Understanding Responsible Investment #12 - Difference between sustainable and positive investments and solidarity investments
"Understanding Responsible Investment" Podcasts
Episode #12: "Difference between sustainable and positive investments and solidarity investments"
by our CSR expert Dorothée Chapuis,
Head of Corporate Social Responsibility for Société Générale Private Banking Luxembourg, Monaco and Switzerland.
Click on the button below to play.
Dorothée Chapuis: Hello everyone and welcome to this podcast which is the twelfth in a series dedicated to Sustainable and Responsible Investment. I am Dorothée Chapuis, Head of CSR for Societe Generale Private Banking Luxembourg, Monaco and Switzerland. We have been talking about sustainable and positive investments for eleven episodes and in this podcast I wanted to look at the differences between sustainable and positive investments on the one hand and solidarity-based investments on the other - this, to put an end to the confusion that can sometimes arise.
First, let’s see what a solidarity product is…
There are two main categories of ptroducts. The first includes investments that integrates a mechanism for sharing part or all of the return with a general interest organisation such as an association or a foundation. Some savings products provide for the donation to be made solely by the subscriber, while others provide for a symmetrical donation between the saver and the financial institution. The number of products in the latter category has grown significantly in recent years.
The other category of solidarity investments is that which invests in securities issued by players in the social and solidarity economy (SSE) in order to finance them. These are companies, cooperatives or associations whose activity pursues a dual objective of social or environmental performance on the one hand and financial performance on the other: for example, social land holdings managed by associations such as the Habitat & Humanisme movement or the Abbé Pierre foundation, or micro-credit organisations such as France Active. It is possible for an individual to subscribe directly to the financial securities issued by these companies. But be careful, these securities are illiquid, without any guarantee of capital or return. Moreover, these securities must correspond to the investor's profile, objectives and needs, while being aware of the risk of total or partial capital loss.
To reduce the risk of non-liquidity, while diversifying the players in the social and solidarity economy that one finances, one can invest in "90/10" solidarity UCIs (Undertakings for Collective Investment) offered by many institutions. They are named like that because 10% of the outstanding amount is invested in SSE players. The other 90 percent is invested in more liquid listed financial securities with varying levels of risk. It will be necessary to inquire about the overall risk level of the support to verify again that it corresponds to the investor's profile and objectives and its capacity to incur losses. The possibility of investing in solidarity-based UCIs is also offered in employee savings plans(1).
What is the link between solidarity investments and sustainable investments?
Solidarity investments are a subset of sustainable investments in two ways: firstly, because the integration of a donation, even if it is small in relation to the amount invested, or the fact of financing solidarity-based companies, contributes precisely to building a more sustainable society. And on the other hand because the management processes of sharing UCIs or 90/10 funds take into account extra-financial criteria specific to responsible management.
I hope that these explanations helped you to understand that, while it can be said that all solidarity products are part of the family of responsible products, the reverse is not true: not all responsible products are solidarity products. Thank you and see you soon!
(1) Since 1 January 2010, in France, pursuant to the Law on modernisation of the economy (« Loi de modernisaton de l’économie » - LME), any company with an employee savings scheme must offer a solidarity company mutual fund (« Fonds Commun de placement d’entreprise solidaire » - FCPES) to its employees. The FCPES offer the possibility to invest in job creation, construction of social housing, environmental protection, while offering a certain profitability.
This podcast is part of a series of episodes proposed by Societe Generale Private Banking to understand responsible investment. It is available on the Spotify and Apple Podcasts streaming platforms via the "#Private Talk by Societe Generale Private Banking" program and on our website www.privatebanking.societegenerale.com. Feel free to subscribe to be notified when the next episode is released and to spread the word.
Would you like to discuss this subject further with us?
