back

The banking sector has to reinvent itself
 Advisory must remain at the heart of the wealth manager's mission and must focus on
creating value to bring to the client
 It must be backed by asset management that is the most dynamic, the most secure but also
the most impactful possible
 The distribution and marketing model must be completely redesigned to be more

comprehensive, efficient and captive
 Concentration of the offer on an offer that is controlled
 Finally the pricing policy must be reviewed because it is too complex and too important
and does not completely put the customer's interest at the center of a real customer
experience

Advisory as a pillar and compass of a heritage strategy
 Advice that must provide maximum value to the client
 Focus, automation and proactivity to maximize customer

satisfaction
 What model should be implemented to maximize the added

value?

Focus, automation and proactivity to maximize customer
satisfaction
 Digital
 Push/pull informations
 Systematization and automatisation
 Proactivity

Focus on financial value creation

Focus on financial value creation

Focus on qualitative value creation

Focus on qualitative value creation

How to adress sustainibility topics in banking industry with our clients
 Part 1: People’s perception of responsible wealth management

 Part 2 : The relationship to develop with this responsible asset manager
 Part 3: The advice, services and products that a responsible wealth manager can
provide
 Part 4: Profiles and opinions concerning the responsible subjects

What model should be implemented to maximize the added value?
Client angle Firm added value
Priorities Advisory
Wishes Relationship
Sensitivities Meaning

The importance of the added value in finance – Eg in real estate

The importance of well choosing the vehicule on an investment
Achat Personnel Achat via une société civile
Bien Bien
SCPI SCPI
classique classique
Rentabilité 0 ++ + +++
Capacité d'emprunt ++ + +++ +
Problématiques Liquidité + ++ + ++
Légende :
financières Capitalisation 0 + ++ +++ 0 Mediocre
Revente à la découpe 0 +++ 0 +++ + Correct
Transmission de patrimoine + + +++ +++ ++ Bon
Flexibilité + ++ + ++ +++ Excellent
Retournement de marché + +++ + +++

Gestion des Complexité ++ + + 0
risques Gestion quotidienne 0 +++ 0 +++
Gestion associés 0 0 ++ +++
Impayés/dégradation 0 ++ 0 ++
Notation moyenne globale (/100%) 22% 58% 42% 78%

Responsibility is also managed through a good management of assets
Immobilier Liquidités Obligation Actions

Cryptomon Matières
Immobilier Immobilier ou oblig société Actions Private
SCPI Fonds naies premières
en gestion côté étatique cotée côtées equity
Rendement brut 3,7 à 6,9% 4,0% 4,0% 0,50% 2 à 3% 3,0% 0 à 5% 2 à 3% 0% 0%
Frais up-front 8,5% 12,0% 0% 0% 0% 0% 5% 2,0% 15% 1%
Performance
Frais récurrents 1,4 à 1,9% 1,0% 0% 0% 0% 0% 4 à 5% 1 à 2,0% 5% 1%
de l'actif
Charges 1,6 à 2,0% 0,0% 1,5% 0,15% 0,7 à 1% 1,0% 1,5% 1% 0% 0%
Rendement net -0,9 à 0,0% 1,9% 2,50% 0,35% 1,3 à 2% 2,0% 0% -2 à 0% -10 à -5% -2,00%
Plus value Potentiel de PV AI 2 à 3,0% 1,5% 2 à 3% 0% 0% 2 à 4% 5 à 10% 2 à 4% 10 à 20% 3 à 7%
Perf totale nette AI 1 à 2% 2 à 3% 4 à 6% 0,35% 1,3 à 2% 3 à 6% 5 à 10% 0 à 4% 0 à 10% 1 à 5%
Volatilité 5% 10% 15% 0% 5% 15% 15% 15% 30% 20%

Distribution model are key to scale on sustainable finance
Old models New models

Costs are key to uptier the performance

Costs are key to uptier the performance

Digitalization is key to
make it efficient

What are the most impactful products and solutions today?

