Impact finance has marked a new milestone in sustainable finance.
On Thursday 25 March, an initiative on impact finance led by the Paris Financial Center was launched by Bruno Le Maire, French Minister of the Economy, Finance and the Recovery, and Olivia Grégoire, Minister of State for Social, Inclusive and Responsible Economy, together with Thierry Déau, Chair of Finance for Tomorrow. Its objective is to make Paris the world’s leading financial center for impact finance.
Opening the event, Bruno Le Maire highlighted the necessity of finance to reach a political economy, an economy with a purpose. It is time to pu finance at the service of the common good. France is leading on this matter. The stake now is to stay a leader. To do so, one always must seek to “correct and improve one’s actions”. Criteria have to be more demanding and transparent to bring concrete answers and refute critics against financial initiatives.
“France is the leading nation on the issue of impact finance. When you are a leader, you have to keep your place. And to do so, innovation is the key.”
Bruno Le Maire, Minister for the Economy, Finance and Recovery
The event dedicated to “Impact finance: a fad trend or an underlying tendency in sustainable finance?” has boosted consolidation and nurture the development of impact finance in the Paris financial center by gathering all the actors in this rapidly emerging field: asset managers, investors, banks, associations, and academics.
Augustin de Romanet also called to define impact, which goes further than ESG. Its ambition is not only to prevent from harming but also to produce a positive impact on common good. Within Paris EUROPLACE, workstreams have been implemented regarding access to social and environmental data and taxonomy. Finance for Tomorrow’s works will support this action by creatinf a clear and all-party methodological framework.
« Finance For Tomorrow is very much involved in trying to provide as clear a framework as possible for the best that can be gained from impact finance. »
Augustin de Romanet, Chair of Paris EUROPLACE
Throwback to the three panels of the morning.
The panels set out the major current challenges of impact, in order to succeed in rooting this fundamental trend in our practices.
- The need of a common definition and shared vision for a common ambition
The first round table considered it essential to agree collectively on a definition of impact so that the Paris financial centre can gear up and speak with a coherent voice internationally. Thus, impact is based on three major pillars: intentionality, additionality and measurability. However, the lack of a common reference prevents the notion from becoming uniformly widespread among players, asset classes, listed and unlisted companies. The challenge is to put the investor’s commitment at the heart of the dynamics of change. It is therefore urgent to unite French players around a common ambition. In this way, everyone will be able to appropriate the collective definition in order to work within a methodological framework that qualifies the performance of impact. Working on impact finance should enable investors to act thanks to a common language, and savers to benefit from better information about the real impact of their investments.
2. The need for good practice and impact assessment methodologies
Measuring impact is crucial: it is the foundation of any possible improvement idea. Therefore, the second panel focused on the high strength of methodologies. Indeed, the latter suffers from significant heterogeneity with regard to the choice of a methodology according to several criteria, including the objective sought. The issue at stake is the production, access and verification of data. In order to harmonise these methodologies, an overview of existing work has been drawn up. These will be the basis for reflection in order to propose a methodological framework capable of qualifying the impact or sustainable transformation performance of an asset portfolio.
“Measuring impact is crucial: it is the foundation of any possible improvement idea.”
Thierry Déau, Chair of Finance for Tomorrow and CEO of Meridiam
3. The need for a regulatory framework to support impact finance
The third panel highlighted the need for French actors to have a toolbox, in relation to the new European transparency requirements currently being developed. France has distinguished itself in the field of green and sustainable finance thanks to its solid regulatory framework, the ambition of which has made it possible to influence the progress of the European strategy on sustainable finance. This is why a label carried by the European Union or by France, following the example of the SRI label, would contribute to the standardisation of impact finance indicators. These regulatory changes should enable impact finance to meet the aspirations of citizens who wish to mobilise their savings, and that the results of this financial commitment are concrete and measurable, as opposed to “green or social-washing” practices that undermine investor confidence.
To conclude this morning, Olivia Grégoire thanked all the women and men who commit by her for finance and common good not to be a contradiction anymore.
“The challenge now is to share more than just an ambition, and to give ourselves the means to share the methods, ideas and benchmarks that will enable the Paris financial centre to assert itself as the world leader in impact finance.”
Olivia Grégoire, Minister of State for Social, Inclusive and Responsible Economy
To know what was discussed in depth or to relive this moment, find the replay below! (in French)