Sustainable finance plays a key role in serving a more responsible economy, in two aspects in...
Interview with Marie-Geneviève Loys Carrieras, Head of Solidarity Investments
With the publication of the BNP Paribas Asset Management 2020 social performance report (in French), Marie-Geneviève Loys Carreiras, Head of Solidarity Investments, BNP Paribas Asset Management addresses the challenges of impact investing and the results of solidarity investment activity in 2020, a year that was exceptional in many respects.
When did solidarity investment start to take off?
The development of solidarity investment is partly based on favourable
regulations. In France in particular, collective retirement savings
plans (since 2001) and company savings plans (since 2010) are required
to offer at least one solidarity fund, i.e., one that financially
supports the stakeholders and structures of the social and solidarity
economy (SSE) sector. We have turned a legal obligation into a proactive
approach. This is partly due to our history as a manager of employee
savings plans, the largest source of funds for solidarity-based
investments. A word of caution though - what we do is investment and not
philanthropy: savers must recover the money invested.
How is a solidarity fund characterised?
Most of the time, this investment takes the form of "90/10" funds in which 5% to 10% of assets are invested in debt or capital in associations and companies with a strong social impact, in order to help them develop. The remaining 90% is in conventional assets. To ensure that we deliver sustainable returns to our clients, we prefer mature structures that have been in existence for at least three to five years and that have achieved economic balance. BNP Paribas Asset Management currently manages 13 solidarity funds with assets of €2.8 billion, of which €148 million is invested in structures covering areas such as access to employment and housing, equal opportunities, access to health care and maintaining independence.
The idea is to identify social and environmental problems - unemployment, deprivation, poor quality housing, global warming - and to tell ourselves that solutions exist. Solidarity financing is there to accelerate their development..
How do you measure the social impact of an investment?
That is the big question of impact financing! The aim is to measure the changes generated among beneficiaries resulting from implemented actions. It is no longer enough just to tell a good story: Clients, investors and regulators expect proof of the positive impact that we promise. As solidarity financing involves an analysis methodology throughout its investment process, it has also been a way to pioneer social impact measurements: upstream, for the selection of investments, and downstream, to measure and report on the social performance achieved. This must be as rigorous as any standard financial analysis.
In 2015, together with the specialist firm KIMSO, we developed an impact measurement methodology that makes it possible to define precise indicator grids with our solidarity partners that are monitored throughout the life of the investment, in order to quantify and concretely track its impacts. We believe that it is essential to maintain a qualitative and contextualised analysis, comparing the fragility of the targeted beneficiaries with the effectiveness of the solutions provided.
That seems like quite a challenge...
As solidarity financing involves an analysis methodology throughout its investment process, it has also been a way to pioneer social impact measurements.
It is indeed very complex since we're dealing with subjects that are extremely difficult to quantify - how can we measure the decline in an elderly person's loss of autonomy, for example? Also, this cannot be calculated instantly, so it’s – important to make sure that investors understand that this takes time.
Are you in contact with the companies you support?
That's one of the exciting things about this field. The teams meet up with entrepreneurs, analyse their projects and choose which ones will be financed. Then we support them in their value creation.
It's been widely stated that the SSE has weathered the health crisis well. Is this true?
The Covid-19 crisis has accentuated all social inequalities and, at the same time, has helped to highlight them. It has reminded us all of the need to continue our efforts alongside solidarity investors and partners. To answer your question, yes, the SSE has stood up well, but it is also only continuing to achieve its mission.. Solidarity stocks are stable stocks that are attracting growing interest from savers. The search for meaning and positive impact is gaining ground in finance, in France and in the rest of the world.
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