The divided company vs the connected company

Desintermediation is key to create value

Impact in asset management

Impact in advisory

Impact on the whole chain up to distribution

Profit
Profit x Risk

ESG strategies

Asset values of ESG strategies

Deep dive in humanity issues

SDGs

Earth temperature has changed a lot

Temperature projected impacts

Share of global annual deforestation

Threatened mammal species

Global living planet index
The Living Planet Index (LPI) is a measure of the state of the world's biological diversity based on
population trends of vertebrate species from terrestrial, freshwater and marine habitats
Mammal species which are highly growing in Europe

The planet carbon budget

GHG emission pathways scenarios

Global scenario

Impacts of various scenarios



Consequences

Consequences

Consequences

Risks increase with warming



Finance is key to solve the issues

Opportunities to be financed to solve sustainable topics

Opportunities to be financed to solve sustainable topics

Where GHG emissions come from

GHG emissions évolutions per main contributors

Worldwide primary energy consumption

Energy source mix

Which industrie emits the most of GHG emissions

Focus on French CO2 emissions
-10% since 2019

Key dates

SDGs

EXEMPLE OF ESG STRATEGY IN A
GLOBAL BANK

Well recognized leadership in sustainability

A csr ambition to face the new paradigm

Csr ambition built on 4 strategic pillars

Reinvent banking businesses

Proactively manage the impact of business activities



Accelerated transition timelines

Sustainable products
offer

Exemples of social financing products

Developping social and inclusive offer

Scorecards and sustainable mobility

Sustainable mobility

Building ecosystems of innovation

Key HR priorities

A regular issuer in sustainable & positive impact finance

Manage sustainability through risk management

Integrated E&S risk management in business activities

Sustainability in capital markets banks activities

External perception is key

Transition management is key

A complex shift to manage

It needs agility to adapt financing and corporates businesses

It needs time to adapt financing and corporates businesses

Worldwide primary energy consumption

Production mix in 2050

Market impacts and solutions

Carbon cost and consequences

Market price of CO2

Carbon taxes are growing

Investments are key

Market impacts on ESG equity indexes

Performance of ESG equity indexes

Best and worst performers asset managers in ESG

World largest asset managers

Evolution of AuM in the world

Evolution of AuM in the world

Act on your wealth on a daily basis and have more impact?
 Diversify your assets
 Identify the most impactful assets
 Measure the impact produced
 Always have a clear analysis to

maximize value creation
 Be accompanied
 Distribute part of the value creation

Financing and advisory solutions

Issuance of GSS bonds

Issuance of green debts

Purposes of green debts

ESG bonds incentives

Advisory is also key

Sustainable products

Extra financial information is now
mandatory

Extra financial accounting
 Historical perspectives
 Single vs. double materiality
 Environmental accounting
 National environmental accounts
 Corporate environmental accounts
 Sustainability accounting
 S ocial issues
 Governance factors

From raw data to ESG pillars

Examples of ESG criterias

MSCI ESG key issue
hierarchy

Refinitiv materiality matrix

Example of ESG scoring tree

Credit ESG ratings

ESG credit ratings long terme perspectives

Renewables energies in countries business mix

European trajectory

Carbon contained in our daily objects

The metrics could help a lot

Kaya equation

Key drivers of kaya equation

Co2 emission per person

Total GHG emissions

Impacts of GHG emissions on plenet limits

Earth energy budget

Interactions through the world

Reportings and double materiality concepts

Double materiality

Financial materiality
Financial materiality focuses on how environmental, social and governance (ESG) issues impact a
company, adopting an outside-in perspective. Within this approach, companies would ask themselves:

Impact materiality
On the other hand, impact materiality focuses on a company’s impacts on environmental, social, and
governance causes. It adopts an inherently inside-out perspective. Within this approach, companies
would ask themselves:

Double materiality
A double materiality approach unifies both financial and impact materiality, and asserts that companies
should adopt both an outside-in and inside-out perspective.

What is at the heart of the debate?
 Impact and financial materiality both aim to define ESG issues that are significant to a company.
However, both approaches have inherently different aims, and target audiences.
 Financial materiality caters to investors and anyone who has a financial stake in the company’s
performance. It thus seeks to assess the impact of an ESG issue on enterprise value.
 Impact materiality caters for a broader group of stakeholders, including employees, civil society, local
communities. In short, it recognises that businesses should create value for all its stakeholders, in
recognition of planetary boundaries.
 The fundamental question that confronts most businesses is whether they should be responsible for
issues beyond those that have a clear or direct financial impact.
 It can be hard to establish a direct relationship between human rights issues along the supply chain
and enterprise value, but does that mean that respect for human rights is beyond the company’s
responsibility to enforce? If we did not have carbon taxes or emissions trading systems, should
companies still reduce their contribution to the global carbon budget? If companies do not have
direct dependencies on ecosystem health, should they still ensure that their waste management
practices do not cause pollution?
 Should businesses be held accountable for issues outside of their direct influence and control?

