Savings, investment fund, label Finansol… Patrick Sapy CEO of Fair (Finance, Accompany, Impact, Gather) takes stock social financing and its place in France. Maintenance.
What are your activities?
Fair is a network that mainly brings together social enterprises and financial actors (investors and asset managers) with the aim of promoting more social financing. We can do it too Finansolthe first financial brand solidarity created in France in the 1980s.
Is it possible to invest in social enterprises?
There are social enterprises that offer their equity. This can be stocks, shares or debt, to finance their development. On the other hand, there are various financial players like big banks. They manage products such as booklet sharing which is a form of solidarity financing. There are also management companies that take care of the French’s savings by investing them in vehicles that match their wishes. Finally, there are investment funds, ie. venture capital specifically dedicated to the financing of social enterprises.
Solidarity financing arose in the early 1980s in two forms. Firstly, it is possible to finance international solidarity actions through specific means of financing. This is the case with the named mutual fund Hunger and development, created by CCFD, a pioneer in solidarity finance. At the same time is banks began offering sharing booklets. These are classic savings books in which it is possible to place your savings and transfer part of your annual interest in favor of an association of your choice, offered by the bank. These two types of solidarity savings work quite well.
What is Fair’s role in these various investment schemes?
We have several goals. Historically, we do education and communication about solidarity savings. There are approximately 2 million solidarity savers in France. We are trying to show that there is another form of savings that has a social purpose. We promote this through projects. We have secured this pedagogical discourse by developing one economic brand so that savers can recognize these solidarity investments. This is the purpose of the label Finansol. We want to change the legal framework to make it easier to save with solidarity. Our third mission is to share practices between actors, we are a network of social savings and we want to ensure that this sector continues to innovate and develop.
What exactly does the Finansol brand guarantee?
This label guarantees the saver transparency. The teams of Fair will dissect all the financial products labeled to see where the money is coming from and where it is going. By choosing a product Finansol, the customer is sure that the money will really be used to develop social utility structures. For example, the country of solidarity Habitat and humanism builds and renovates homes for insecure families. There is also the land of the bands who buy land back to enable the installation of young farmers. Finally, the ADIE (Association for the Right to Economic Initiative) offers small loans to insecure people to create or develop an independent activity.
What about financial results?
French savers are waiting for financial returns. This sector is evolving by working on the relationship between return and risk. The more risk the saver takes with his savings, the more likely he is to get a high return. In the house of Fairwe are in favor of a triptych of return, risk, impact. Solidarity Financing offers low-risk products such as savings books and other more risky ones such as mutual funds or equity investments. Solidarity financing does not underperform traditional financing. Its special property is to create social effect. Financial actors have built products that combine both economic performance and social performance. These funds make it possible to invest part of the French’s savings in associations, and the rest is brought to market. The label Finansol controls the solidarity pocket, but also how the rest is invested. We work with investments that are labeled “socially responsible investments” or that offer extra-financial accounting techniques to reassure investors. Their investments invested in more traditional securities are also more responsible.
Can we imagine finance being transformed around this triptych of risk, return and effect?
We can hope for this transformation. We have seen for three or four years that the growth of this financing has a double-digit rate. For example, between 2019 and 2020, outstanding quantities of labeled products Finansol increased by 33 per cent. It is still a marginal financing, representing only 0.4% or 20 billion euros of the French financial heritage. Our goal is to ensure that it settles permanently in the landscape. This is possible thanks to regulatory schemes such as the Covenant Act, which oblige insurance companies to present at least one solidarity account in their life insurance contract. It’s a big win because it’s the Frenchman’s favorite position. Having solidarity support of around € 1.8 trillion can contribute to the growth of social funding. We want every Frenchman to be able to save 1% of theirs financial wealth in solidarity. So this funding will really change in dimension.
Investing in companies that have put social issues at the heart of their mission can also irrigate the sector into the more traditional economy. “
What are you defending in this presidential election campaign?
We have just published a white paper containing ten proposals for the development of social impact financing. The idea is to better finance companies with strong social benefits. We offer institutional investors such as large organizations that manage pensions to invest 1% of their assets insolidarity savings, today this is not possible for regulatory reasons. However, there is a real appetite for social savings. We also offer a social finance label administered by the European Commission to distinguish between solidarity-based investments.
#Financing tomorrow 10 suggestions for developing social impact financing!
FAIR publishes a white paper for public decision-makers, citizens, investors … And for graduates # Presidential2022 !
To discover and share👉https: //t.co/wCwR0io5fG pic.twitter.com/Qzf0itMX3K
– FAIR – Label Finansol (@Label_Finansol) February 9, 2022
We are in a period of stress in the markets and in the companies due to Covid and the war in Ukraine. Are solidarity investments safer?
Social economy is robust. There are shock absorbing mechanisms. When markets rise sharply, solidarity investments rise slightly, but when they bend or fall, solidarity financing resists. For example, during the first lockdown in March 2020, markets stalled. We observed that asset managers have maintained their investments in social enterprises. Solidarity economy is patient and long-term. The socio-economic sector managed to get through this crisis despite certain funding problems. There was no resounding bankruptcy.
An interview conducted in collaboration with France Inter. Listen to the Social Lab column here.