Koen Van de Maele, the new president of the Belgian Asset Manager Association, or Beama, began his career at what is now Candriam. He shared his views on the evolving sector of sustainable fund management.
“After the initial overhaul of the Sustainable Finance Disclosure Regulation (SFDR) rules, a kind of balance has now emerged. Yet, there’s still much room for improvement,” Van de Maele said. “A major issue is that different disclosure rules apply to articles 6, 8, and 9. Retail customers often misinterpret them as labels, which is not the intention. The varying rules complicate comparing products effectively.”
Van de Maele advocates for “basic transparency” across all funds, suggesting that making a fixed number of Principle Adverse Impacts transparent for all products would be a significant first step. “This should simplify choices for retail customers,” he added.
While recognising fund managers’ role in the ecological transition, Van de Maele cautioned against overestimating their sector’s impact. “Fund managers rely on company reports, which are still developing. The upcoming Corporate Sustainability Reporting Directive (CSRD) aims to enhance this in the next few years,” he noted.
Data quality and regulation
Today’s fund managers rely on data from providers like Msci and Sustainalytics. Despite recent sector consolidation, challenges persist. Van de Maele expressed surprise that regulation focuses mainly on fund managers, with less oversight upstream at companies and data providers. “Uniformity in data quality is essential, and regulation should eventually establish a global minimum reporting standard,” he said.
Van de Maele warned against the proliferation of sustainability labels, noting that too many labels with varying criteria could compromise the uniformity of the European market.
Addressing the criticism of ESG scores, Van de Maele said, “ESG scores aren’t uniform, which reflects cultural differences in risk assessment. A breakdown of the three different scores could provide more clarity.”
Striking a balance
“Sustainable and Responsible Investment (SRI) benefits from greater transparency,” Van de Maele stressed. “The challenge is to engage the general public without overly concentrating investments in certain sectors, which could increase volatility and deter retail investors.”
Regarding impact investing, Van de Maele emphasized the need for a uniform definition and transparency. “We must avoid impact washing and consider extending impact investing beyond just private equity,” he said, adding that Europe might soon clarify this, particularly regarding fund naming conventions.
“The real economy, much larger than just listed companies, remains mostly inaccessible to private investors,” Van de Maele observed. “Within Beama, we’re exploring opportunities for retail investors, always considering risks such as liquidity concerns in private equity.”