New accounting standards

What is taken into consideration

Accounting with multi-capital accounting standards

What are the objectives

Natural capital protocol

Defining metrics is key but have to be synthetic

Profit
Profit x Risk

How to measure the overall impact?
Indicateur
Problématique à pour répondre
Epoque Contexte historique Formule Description
gérer à la
problématique
Recherche de
Pouvoir garantir un Mesure le retour sur
1ère moitié développement des
retour sur fonds La rentabilité investissement d'un
du XXè siècle industries et crise des
propres suffisant placement
années 30 déflationniste
Pouvoir mesurer le
Sortie d'une guerre Mesure de l'ampleur de
2ème moitié risque pris sur un
couteuse et très forte La volatilité variation historique du
du XXè siècle investissement ou
inflation et volatile cours d'un actif
portefeuille
1ère moitié Recherche de Pouvoir identifier Devrait mesurer l'impact

du XXIè développement des l'impact ESG sur un L'impact ??? sur l'investissement
siècle industries vertueuses investissement donné effectué?
Ratio
Mesure Détails Indicateur commun
d'efficacité
CO2 Economie de CO2 Couts de CO2 €
Couts + Inv /
Environnemental Investissements
Investissements Investissements € Actifs
effectués
Emplois Nombre d'emplois créés Couts des emplois €
Couts + Inv /
Sociétal Investissements
Investissements Investissements € Actifs
effectués
Investissements
Gouvernance Investissements Investissements € Inv / Actifs
effectués
Indicateur Investissements Efficacité ∑(Couts + Inv)

∑€
composite Sébastien Revault – 2023-2024 ESG ESG / ∑ Actifs
Mandatory PAI
indicators

ESG risk and scoring

Focus on environmental indicators
 Emissions & pollution (1) CO2 emissions (metric tons per capita); (2) GHG net emissions/removals by LULUCF
(Mt of CO2 equivalent); (3) Methane emissions (metric tons ofCO2 equivalent per capita); (4) Nitrous oxide
emissions (metric tons of CO2 equivalent percapita); (5) PM2.5 air pollution, mean annual exposure
(micrograms per cubic meter);
 Natural capital endowment & management: (1) Adjusted savings: natural resourcesdepletion (% of GNI); (2)
Adjusted savings: net forest depletion (% of GNI); (3) Annualfreshwater withdrawals, total (% of internal
resources); (4) Forest area (% of land area); (5)Mammal species, threatened; (6) Terrestrial and marine
protected areas (% of total territorialarea);
 Energy use & security: (1) Electricity production from coal sources (% of total); (2) Energyimports, net (% of
energy use); (3) Energy intensity level of primary energy (MJ/$2011 PPPGDP); (4) Energy use (kg of oil
equivalent per capita); (5) Fossil fuel energy consumption(% of total); (6) Renewable electricity output (% of
total electricity output); (7) Renewableenergy consumption (% of total final energy consumption);
 Environment/climate risk & resilience: (1) Cooling degree days (projected change innumber of degree Celsius);
(2) Droughts, floods, extreme temperatures (% of population,average 1990-2009); (3) Heat Index 35 (projected
change in days); (4) Maximum 5-day rainfall,25-year return level (projected change in mm); (5) Mean drought
index (projected change,unitless); (6) Population density (people per sq. km of land area)
 Food security: (1) Agricultural land (% of land area); (2) Agriculture, forestry, and fishing,value added (% of
GDP); (3) Food production index (2004-2006 = 100);
Focus on social indicators
 Education & skills: (1) Government expenditure on education, total (% of government expenditure); (2) Literacy rate,
adult total (% of people ages 15 and above); (3) School enrollment, primary (% gross);
 Employment: (1) Children in employment, total (% of children ages 7-14); (2) Labor force participation rate, total (% of
total population ages 15-64) (modeled ILO estimate); (3) Unemployment, total (% of total labor force) (modeled ILO
estimate);
 Demography: (1) Fertility rate, total (births per woman); (2) Life expectancy at birth, total (years); (3) Population ages
65 and above (% of total population);
 Poverty & inequality: (1) Annualized average growth rate in per capita real survey mean consumption or income, total
population (%); (2) Gini index (World Bank estimate); (3) Income share held by lowest 20%; (4) Poverty headcount
ratio at national poverty lines (% of population);
 Health & nutrition: (1) Cause of death, by communicable diseases and maternal, prenatal and nutrition conditions (%
of total); (2) Hospital beds (per 1,000 people); (3) Mortality rate, under-5 (per 1,000 live births); (4) Prevalence of
overweight (% of adults); (5) Prevalence of undernourishment (% of population);
 Access to services: (1) Access to clean fuels and technologies for cooking (% of population); (2) Access to electricity (%
of population); (3) People using safely managed drinking water services (%of population); (4) People using safely
managed sanitation services (% ofpopulation);

