CITIZEN ACT - season 2011-2012Social Responsible Investment

CITIZEN ACT – SEASON 2011-2012

SOCIETE GENERALECITIZEN ACT

Social Responsible Investment

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INVESTISSEMENT SOCIALEMENT RESPONSABLE

SOCIETE GENERALECITIZEN ACT

_ Qu’est ce que l’Investissement Socialement Responsable (ISR) ?

SOCIAL RESPONSIBLE INVESTMENT

Socially Responsible Investment (SRI) refers to the various approaches aimed at incorporating sustainable development within a financial management process.

SRI consists, for investors that use such an approach, in taking onboard non-financial criteria, such as Environmental, Social and Governance (ESG), in their investment choices.

This means that they are no longer looking purely at the financial characteristics of the assets (shares or bonds in listed companies, Treasury bonds, non-listed companies, etc.) in which they invest their capital.

SOCIETE GENERALECITIZEN ACT

 _ Various forms of SRI

VARIOUS FORMS OF SRI

These practices, which have developed substantially since the early 2000s, and notably in France and Northern Europe, can take various forms.

SOCIETE GENERALECITIZEN ACT

 _ SRI funds 

These funds consist of shares or bonds that meet both :• financial and • non-financial criteria.

They include the best-performing companies and/or States in terms of Environmental, Social or Governance (ESG) performance

VARIOUS FORMS OF SRI

SOCIETE GENERALECITIZEN ACT

 _ Negative screening funds

More common in English-speaking countries, such funds exclude, for moral or religious reasons :

• certain sectors such as arms, gambling or tobacco, • certain companies because of their presence in contentious

countries…

VARIOUS FORMS OF SRI

SOCIETE GENERALECITIZEN ACT

 _ Shareholder activism

Shareholder activism consists in investors demanding that companies improve their position in terms of environmental, social or governance matters via :

• direct dialogue,

• the exercising of their voting rights at AGMs and/or

• the tabling of resolutions if dialogue fails to have the desired effect.

VARIOUS FORMS OF SRI

SOCIETE GENERALECITIZEN ACT

 _ Thematic funds

Thematic funds is a new type of product often associated with sustainable development issues has begun to appear.

These are funds that are invested in companies whose activity contributes to sustainable development in its broader sense (renewable energy production, traditional industries that lead their field in terms of energy efficiency, and sectors such as water and waste management or the health sector).

Only part of these funds incorporate global demands across all SRI criteria. Novethic has thus created an adapted category called SRI thematic funds.

VARIOUS FORMS OF SRI

SOCIETE GENERALECITIZEN ACT

 _ Objectives

OBJECTIVES

The objectives of ISR-friendly investors are often multiple, but to simply things they can be divided into two major categories :

• Control risks with a view to a better long-term financial performance

• Combine SRI and ethics

SOCIETE GENERALECITIZEN ACT

 _ Control risks with a view to a better long-term financial performance

OBJECTIVES

Financial players with such beliefs are also generally long-term investors who use non-financial analysis grids to identify the ESG risks that the companies they invest in may have to face, and who check that such risks are properly controlled.

On the other hand, non-financial analysis can reveal growth opportunities within companies or sectors that, via the marketing of green products or the limited use of natural resources, are able to adapt to or anticipate clients’ new expectations or new economic constraints.

SOCIETE GENERALECITIZEN ACT

 _ Combine SRI and ethics

OBJECTIVES

For other financial players, SRI is a way to invest in companies whose practices are compatible with their own or their clients’ values.

Non-financial analysis should thus enable them to exclude from their investments :

• Certain sectors of activity such as tobacco, alcohol, arms, etc. that are not in keeping with their moral or spiritual values, or

• Companies that are controversial because of their failure to adhere to major international conventions regarding the environment, basic human rights, etc.

SOCIETE GENERALECITIZEN ACT

 _ Conclusion

CONCLUSION

On an international level, the number of institutional investors – banks, insurers, pension funds, etc. – that have adopted an SRI approach is rapidly increasing.

Individuals can also choose to invest their savings in products that have this type of SRI-fund approach and are available from most major bank and insurance networks.

SOCIETE GENERALECITIZEN ACT

LA VILLE DURABLE

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Novethic

 _ Sources