When sustainability meets private assets
February 18, 2025
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10 min read
Vincent Touraine: Hello and welcome to the IPEM Wealth 2025 edition here in Cannes as we explore the latest trends in the private assets industry. What's the mood right now and what can we expect in the coming months? Here to discuss this is Anne-Laurence Roucher, deputy CEO, head of private equity and natural capital at Mirova, which is an affiliate of Natixis Investment Managers.
Before we get into the details of your investment strategy, a quick word on Mirova. What does it represent today?
Anne-Laurence Roucher: So, Mirova is an asset management firm fully dedicated to sustainable and impact investing. We manage €32 billion. We are a 12-year-old company, and within those €32 billion, we manage €27 billion in liquid assets, so listed equity, fixed income, and €5 billion in private assets. In private assets, we are active across three asset classes, which are energy transition infrastructure, natural capital, and private equity.
VT: That said, how do you invest in private assets at Mirova? What's your approach?
ALR: So, our approach is that private assets are really a good fit for sustainable and impact investing. We have taken the view that we should be experts in the asset class in which we invest. As you can see, we have a pretty strong environmental bias because we invest in energy transition infrastructure, which encompasses renewable energy, storage, and clean mobility. We invest in natural capital, which is about agroecological infrastructure, basically regenerating, protecting, and restoring nature. This means restoring forests that generate carbon credits on the voluntary markets that are bought by corporates or promoting sustainable agricultural forestry practices, regenerative agriculture practices, that enable the production of sustainable and certified food and timber that is bought by the large corporates of this world. The last one is private equity, where we have a first investment strategy that is to invest in environmental solutions for the environmental transition, and a second one that is a tech-for-good strategy, meaning to invest in solutions around humans to promote a just and human transition.
VT: What's the current mood in the market segments you're addressing and what do you expect in 2025?
ALR: So, the mood is cautiously optimistic. To give you some perspective on private equity, last year saw a limited number of deals because bidders and offers were not matching in terms of prices. The recent slowdown in interest rates has helped a little bit, and therefore we've seen a bit more transactions, and prices are going a bit up, which is a pretty good sign. More precisely, we believe that when your theme is a good one, when your investment approach is robust, and your theme is here to stay, this is not because you have liquidity issues that you don't make deals. To put it in other words, planetary boundaries have been crossed, and it's not because there is some political turmoil or uncertainty that it will stop.
So, the solutions to how we manage the overcoming of the planetary boundaries are still very relevant. This is long-term, and that’s why it makes sense. A good example is that the clean tech deals have been larger in number and in value in 2024 than in 2023, which I think is a pretty good mark that actually when your theme is robust, whatever the market uncertainties, it works.
Now, touching on natural capital, what we see is that corporates are very much cognisant of climate change. They have been pretty active in reducing their carbon footprint across their value chain, and they pay a lot of attention to the last mile, which can be done outside their value chain through carbon sequestration with voluntary carbon credits that are generated when you protect or restore forests.
On another note, food security and supply chain resilience in the food business are becoming more prominent, especially in light of heat waves and droughts, where the food supply is at risk, in conjunction with the reduced yields. We know that regenerating the soils and moving to more sustainable agricultural and forestry practices is key to restoring yields and ensuring we have enough food. In this conundrum, natural capital investment strategies become better understood.
VT: Would you say sustainable investing is being challenged right now?
ALR: It is, actually, on listed markets mostly. It is for many reasons that we all know, a lot are related to political reasons both in the US and in Europe. It's also because the macroeconomic context is more difficult and requires investments to make the sustainable transitions we need to do, so that's for sure. On listed markets, their key feature is to overreact, and the valuation of the market is not intrinsic; it's done by the market. Investors can change their mind every other day and still be right.
On illiquid markets, we invest for the long term with patient capital. We have fundamental valuations that don't change from one quarter to the next or from one year to the other, so therefore it's much more stable. That's why we are still much more aligned with the long-term trends that are happening.
VT: So today, you're speaking at a panel session here at the IPEM Wealth in Cannes about thematic funds. Are these funds the next biggest thing in wealth channels? What's your take on this?
ALR: Thematic funds on the listed markets, typically on listed equity markets, are valued because the value proposition is very clear. It’s the same for private assets; it's a clear value proposition, and more and more investors want to do good with their money. Ideally, they want to combine robust financial returns with a positive impact regarding environmental and social issues. Investing thematically enables you to do that.
That's basically our investment thesis and value proposition at Mirova, and therefore it’s a pretty powerful message because there is no trade-off to make in that kind of investment strategy. Basically, if the technology or the solution proposed by the project components in which we invest is robust technologically and the market from a sales perspective is there, then the more business the project proponent makes, the more money, the more financial returns, and the more impact. That’s why they are truly correlated, and it’s a virtuous circle. That’s why we believe our investment thesis is here to stay, and thematic funds make sense in this perspective.
VT: More generally, what have you learned so far about the wealth sector? Because this is the IPEM Wealth.
ALR: What's interesting is that the wealth sector in private assets represents 5% of the total private assets AUM in the world. The inflows from wealthy investors represented, for the first half of last year in France, 20% of the inflows. So, the inflows are four times larger than the AUM. This trend is here to stay, we believe, because it's a great diversification tool for individual investors.
VT: Finally, what would you like to tell wealth professionals and their clients? What are your key messages here?
ALR: So basically, they should continue because private markets represent more than 80% of the global economy and more than 50% of the jobs. Being exposed to those private markets is clearly an addition to listed markets. The tools to invest in those private markets have been improved: lower ticket sizes, capacity to invest through online platforms, and favourable regulations such as ELTIF 2 or the green industry law in France. We believe that the tools are here, and the fundamentals are here as well to justify a much larger allocation from individual investors to private assets.