The content provided on this page is for informational purposes only and is not contractually binding. The materials contained herein are not intended to provide investment advice or any other investment service and do not constitute a personal recommendation, advice, or an offer from Societe Generale Private Banking to purchase, sell or subscribe to investment services and/or financial products and/or investments in the aforementioned asset class. Some of the products, services and solutions described can carry various risks and involve the potential loss of the entire invested amount, if not theoretically unlimited loss. As such, they are reserved for a certain category of investors and/or adapted solely for informed investors who are eligible for such products, services and solutions. The information set out above shall not be considered legal, tax or accounting advice.
The wealth management and financial solutions, offers, products, services and activities mentioned on this page depend on each client’s personal situation, the legislation applying to them, and their tax residence. Consequently, the offer presented may not be eligible for implementation, adaptation or approval at all of the Societe Generale Private Banking entities and must comply with Societe Generale Group's Tax Code of Conduct. Furthermore, access to some of these products, services and solutions is subject to specific conditions, notably in respect of eligibility.
Please contact your private banking adviser to check that these offers meet your needs and are suited to your investor profile (knowledge, experience in investment, financial situation, including ability to withstand losses, and investment objectives, including risk tolerance).
Societe Generale Private Banking shall under no circumstances be held liable for any decision taken by a reader on the basis of this information. Before Societe Generale Private Banking can provide a potential investor with an investment service and/or a subscription to financial products, the investor must first be made aware of, understand and sign the related informative and contractual documentation, notably in respect of the associated risks (prospectus, Key Investor Information Document, Term Sheet, etc.). The potential investor must not base his/her investment decision and/or give investment instructions solely on the basis of this document.
All Societe Generale Private Banking entities reserve the right not to update or amend this document and shall accept no liability in this regard. The present document has the sole aim of informing investors, who will make their investment decisions without overly relying on this publication. The Societe Generale Private Banking entities shall under no circumstances be held liable for the accuracy, relevance or exhaustiveness of this information. The Societe Generale Private Banking entities give no explicit or implicit guarantees as to the accuracy or exhaustiveness of this information or of the profitability or performance of any asset class, country or market.
This document is not intended as a list or summary of all the terms and conditions pertaining to financial products, nor to identify all or some of the risks that may be involved in the acquisition and/or sale of a financial product/investment in any of the aforementioned asset classes.
The historical data and the information and opinions herein have been obtained from, or are based upon, external sources that Societe Generale Private Banking entities believe to be reliable but have not been independently verified. The Societe Generale Private Banking entities shall under no circumstances be liable for the accuracy, relevance or exhaustiveness of this information. Information provided on past performance, even repeated performances, is in no way a guarantee of future performance and may not be repeated. The value of an investment is not guaranteed and the value of investments may fluctuate. These forecasts about future performances are based on assumptions which may not be realised and do not therefore provide any assurance or guarantee with regard to the expected results of the investments in the aforementioned asset classes.
Generally speaking, Societe Generale Group companies may be market makers, conduct transactions involving the securities referred to on this page, and may provide banking services to companies whose asset classes are mentioned on this page, as well as the subsidiaries thereof. Societe Generale Group companies may, from time to time, conduct transactions, generate profits, hold securities or act as adviser, broker or banker in relation to these securities, or derivatives thereof, or in connection with the asset classes mentioned in this document. Societe Generale Group companies may, from time to time, acquire or liquidate positions on the securities, or the underlying assets (including derivatives), mentioned on this page or, where applicable, any other assets. Consequently, this may affect any returns for a potential investor either directly or indirectly. Societe Generale Group companies have no obligation to disclose this page or take it into account in providing advice or conducting transactions with a client or on behalf of a client. The administrative structure of the Societe Generale Group includes all safeguards needed to identify, control and manage conflicts of interest. To this end, Societe Generale Private Banking entities have implemented a conflict of interest management policy to prevent such conflicts of interest. For further details, Societe Generale Private Banking clients may refer to the conflict of interest management policy given to them by the Societe Generale Private Banking entity of which they are clients.