capco institute journal #56

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FLORENCE ANGLÈS | Managing Principal, Capco

Growth is only sustainable if it preserves natural capital and integrates, beyond its economic implications, the environmental, social, and governance dimensions. It is a new social project advocated by the public authorities and which is applied at the corporate level through “corporate social responsibility” (CSR). Sustainability is gradually gaining ground and affecting the whole economy. As the intergenerational component of sustainable development emphasizes the objective of a long-term horizon, it is necessary to develop new instruments and mechanisms for financing the economy. 

Finance and sustainability come together to give rise to the so-called sustainable finance. Europe is the epicentre of sustainable finance. The lack of a clear definition has led the European Commission to work on developing a common classification or taxonomy. Environmental, social, and governance (ESG) concerns are at the heart of regulations in the financial services industry. Today, ESG is no longer just an acronym but a reality, expected to reach a third of assets under management worldwide by 2025. It is spreading across all asset classes, including the less liquid ones. ESG now defines the new frontiers of alternative investments.