Rethinking the nature of savings to accelerate change

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 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).

1. 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.
2. 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%."