Serge Krancenblum (IQ-EQ): Sustainability is more than just being green
There is a growing desire for environmental, social and governance (ESG) norms to be respected in finance and investment. According to Serge Krancenblum, chairman and founder of IQ-EQ, the real challenge is to determine compliance and minimise reputational risk through ESG benchmarks based on reliable and consistent data.
Why is ESG so important to you and IQ-EQ?
As a co-founder of a company that has become one of the world's largest independent players in the field of investor and asset manager services, I have two major responsibilities. The first, as group executive chairman, is the strategy and non-organic growth of the organisation. The second is our commitment to environmental, social and governance standards. Thirty-five years ago, when I started my professional career, we didn't talk about ESG but I have always wanted to build my group in a responsible way to ensure its sustainability. This obviously involves the company understanding that we have a real social responsibility. I always understood that taking these questions into account would become crucial for all types of company and would play an increasingly important role in the financial sector and in the wider Luxembourg marketplace.
"One of the most important challenges is the question around data integrity and reliability."
How do you help your clients in this area?
IQ-EQ works for large alternative funds, including private equity funds, and for their institutional and family offices investors. They all understand that they must invest with or in sustainable companies. "Sustainable" does not only mean "green", it also means respecting every aspect of ESG. We collect and compare data for our clients to help them make their investment decisions, as well as monitoring these positions afterwards. We also provide them with ESG reputation assessments of a target or of an asset manager. These help clients avoid dealing with entities that do not share their values. We help clients focus on the "E", "S" and "G" by ensuring, for example, that a target does not use carbon-intensive cars, that diversity and inclusion extends beyond gender to the respect of minorities in every country of operation, or that the business meets certain minimum governance criteria.
Where are the challenges and opportunities for IQ-EQ and ESG over the next three to five years?
One of the most important challenges is the question around data integrity and reliability. Unreliable information can hamper the assessment of a company's ESG compliance. Our clients need data they can rely on to ensure that they are not working with an asset manager or investing in a company that are not ESG compliant. A lack of reliable data could have a negative impact on their reputation. A number of different measures currently exist, and we hope that organisations will adopt common standards and KPIs. In terms of opportunities for our group, we know that in the future no one will be able to do without ESG processes, nor will they be able to avoid demonstrating compliance with these standards. This has great potential for us and of course for the society in general.