Socially responsible investment: what are we talking about?
Socially responsible investment in France
Responsible Investment includes:
- SRI (Socially Responsible Investment) funds: "SRI is an investment which aims to reconcile economic performance with social and environmental impact by funding companies and public institutions that contribute to sustainable development regardless of their business sector. By influencing governance and corporate behaviour, SRI contributes to a responsible economy." (AFG-FIR definition, 2013);
- Funds that adopt other ESG (environmental, social and governance) approaches, such as thematic ESG funds, ESG integration funds, exclusion funds, engagement funds, solidarity funds and impact investing funds.
According to the latest SRI study by Eurosif (2018 European SRI Study), only a small minority of European investors (around 3%) adopt a best-in-class approach.
Outside France, responsible investors tend to use approaches based on exclusions, either of certain industries (e.g. controversial weapons, the alcohol sector, etc.) or controversial practices (standard selection processes based on exclusion criteria relating to practices such as corruption, discrimination, violations of basic rights, etc.).
Socially responsible investment in Europe
According to surveys published by the AFG (Association Française de Gestion - French asset management association), the SRI management market accounted for approximately 13% of the third-party asset management market at end-2019, having grown very significantly (+76% in 3 years). If we also include the other ESG approaches, the percentage increases to 44%.
In France, the “best-in-class” approach (use of selection criteria to identify companies with the best ESG practices in their sector) is the most popular, ahead of the “best-in-universe” approach (covering all business sectors combined), the “best effort” approach (to select companies with the most improved practices) or approaches based on thematic environmental, social or governance criteria.
Test your knowledge about SRI!
« Launched in 2010 at the initiative of the Forum for Responsible Investing (FRI), SRI Week has for the last four years been managed by the Ministry of Ecology, Sustainable Development, and Energy. Numerous actors participate alongside the government to promote awareness of this type of investment, which rigorously takes into account the issue of sustainable development, among the general public, businesses, and institutional investors. »
The entity that manages the mandatory public service additional pension scheme (ERAFP) is joining this effort and has put together this quiz as a way to answer your questions about socially responsible investing by pension funds.
ERAFP and the climate
The French Public Service Additional Pension Scheme (ERAFP) wanted to illustrate, through a fun and educational video, how it works to invest, measure, engage and communicate around this major axis that is the energy transition.