Social investment is about investing in companies that have a positive social impact on people. It's about socially-minded businesses that seek to strengthen people’s skills and capacities so as to help them participate fully in their working and social lives. The main areas they are involved in include education, services for dependent people, training, job-search assistance and rehabilitation.
In this post, Jacky Prudhomme, head of social investment at BNP Paribas Asset Management provides an introduction to socially responsible investment.
What is social investment and how is BNP Paribas Asset Management involved?
Social investment is based on two guiding principles: supporting unlisted companies with a declared social mission (in France in particuliar there exists a social business agreement to legally identify this type of business model) of helping people affected by life’s challenges (those out of work, elderly and disabled people, homeless families, etc.) and ensuring the economic sustainability of the structures being financed. We're not talking about gifts or philanthropy here, but rather investments with a dual objective of making both a strong social impact and a possibile financial return.
There are many activities supported by social investing. BNP Paribas Asset Management is particularly active in the following areas: access to employment, microfinance and support for entrepreneurship, access to housing and accommodation for elderly and disabled people.
How is the impact of social investment measured?
The measurement of the social impact of the companies engaged in social business missions that we support is very important because it enables us to ensure that we are aligned with the portfolio management objective of our ‘social business funds’; namely, the creation of a strong positive social impact on society. It is also a means for us to track the results, on the ground, of the companies we invest in.
So, we created social performance indicators adapted to the activities covered by our investments. For example, for access to housing we measure the number of beneficiaries and the number of trainers helping others to relearn everyday skills (looking after their accommodation, managing a budget ...). For access to employment we measure the number of people employed via a social integration contract in the companies we finance. The rate of reintegration into the job market is also a measure used to judge the robustness of the integration project. These indicators speak for themselves because they highlight the practical results in terms of the integration of vulnerable people back into society. We consolidate and aggregate data for each of our solidarity portfolios, publishing a social performance report distributed to all investors in our funds. So we male the most of this opportunity to highlight the remarkable companies in which we have invested.
You recently participated in the 2015 Convergences World Forum on the themes of "zero exclusion, zero carbon, zero poverty." How can social investing help meet these challenges?
Zero exclusion and zero poverty are clearly targeted by social investing, which focuses on providing financial support to those participants in the social/solidarity economy whose social mission is to fight against all forms of exclusion. This may involve putting those at the margins of society back into work, giving them access to housing, a means of commuting, or, for the elderly and dependent, access to housing facilities. While not a direct objective, zero carbon is also covered within social investing particularly through the renovation and insulation of social housing projects that will require less energy or through the promotion of local agriculture or the recycling of consumer durables (computers, clothes).