Clémence Chatelin

ESG Integration Manager

Clémence has lived in four different countries and speaks three languages. She obtained a Bachelor’s in International Management (China) at SOAS, and completed a Master’s in Finance & Investment at the University of Bristol before joining in 2017 on the Graduate Programme with Paradigm Norton, where she led the development of sustainable investing. She has recently joined CCLA as an ESG Integration Manager.

CCLA

CCLA is one of the UK's largest charity fund managers (with over £14 billion of assets under management as at 31st December 2021). Managing investments for charities, religious organisations and the public sector is all they do. Based in the City of London, they are largely owned by its clients' funds. CCLA has led various industry wide engagement initiatives such as ‘Find it, Fix it Prevent it’ for modern slavery and the CCLA Corporate Mental Health Benchmark among others.


Most companies believe that going public on adaptation would be a message that they have failed, that something’s wrong and business as usual is not good.

Sustainable investments: financial planners should screen both active and passive funds

As a financial planner Clémence had many clients who were already passionate about sustainability and seek it out – but most do not. She says: “The bulk of Paradigm Norton’s working and retired clients are very generous, they all give to charity in some shape or form. But they maybe hadn't thought about investing in a way that is more sustainable without having to necessarily forego financial returns. And these are the clients that Paradigm Norton is having proactively more conversations with. Most of them want to invest sustainably but also to make sure that their financial goals can still be achieved.”

When selecting funds for clients, Paradigm Norton’s investment philosophy favours quant or index funds, but the firm ensures they are signed up to the stewardship code and take engagement seriously. “You should have really good relationships and make those work for your investors who are demanding a more sustainable way of doing business.”

Clémence adds: “Some of Paradigm Norton’s clients like to invest in companies that have a feel good factor and are leaders in sustainability through active funds, investing in companies like Safaricom which provides a mobile infrastructure in very remote areas, enabling people to be connected to the banking system through their phone.” For these funds, the firm has further criteria. “Are they good at selecting impactful companies? Are they good at engaging with these companies as well? And do they have patient capital? I wanted to make sure that they select companies that they can hold for the long term.”  

She says: “There is already change underway in how Paradigm Norton asks clients what their preferences are around sustainability. The FCA is currently working on its own taxonomy, and now SFDR is being embedded in the EU. It will therefore affect the way financial planners choose funds and the way they justify the suitability of what they recommend to clients.”

 

Divesting may only be a gesture

Index funds will have some basic exclusions, Clémence says, and some passive managers will also divest from certain companies following engagement.  “The focus is a lot more engagement than divesting, because sticking it to the big guy and saying I’m not giving you any money can make you feel good, but the overall impact is negligible for the company being divested from. So Paradigm Norton aren’t big promoters of divesting.” CCLA, who Clémence recently joined also believes that working with businesses through meaningful and persistent dialogue is more likely to drive change than only investing in ESG leaders.

 

Companies believe publicly embracing climate adaptation would be seen as failure

Companies are reluctant to go public on any kind of adaptation strategy, Clémence believes, because it would give out a negative signal. “I think most companies are doing mitigation because if they did adaptation as publicly it would be a message that they have failed. Adaptation would mean they accept that something's wrong and business as usual is not sustainable. 

“We do need to adapt to what's going to happen down the line, but a lot of companies don't want to accept that as it would question the legitimacy of what they are doing. And a lot of people who head up companies are going to be there for maybe five years and then the next CEO will arrive, and it will be for them to deal with. I do think we need a lot more honesty on where we are.”

Clémence sees a parallel with the pandemic. “The pandemic for me was a dress rehearsal to what climate change is going to do to us. Taiwan and South Korea invested in adaptation very early on, because they had SARS. They said we're going to adapt the situation, we're going to put these policies in place and so on. But countries in the West, like the UK or the US, sort of tried to do some last minute mitigation, which didn't result in anything. We had the adaptation later through the vaccine.”

As for companies, adaptation will vary as it would mean “speaking the truth”.

 

Solutions to climate change: better disclosure will help, but the older generation is sceptical

Clémence notes that investors still have a limited view of what companies are doing. There is no accounting framework for environmental or especially social impact. “So we need this sort of information and then we need governments to react based on that. There are great companies out there who by their own initiative to do well, but they're the outliers. I think I saw recently a study that only a fraction of companies actually make meaningful climate disclosures. We need more centralised action, it's not going to work if only a minority of people do something.”

It’s also about awareness and consumer behaviour. “I don't think it's in anyone's consciousness except for people who work in this area. Most financial planning clients are 50-plus, and it's a generation of people who have been told that the world is going to end several times, the Cold War, overpopulation, Chernobyl, and it never happened. In other words, I’m not sure whether that generation is ever going to grasp that climate change is going to be so hugely impactful on everyone’s lives.”

 

COP-26 saw limited progress

Clémence is lukewarm about the outcomes from COP-26. “At the moment, you've got different countries with different targets, some not even believing in climate change, some serving their own oil interests, and the world is still going to go to two or three degrees, even if France builds all the nuclear plants, even if Germany has all the wind and solar. I think therefore we need a more coordinated action that is actually binding where everybody has a concrete action plan. And part of that requires that we actually know what companies are doing.”

 

The outlook for 2050 is currently bleak

Clémence says the Climate Change Tracker is disturbing. “It's quite clear that we’re heading towards the three or four degree scenario if we don’t do enough. Even these scenarios are relatively optimistic because we could have another pandemic, there could be a huge migration from countries that will just not become inhabitable. I think a lot of things are going to happen up until the end of the century, and even before 2050 I think we go into a lot of problems. I'm not very optimistic, because I'm 28, and we have had 26 COPs and look where we are. Really nothing impactful has been done, we still have increased emissions, and we have such a big problem that by the end of the century, it looks like it will be very problematic to live here, unfortunately.”

This document is issued for information purposes only. The views expressed do not constitute financial, investment or professional advice. They are the opinion of Clémence Chatelin only and do not necessarily represent the views of CCLA Investment Management Limited or Paradigm Norton Financial Planning Limited.