Interview with Marie-Anne Vincent, VP of Climate Finance
The indirect emissions of a financial institution’s investments can be over 700 times larger than those from direct operations. So finance clearly plays a crucial role in the transition to a green future. But how can investors track the climate impact of their – possibly very wide – investment portfolios? Help is at hand, as Marie-Anne Vincent of Sweep explains.
It’s great to have you with us today, Ms Vincent! We appreciate your making time for us despite the busy schedule. Can we begin with a few words on what drew you into climate finance?
Becoming a mother of two was a major turning point for me in thinking about the world I would be leaving behind for my children and future generations. Given my background in finance, I started to look into ways to transform the industry into an active agent for a better, cleaner future. It was around this time that the 2015 Paris Agreement came through and ESG more fully emerged as a concept. This drew me further into the world of climate finance.
After a few years at Carbon4Finance, a leading European climate and biodiversity data provider for financial actors, I realised that tech innovation was necessary to tackle the complexity of financed emissions, and joining Sweep as VP of Climate Finance was the next obvious step.
What do you believe is finance’s role in the global low-carbon transition?
Financial institutions are vital in funding the transition to a green future and channelling investment into the right areas. Finance has a key role to play in accelerating innovation and the development of new climate solutions and low-carbon industries.
Private equity is a great place to start when we talk about sustainability and financing the climate transition. In 2021, private equity firms managed $6 trillion worth of assets. That will exceed $11 trillion in 2026. It is currently estimated that $3 trillion in investment is needed to limit global warming to 2°C by 2050, meaning private equity will be critical to keeping us on track to fund the green transition.
As well as financing low-carbon industries, finance as an industry has a crucial role to play in helping portfolio companies to decarbonise, so that investors can start to make an immediate impact on reducing carbon emissions, rather than only investing in technology that will be ready in a few years time.
Your company is now targeting high-emitting industries such as financial institutions and is today launching Sweep for Finance. Can you tell us more about this direction the company is taking?
We target high-emitting industries because we want to have the most impact. By helping the biggest emitters, with large supply chains, we can start a global movement toward decarbonisation.
Our mission is to help companies and their partners get on track in their climate journey. We believe we can only make this a reality by using carbon data and tools.
Every carbon journey is unique, which is why Sweep for Finance tailors its approach to the individual needs of the financial institutions we work with. Currently, the indirect emissions of a financial institution’s investments can be over 700 times larger than those from direct operations. Our network approach to carbon management facilitates the real-time exchange of carbon data by connecting investors to portfolio companies. This helps them take action with their investees – whether it’s a US start-up that has yet to start measuring emissions or a UK corporation looking to get accurate data to comply with new climate disclosure requirements. This tailored network approach is the reason why leading organisations such as Coatue, Mirova, and 2050 chose Sweep for Finance to reach their climate targets.
Companies need to have clearly defined targets and obligations, as well as appropriate reporting mechanisms, in order to access and maintain funding options. What can be done to prevent businesses from using “greenwashing” as a means to an end in this regard?
Greenwashing thrives because of a lack of transparent data. This is where carbon management solutions like Sweep play a crucial role. Sweep for Finance covers 100 per cent of an investor’s portfolio to help improve the accuracy of emissions data.
By making it easier for companies to track and report on their carbon emissions, carbon management solutions help businesses to prevent claims such as greenwashing, which can damage their reputation as well as their bottom line.
The more we educate businesses and the public in this area, the harder it will become for companies to greenwash, or to be accused of greenwashing, when actually they’re trying hard to improve. At Sweep, we try to emphasise that decarbonisation is a journey that’s neither solely good nor bad. It’s a process that takes time, trial, and error in order to change the way a company has been operating for years.
Wherever a business is in its climate journey, tracking their progress with accurate and clear data is key. This will make their investors, customers, and regulators happy, prevent them from falling into the greenwashing trap, and keeping them on track with their climate targets and regulatory requirements.
What do you think of the rise of new climate disclosure regulations in Europe?