Focus on governance indicators
 Human rights: (1) Strength of legal rights index (0 = weak to 12 = strong); (2) Voice and accountability (estimate);
 Government effectiveness: (1) Government effectiveness (estimate); (2) Regulatory quality (estimate);
 Stability & rule of law: (1) Control of corruption (estimate); (2) Net migration; (3) Political stability and absence of
violence/terrorism (estimate); (4) Rule of law (estimate)
 Economic environment: (1) Ease of doing business index (1 = most business-friendly regulations); (2) GDP growth
(annual %); (3) Individuals using the internet (% of population);
 Gender: (1) Proportion of seats held by women in national parliaments (%); (2) Ratio of female to male labor force
participation rate (%) (modeled ILO estimate); (3) School enrollment, primary and secondary (gross), gender parity
index (GPI); (4) Unmet need for contraception (% of married women ages 15-49);
 Innovation: (1) Patent applications, residents; (2) Research and development expenditure (% of GDP); (3) Scientific and
technical journal articles;

Impact on the whole chain up to distribution

To better enter into
this new paradigm

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EDHEC 2023-2024

Sébastien Revault – 2023-2024

Corporate governance, corporate

Investor and advisor

2/20/2024 11:50 AM Sébastien Revault – 2023-2024 3

Sébastien Revault – 2023-2024

Useful Information and Class rules Class Rules

2/20/2024 Sébastien Revault – 2023-2024 5

The « Attention » of people is the gold of the 21st century

𝑇𝑖𝑚𝑒 ∗ 𝑒𝑥𝑝𝑒𝑟𝑖𝑒𝑛𝑐𝑒 ∗ 𝑎𝑡𝑡𝑒𝑛𝑡𝑖𝑜𝑛 ∝ 𝐾𝑛𝑜𝑤𝑙𝑒𝑑𝑔𝑒

2/20/2024 11:50 AM Sébastien Revault – 2023-2024 6

Three Golden Rules

BE ON TIME : Arriving late three times counts as an unexcused absence

3 Delays (D) = 1 Absence (A)

The use of laptop computers is not adviced

LEAVE YOUR GUNS AT THE DOOR

2/20/2024 11:50 AM Sébastien Revault – 2023-2024 7

The researchers conducted a nationwide survey of

86% think it’s inappropriate to answer phone calls

2/20/2024 11:50 AM Sébastien Revault – 2023-2024 8

Why do so many people—especially successful people—find

Lack of respect. You consider the information on your phone

Sébastien Revault – 2023-2024

 By group of 3, choose one of the following topics, then work :

Sébastien Revault – 2023-2024

Sébastien Revault – 2023-2024

Sébastien Revault – 2023-2024

“You can go to sleep now.

He’s the one who can’t sleep anymore”

The moral of the story : Financial

Insolvency is not the problem of the borrower but … the lender

Never put all your eggs in one basket

2/20/2024 11:50 AM Sébastien Revault – 2023-2024 14

Who cares wins

How to maximize the value of a business in a

2/20/2024 11:50 AM Sébastien Revault – 2023-2024 15

Earning the trust of stakeholders is vital

DIG DEEPER https://www.ft.com/content/1f429ebc-90c0-11e6-8df8-d3778b55a923

Stumpf’s departure likely to have big consequences for US banks

2/20/2024 11:50 AM Sébastien Revault – 2023-2024 16

Earning the trust of stakeholders is vital

Everything will be available on Blackboard

Students will be provided with:

- Complementary material with some case studies and Excel files

2/20/2024 11:50 AM Sébastien Revault – 2023-2024 18

After each session you can …

“Teachers open the door,

2/20/2024 11:50 AM Sébastien Revault – 2023-2024 19

Prerequisite? Key objectives?

• Gain greater confidence with a working knowledge of business

• Expand your professional expertise

2/20/2024 11:50 AM Sébastien Revault – 2023-2024 20

For whom is this course intended ?

Sustainable Finance is too serious to leave it only to finance people

2/20/2024 11:50 AM Sébastien Revault – 2023-2024 21

Sébastien Revault – 2023-2024

Cognitive and intellectual

Turning knowledge into action