Monaco's financial place will soon be a model of sustainable finance?

Jean Castellini

H.S.H. the Sovereign Prince's commitment to sustainable development underpins the actions of His Government. Sustainable Finance was already a reality in the Principality in the 2000s. Mr. Jean Castellini, Government Counsellor - Minister of Finance and Economy, wishes to position the Monegasque financial place as an international model of green finance.

Is it difficult to promote sustainable finance?

Not at all, because today it is not a coercive or punitive approach, but on the contrary a positive and inclusive one. Supporting new solutions to protect the planet from global warming is not only useful for everyone, but it is an investment option that clients are demanding, especially the younger generations. Family Offices, according to a recent study by Black Rock and Juniper, believe that having a positive impact on the planet and a sustainable ambition is essential.

Is the Principality of Monaco familiar with Impact Investing?

The State has set an example in the management of the Constitutional Reserve Fund (FRC) since the early 2000s. At the time, two sustainable finance funds existed in the Principality: Monaco Eco+ and MC2D, managed respectively by the Compagnie Monégasque de Banque and CFM Indosuez Wealth.
In 2009 the FRC diversified its investments in sustainable development with the Terra Munda fund, managed by a subsidiary of the BNP Paribas Group.
In recent years, we have also focused on private equity funds with the ambition of finding talent in the field of technological innovation in the service of the environment.
Today, the players in the Finance sector in turn must adapt, and banks are integrating this approach by offering services or products with a positive impact.

Do these products have an interesting profitability?

The "greening" of the products is not at the sacrifice of profitability or higher risk-taking. At one time this could be the case, because the approach chosen was exclusive. Certain sectors of activity or countries could be avoided, investment opportunities were reduced and potentially the risk increased.

Today, we are in an inclusive approach where it is possible to diversify investments with sufficient buy-in from all sectors of the economy concerned. This generates a positive performance, which is why we can envisage that all or almost all of the CRF will be managed in a sustainable manner.

What's the interest for Monaco?

It's interesting on two levels: the first is strategic and political, the other is economic and financial.
Strategically, we can deploy capital beyond our borders, in accordance with the Sovereign's ambitions.
The Reserve Fund then fulfills a societal role, it promotes the emergence of new technologies at the service of sustainable development.

To sum up, we would thus have a national green fund endowed with tens of millions of euros for the energy transition in Monaco, and a green reserve fund that would deploy capital of several billion euros around the world.

What is the goal for 2021?

Monaco must be an international model of sustainable finance. It is an interesting vector for positioning the Monegasque banking and financial place, even if competition exists in Europe with places such as Switzerland or Luxembourg.

Our approach must be collaborative. The Department of Finance and the Economy could offer, in line with the professional certification linked to financial activities, training in sustainable investments; questionnaires to the clients of the financial place could also identify the appetite for ESG investment, and in particular on the environmental protection aspect.

I would like to unite all the professionals in the financial community in this idea and promote investment approaches that protect the planet and future generations.