Novethic is both a media on sustainability, for the general public, and a research centre on Socially Responsible Investing (SRI) and Corporate Social Responsibility (CSR), targeting the business world. Novethic started in 2001, and Anne-Catherine Husson-Traoré was involved in launching the media from the start. She has been Director General of Novethic since 2006. We asked this SRI expert about Novethic’s work and aims, and more generally about her own vision for the future of social responsibility, responsible investing and sustainability.
Why and how did you launch Novethic?
In 2001, Jean-Pierre Sicard, the president and founder of Novethic, recruited me to launch a website with him to promote Socially Responsible Investing (SRI). Twelve years ago, people were just starting to talk about global warming. Sicard knew about SRI and wanted to develop a media to help the business world understand how important environmental, social and governance (ESG) criteria were, and how vital it was to integrate them in financial management tools.
Our mission at Novethic is thus to provide education on these subjects, through our website, our research and studies, our events, etc.
This is why all of our Research Centre’s work is public: it serves to feed the debate, and to encourage the actors to do more and better. We aim to publish “wake-up calls” for the leaders of the business world.
What is the connection between the website, novethic.fr, and your other activities?
Our media has a much broader target than our Research Centre. People cannot understand what SRI and Corporate Social Responsibility (CSR) are, and how important they are, if they do not understand the general context we live in. We also have a role to play in helping raise awareness inside corporate companies. Environmental and social concern in the business world still lacks a voice; and we are here to show that it is a global movement.
Are there obstacles to the development of SRI, legally speaking? Do we need political will and action to support it?
Neither SRI nor CSR technically has a legal framework – and that is a real issue.
As far as Corporate Social Responsibility is concerned, in France companies have had an obligation to report on environmental, social and governance criteria since 2002. But the interpretation of these criteria is up to them, and there are no sanctions if they do not report. It has spread, but every company does as it wishes. This poses great difficulties for investors benchmarking companies: they do not all use the same calculation methods for CO2 emissions, for instance, and it is hard to know what you are comparing.
Socially Responsible Investing is even less regulated: Management Companies have an obligation to state publicly, on their websites, whether they integrate ESG criteria or not. And that is it. If they do not integrate them – and to me that is pretty much the equivalent of saying “we do not take reality into account” – there are no sanctions.
We are thus fighting to change the legal framework, with more obligations for institutional management bodies.
What do you identify as the main challenges for the future of CSR and SRI, and more broadly for sustainability?
Theoretically, CSR and SRI should walk hand in hand: socially responsible investors should value companies with socially responsible initiatives. And the two are only meeting now. The next question is: how do we build, at international level, a way to integrate ESG criteria into financial assessments? How do we make them part of the evaluation of a company?
We need to be able to build a hierarchy to distinguish between the companies who have a business model that makes them capable of absorbing upcoming shocks, and those which are just stepping on the gas. Now, the challenge is to structure an international community of socially responsible investors.
Are you optimistic, still?
When I look back over the past ten years, I think we are getting there. It is only taking time because people are so resistant to change; that is in fact the only real hurdle. We know that new business models that take ESG criteria into account are viable. And we need to support the companies that develop these models, and have a long-term vision.
The public’s demands are also evolving: they want more transparency and traceability. How does the business world need to work on that?
There is indeed phenomenal public mistrust of financial institutions. When it comes to the food-processing industry or the textile industry, people are increasingly aware of how to find the information they want, and they react accordingly. It is crucial that they understand they could do the same when it comes to their savings. They have every right to ask where the money they save goes. What strikes me is that people say they don’t trust banks, but they do not try to find out what they do with their own money. And that is because such a dialogue is definitely not encouraged. The banks have not been promoting socially responsible investing; and since the market is based on supply and not on demand, no one really asks them about it. We are hearing from people who have asked their bank for SRI options and have been waiting for an answer for two years!
This is why we are participating in an ongoing campaign called “Demand SRI!” to encourage people to talk to their bank about SRI. We hope to show that there is public interest in the issue, and that they will encourage the banks to develop the products people want.
Photo : © Novethic