The Spanish Association of Sustainability Managers (DIRSE) celebrates a decade. Ten years of activity in which they have ‘grown in size’ hand in hand with the corporate revolution that companies have experienced in the field of sustainability and which are having an impact on employment. “In the beginning there was barely an offer or two a week. Now around 70 vacancies are published,” explains Alberto Andreu, who has just handed over the baton of the association’s presidency to Ana Gascón Ramos after two years. In an interview with La Información, Andreu takes stock of this period, in which the revolution has come hand in hand with regulatory changes. A legal framework that will continue in the future and will encourage “sustainability information to eat up financial information in the future”.
“The indicators to measure the gross operating result (EBITDA) are around 25. However, the non-financial ones are many more,” he points out to assert that ultimately, “the market realizes that capital losses are caused by financial scandals, but mostly by non-financial ones”. “Whether you like it or not, climate risks can make you lose money”, he qualifies, which is why he emphasizes the importance of knowing sustainability risks in order to be able to secure investment and predict that, in a few years, the Sustainability information will surpass financial information in relevance, since it will measure the company from all angles.
The also professor at the University of Navarra argues that the business scandals of the last two decades are related to the ‘G’ for Governance and the ‘E’ for ‘environmental’ (environmental). Thus, he emphasizes that corporate activism will increase as long as it involves growth in assets.
“You like it or not, climate risks can make you lose money”
In the case of Europe, the transformation became evident since the launch of the Sustainable Finance Plan promoted from Brussels in 2018 and, within this, the EU Sustainable Finance Disclosure Regulation (SFDR, for its acronym in Spanish). in English) of 2021. “From the investor approach, it is a huge movement,” he says. In the case of the aforementioned SFDR, it seeks to promote the classification of financial products into categories and forces asset managers and independent advisory firms to detail the parameters they follow. The aim is to make it easier to compare funds in terms of sustainable criteria and help when making decisions.
With respect to Spain, Andreu stresses that it leads other European countries in terms of sustainability information, since the transposition in December 2018 of the directive on the disclosure of non-financial information went further, and that It has allowed companies to arrive more prepared. The future unified report that EFRAG is working on is a step forward in the maturity of sustainability because it will also have the element of verification of the measures by a third party.
“The key point is that the signature of a third party compromises the image of a company”, to add that “the SFDR leaves the door open for there to be a reasonable assurance in 2028” and that the procedure when auditing a non-financial report is the same as the employee when analyzing a balance.
Andreu sees it convenient that when reconsidering the valuation methods of companies, the method known as “netting” should be used, which would imply restoring the harmful actions that are generated in the income statement. “It is difficult to assess the positive impact because it is subjective, while the negative one is easier,” he points out. In this context, he points out that although “many metrics” have been developed, the problem lies in the quantification of the footprint in certain issues. By way of example, he points out that estimating the reduction of the carbon footprint “is simple”, but it is not so easy when it comes to calculating the benefits of improving transparency in a company’s supply chains. One of the factors lies in the lack of consensus and homogenization on the aforementioned metrics. “100% of the indicators are measured in two or more ways. Conclusion: it cannot be compared,” he says.
“It is difficult to assess the positive impact because it is subjective, while the negative is easier”
During the conversation, he highlights the ‘war’ of ESG standards, as well as the differences in their design between Europe and the United States, of which he points out two. One of them is related to scope three emissions, referring to those produced by the value chain of a company, but which is not under its control. The other alludes to the fact that the SEC (the Securities and Exchange Commission of the United States) does not require double materiality, which implies taking into account threats and opportunities from the financial and non-financial point of view. Despite this, he qualifies that from the investor side this difference “is not significant”, except that the external environment affects it “negatively”.
In this sense, he warns of the rise of the ‘anti-ESG’ movement in the United States, which has its origin in two aspects. The ideological one, which is “necessary” to separate from the scientific evidence, and the rational one, which is observed in some states in which investment is no longer being channeled towards “less clean” companies, such as oil companies, with which “it is the value of the assets at stake. “Sustainability is not going to be radical, but a transition must be made and see how the strategy of these companies evolves towards hydrogen or renewable energy projects (…). The question is whether I deny sustainability or protect the value of assets”, he points out, while stressing the need to separate ideals in these matters. “This current can reach Europe, but what cannot be denied is that money is global and seeks protection and adequate risk management”, he concludes.