Interview with Olivier Marquet: "There was a proliferation of sustainability claims."

Speaking to Bruno Iserbyt for VFB magazine, Olivier Marquet explains how Towards Sustainability can help investors.

With Towards Sustainability, our country is at the forefront of one of the leading labels for financial products in Europe. From savings accounts to pension products and investment funds to ETFs, you can search for a labelled product that suits you via the label's website. But what exactly does it mean when your investment holds this label? Olivier Marquet, independent chairman of Towards Sustainability's Board of Directors, gives an insight into the label's origins. The former top banker at BBL, ING and Triodos Belgium, among others, also casts a glance into the future.

“The label was introduced at the end of 2019, after roughly a year and a half of preliminary research,” Marquet explains, drawing on his two decades of experience in sustainable banking. “At that time, two major forces were at play. On one hand, there was a proliferation of funds claiming sustainability without substantial backing, which drew considerable criticism from civil society organizations. Some of this criticism was warranted: greenwashing remains a significant issue, partly because 'sustainability' lacks a clear, uniform definition. It's a multifaceted theme that is constantly evolving, leading to confusion among investors about the criteria for considering a financial product sustainable.”

“On the other hand, about five years ago, there was an increasing demand from governments to make the financial sector more sustainable,” Marquet continues. “I had already spoken about sustainable investing at a Senate hearing about a decade ago. I was convinced then that a private initiative would be more flexible than a government-mandated label. A relatively small team of experts can implement changes much quicker, which is essential for a theme that evolves so rapidly. That's why we set up Towards Sustainability—to establish minimum requirements for sustainable financial products and thus assist investors in identifying truly sustainable options.”

“Tom van den Berghe from Febelfin took the lead in this initiative. He brought together various financial players—banks, asset managers, and insurers, to name a few—with civil society organizations. The initial meetings aimed to establish minimum criteria that were widely supported yet stringent enough. I believe we've succeeded in finding that balance.”

Evolution

“This is the unique aspect of the Towards Sustainability label,” emphasizes Marquet. “We did not choose to define an eternal set of rules carved in stone. Sustainability is an evolving concept. Therefore, our approach is somewhat different. Instead of defining a detailed list of excluded investments, we outline a framework of minimum criteria that is reviewed every two years. The investment policies of funds applying for the label are then evaluated by an independent verifier against these criteria. This sometimes creates a grey area, which embeds the evolutionary nature of sustainability into our methodology. The suitability committee must rule on certain aspects, creating a kind of case law. The verifier is an independent consortium consisting of Forum Ethibel, ICHEC University College, and the University of Antwerp.”

“This independence is crucial and is anchored in the label,” stresses Marquet. “Towards Sustainability is a separate, independent non-profit organization that is financially self-sustaining. Additionally, the Board of Directors and the eligibility committee, chaired by Professor Luc Van Liedekerke, are composed equally of representatives from the financial and non-financial worlds (academia and civil society). This independence is also recognized: the French Novethic, a benchmark in sustainable investing, has praised our approach.”

Baseline

“We expect funds to apply at least three sustainability strategies. This creates a healthy baseline. The label was never intended to select a niche of dark green funds. As the name suggests, we aim to move as many financial players as possible towards sustainability. The gradual tightening of the criteria confirms this.”

“In addition to the independent evaluation of investment rules, auditing is another crucial aspect. This is something that current European regulations lack. Our label goes beyond just reviewing written investment policies; it also involves random portfolio screenings. I am confident that the label will continue to be relevant, even as European regulations become stricter.”

“The challenge is to become a standard label for individual investors, like organic or fair trade labels. Today, Towards Sustainability is already considered a standard by Fund of Fund managers. The clear rules and independent screening should ensure that bankers actively promote the label. Hopefully, it will become a quality standard that individual customers request on their own,” concludes Marquet.