Rethinking the nature of savings to accelerate change

The global economic environment: now is the time for responsible savings

Climate change, the health crisis linked to Covid-19, the strengthening of social inequalities, etc…. All environmental, economic and societal indicators across the world point to the need for greater awareness: the time has come for us to reflect on creating a more responsible world. There are two reasons why individual savings can play a key role in the achievement of this goal:

1. On the one hand, a growing number of committed consumers are convinced that their way of living, producing and consuming could shake things up and have a positive impact on the economy and society. This awareness and willingness to act also covers their savings and what they intend to do with them. It is these savings that are financing the real economy. Savings also have a positive impact on investment choices. A survey by Morgan Stanley in 2019 found that 85% of individual US investors express an interest in responsible investment. Similarly, an IFOP survey carried out in September 2020 for the Responsible Investment Forum reveals that 62% of French people say they give a high priority to environmental and social impacts in their investment decisions: a desire for more meaningful investments shared relatively widely across the world.
   

2. On the other hand, personal savings levels have rarely been so high. In many countries, periods of successive crises and, more recently, periods of lockdown have led savers to hoard. The European Central Bank as well as the OECD, have published studies showing an unprecedented peak in household savings (the household savings rate stood at 16.9% the eurozone in Q1 2020, compared with 12.7% in Q4 2019).

Responsible savings: where do we stand today?

Responsible savings refers to traditional format investment savings products (employee savings, life insurance, securities accounts), but which incorporate extra-financial criteria such as ESG (environmental, social and governance), which characterise sustainable finance. When these criteria, are taken into account, companies with irresponsible business practices or that belong to certain industrial sectors with a negative environmental public health impact can be excluded from these savings products’ investments. Preference is given to companies that are both the best performers and which have a real positive impact, such as certain socially responsible investment funds or the social and solidarity-based economy (SSE).

However, there are still two main obstacles to the expansion of responsible savings:

• Knowledge and visibility of responsible savings products

Too few individuals know little or nothing about these products. It is up to financial players to educate savers and to the regulators to give them clear and transparent labels so they can better understand and compare in order to generate greater confidence.

• Responsibility doesn’t mean loss of profitability

In making their investment choices, investors rely on three main criteria: reliability, liquidity and profitability.

"A fourth requirement has been added, across all generations, and this is a need for meaning," adds Laurent Monet, Head of Marketing Epargne France at BNP Paribas. Responsible SRI funds do in fact demonstrate strong growth and resilience and sometimes even perform better in times of crisis than traditional funds. During the economic crisis caused by Covid in early 2020, the CAC 40 in France fell by 17.5% while socially responsible investment funds lost only 6.5%. Dominique Brisse, savings and insurance advisor at BNP Paribas in France, noted the same performance: "Between 31 August 2015 and 31 August 2020, the CAC 40 increased by an annualized 3.57%, the index of our Aqua thematic fund by 9.01% and the index of our Smart Food fund by 3.82%."

• Engaging with clients: retail banks, wealth advisers and insurers, employee savings schemes

Steering individual savings towards responsible investment requires advice from financial specialists: retail banking networks, private banks such as BNP Paribas Wealth Management, employee savings specialists such as BNP Paribas Epargne et Retraite Entreprises, and insurers such as BNP Paribas Cardif.

For example, BNP Paribas Wealth Management provides its clients with tools to help them make responsible investment decisions in line with their convictions. For example, it offers the MyImpact simulator. Using a simple and quick questionnaire accompanied by a full explanation of the concepts of sustainable development, the programme enables clients to assess their profile as responsible investors and provides them with advice on the most appropriate investments in terms of responsible investment and philanthropy. Another example is Clover, a methodology for assessing funds and asset managers that steer these funds based on sustainable development criteria. Using this tool, clients can decide how much "sustainability" they wish to give to their investments.

"We offer our clients not only sustainable investment solutions, but also education and advice to guide them towards the most relevant choices," says Eléonore Bedel, Global Head of Sustainable Investment at BNP Paribas Wealth Management.

Leader in the SRI market in France and in sustainable theme funds in Europe, BNP Paribas has placed sustainable finance at the heart of its strategic choices and regularly makes new commitments in order to further this form of investment. BNP Paribas Cardif has therefore decided to increase its positive impact investments to €11.5 billion by the end of 2024 by investing an additional €5 billion in activities with a positive environmental and social impact. In addition, at the end of 2019, in France, BNP Paribas Cardif held €6.7 billion invested in unit-linked products considered as "Socially Responsible Investments", including € 4.3 billion in labelled products.

We are equally involved in promoting sustainable investment through BNP Paribas Asset Management, which is positioned as number 1 in SRI in France in terms of both funds and assets under management and is at the forefront of responsible asset management. The BNP Paribas Group asset manager is ranked 8th worldwide and 4th in France by RIBI (Responsible Investment Brand Index). This index assesses the asset management sector on its commitment as a responsible investor and the ability of asset managers to translate this commitment into the core of their corporate identity. BNP Paribas' asset manager is also regularly recognised for its involvement through its voting policy.

As Antoine Sire, Director of Corporate Commitment at BNP Paribas, puts it: "BNP Paribas Asset Management is one of the two global investors that vote the most climate resolutions at company shareholders' meetings."

Rethink the nature of savings, to accelerate change

Investing in the next generation, to accelerate change. 1/2

Investing in the next generation, to accelerate change. 2/2

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