Alexandre Tiesset on helping clients deal with the current regulatory environment
With Alexandre Tiesset, Head of ESG at SESAMm. Alexandre is responsible for developing and overseeing ESG methodologies at SESAMm.
How do you help clients manoeuvre around the challenges posed by the current regulatory environment? Have you seen an increased momentum from both investors and corporates to disclose?
There are numerous new regulations, especially in the context of the EU Green Deal. There are two main areas regulated: sustainable finance which aims to transition to a low carbon economy and sustainability in the company with CSRD and CSDDD.
We can help sustainable finance actors using our model to spot controversies with a large panel of ESG risk but also without constraints of universe.
More recently, the CSDDD (Corporate sustainability due diligence directive) will require large companies to monitor their supply chain for adverse behaviour on fundamental Human Rights and Environment.
How important it is to consider company’s stakeholders to build a meaningful ESG strategy?
A company cannot properly work without its stakeholders such as shareholders, creditors, clients, employees, government & local authorities, environment and many more. That’s why there are frameworks that promote best practices such as OECD guidelines, UNGC, ILO conventions.
It is thus essential for companies to implement CSR strategies to guarantee that every stakeholder’s interests are considered.
On the investor side, a meaningful ESG strategy will result in collecting ESG indicators (accident rate, GHG emissions, board diversity, …) and monitoring the stakeholder feedback via the media, NGOs and social media. SESAMm’s solutions able to monitor millions of sources and compile billions of documents, enabling investors to use stakeholder feedback as a relevant ESG indicator.
Does a structured approach to stakeholder engagement allow investors and corporates to develop more impactful ESG initiatives?
The relevance of an ESG strategy will depend on the good identification of material stakeholders. Materiality is essential, The European Union encourages the concept of double materiality: the assessment of how an ESG issue impacts the company and how the company impacts the ESG issue. For example: Is the company subject to extreme weather events ( physical risks related to climate change such as floods, droughts, …), and does the company have a significant impact on global warming inducing those changes? CSR reporting frameworks such as ESRS (European Sustainability Reporting Standards) help the company to identify the relevant stakeholders and to take appropriate action/initiatives to mitigate its impact on them so that it can avoid the associated risks.
Can AI and NLP make ESG metrics more meaningful? Can AI and NLP eliminate some of the ambiguity around ESG ratings and minimise the problems associated with siloed and overlapping data, incomplete and aggregated self-reporting?
AI technologies made very good progress in recent years, especially the large language models that drastically enhance the capabilities of collecting and analysing data. We hope that those progresses result in more comprehensive ESG opinions, including the most ESG-related events that enable to add new pieces of information to nuance self-reported data. This is also the opportunity to cover more companies out of the current coverage with a large cap bias. This is how SESAMm uses artificial intelligence to provide its client ESG data across all asset classes, especially private equity.
