Ecological transition: engaging financiers

The Shift Project, a think tank, offers concrete ways to integrate environmental issues into financial education through the involvement of more than 150 experts from higher education, management and finance.

After management students, the Shift Project tackles students in the finance sector with a report entitled ClimateSup Finance – shaping finance in the service of transition.

The analytical center reminds that the ecological transition requires a lot of funding. According to Adem, France needs to invest around €100 billion a year until 2030 for decarbonisation alone. Funding needs are diverse: decarbonization of industrial processes, insulation of buildings, conservation of species, etc. According to The Shift Project, which analyzed 1,400 training courses in France, only 5% of financial training covers environmental issues.

At least 320 hours of knowledge and skills base

Financial professionals need to understand physical limitations and their implications for their business. The Shift Project has identified a knowledge and skills base for teachers and education managers. It describes the knowledge and skills to be integrated into the compulsory courses that teach the fundamentals of management, including finance (165 hours). In addition to the general core (156 hours), it is complemented by a specific core for ‘finance’, which describes the knowledge and skills to be taught to finance students and professionals.

Therefore, financial subjects should develop special knowledge and skills, such as knowing the limits of the mechanisms used by finance to take into account environmental issues (green finance, ESG, etc.), and understanding the necessary contributions of finance to the ecological transition. mitigating the impact of organizations on the environment, increasing the stability of the real economy in the face of future crises, not aggravating the ecosystem imbalance, etc. institutions (monetary policy targeting climate goals, review of environmental issues by regulatory bodies, etc.).

Foresight: 12 potential developments to consider

In a forward-looking approach, the report also considers 12 potential changes in finance under the impact of an environmental emergency. These developments describe selected or exposed events that may occur and cause a significant change in the performance of the fund and its business. This perspective is intended to help program directors and teachers identify the knowledge and skills that professionals need to develop so that they can meet the challenges they may face.

Among the developments to consider are the shift in practices brought about by the defocusing of the GDP growth target and the risk of another recession. The evolution of central banks’ missions in favor of financing the environmental transition is also noted, for example by integrating the principle of double materiality into their doctrine (the principle of double materiality, which consists in studying the effects of the environment on and on companies). on the contrary).

On the regulatory side, the Shift Project emphasizes consideration of physical climate risks, transition and fiduciary responsibility, allowing asset managers to prioritize environmental issues over short-term investment returns. The report also highlights the generalization of methods that allow environmental impacts to be taken into account, such as triple capital accounting (financial, human, environmental) under the influence of regulatory developments.

3% of the operating budget of enterprises to be mobilized for at least three years

The administrations and presidents of higher education institutions are invited to educate themselves and all their staff while redefining their creation strategy to integrate environmental issues with ambition and consistency in teaching, research, campus, practice and management.

This requires the mobilization of human and financial resources in line with the transformations to be carried out: at least 3% of the operating budget for a period of 3 years. Principals and chairpersons must also ensure that there are no conflicts of interest between teachers’ teaching and professional activities. If they exist, they should be displayed to the public.

As for the organizations specializing in accreditation and rating, according to The Shift Project, they should prioritize environmental issues in their evaluations above all other criteria, clearly define the environmental issues to be evaluated, place the planetary boundaries at the center, integrate environmental issues into all teaching, quantify the impact of the implemented actions. and evaluate qualitatively.

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