Regulations are one of the most effective ways to accelerate action to lower carbon emissions and meet global net-zero targets. Ultimately, the rise of climate disclosure regulations will push financial organisations to get reliable and consistent climate data from portfolio companies, giving them clarity on how to act and preventing greenwashing. The EU is set to adopt the Corporate Sustainability Reporting Directive (CSRD) this month, which will require all companies with 250 or more employees to measure their carbon footprint. In the UK, the Taskforce on Climate-Related Financial Disclosures (TCFD) framework is regulatory policy and was adopted back in 2019 by the Bank of England, and requires mandatory climate-related financial disclosure for companies with over 500 employees.
These climate disclosure regulations are definitely a step in the right direction towards a low-carbon future.
Do you think the private sector in Europe can lead the way in tackling climate change?
The private sector is vital in supplying the innovation and investment needed to transition to a low-carbon economy.
In the past few years, the EU has enjoyed unprecedented growth in the demand for sustainable investments, with the European green bond market forecast to exceed 1 trillion euros by 2025. Such a strong demand for ESG-driven investments is driving European businesses to look again at their business models through the ESG lens, encouraging them to increasingly adopt sustainable practices and lead the way in tackling climate change.
Investment into climate tech is also rapidly growing; the size of the climate tech ecosystem has doubled in value from 2020 and is now estimated to be around $104bn.
What impact is inflation having on businesses’ ability/willingness to work towards sustainability goals? In your opinion, what can be done to resolve this issue?
The current economic uncertainty is causing companies to reduce spending on their sustainability initiatives. For many CEOs and CFOs, green initiatives represent a significant upfront cost, often without an immediate payoff. The survival instinct is to keep their heads down until inflation subsides. But we simply don’t have time. More importantly, a climate programme that supports the climate journey of portfolio companies will be more impactful in the long term.
From resource shortages to supply chain disruptions, one could argue that the recent crises – COVID, the Russia-Ukraine conflict, to name just a few – are just a rehearsal for the imminent climate crisis.
Companies should maintain investment in climate action now to reduce costs in the long term. Companies like 3M and FedEx have saved billions of dollars by sticking to a long-term sustainability plan. I would also urge companies to think about how continued climate investment will keep ESG scores up, which is likely to translate to a reduction in capital costs further down the line, as well as more opportunities to raise debt and get funding.
Can you also tell us a little about the difficulties of accurately tracking emissions and how to mitigate these challenges for businesses?
It’s difficult for companies to maintain an accurate picture of their carbon emissions across the value chain, especially when considering scope 3 emissions. There are still businesses that use Excel spreadsheets to record carbon data, which is often incomplete, out of date and, in some cases, completely falsified.
When investors are trying to measure carbon data from their portfolio companies, they either base this on estimates or send detailed questionnaires. This one-way process requires a lot of work for investors to harmonise and analyse all the data for each portfolio company – and more added work for investees, who don’t get anything in exchange.
By using an advanced carbon management platform like Sweep, financial institutions get a time-saving and comprehensive overview of their direct and indirect emissions, as well as the means to share that data and visualise how their changes are making a difference in the long run. Sweep for Finance can facilitate the real-time exchange of carbon data by connecting investors to portfolio companies – delivering a complete and auditable overview of their financed emissions. Most importantly, it enables them to collaborate on climate action.
Ideally, what changes would you like all businesses to implement by 2030?
We would like all businesses to have an accurate picture of their direct and indirect carbon emissions across their entire value chains by 2030. We will be in a much better position to achieve a low-carbon future when businesses are able to accurately track and act on their carbon emissions in real time. Hopefully powerful carbon management platforms like Sweep will give us the tools to achieve this.
Ultimately, our vision for the future is for companies to see carbon not as a limitation, but rather as a creative force for innovation and positive growth.
Our next goal is to work across the supply chain in high-emitting industries to help every business become a “forever company” – one which can adapt to and thrive through the low-carbon transition.
This article is originally published on November 08, 2022.
Marie-Anne Vincent is Sweep’s VP climate finance. The former CEO of the European climate data provider Carbon4 Finance has 15+ years of experience in the finance industry, working at various positions at HSBC and BNP Paribas on the intersection of finance and sustainability.