Finance

Sustainable finance: how to find out before investing

As more and more people seek to give meaning to their savings, so-called green finance appears as a means of participating in a sustainable economy, whatever the sector of activity. More and more products are offered, but how to choose, and what are the labels behind these new sustainable finance tools?

In recent years, so-called “green” finance has been developing, under various terms such as green bonds, responsible savings. Among the most popular today are funds with the “social and responsible investment” (SRI) label, which are supposed to guarantee that ESG (environmental, social and governance) criteria are properly taken into account.

These ESG criteria are based on several concrete data on greenhouse gas emissions, energy efficiency, business ethics, in particular.

The fund labeling audit is carried out by Afnor Certification, Deloitte, and EY France, three organizations accredited by COFRAC (French Accreditation Committee), the semi-public organization that ensures the quality of labellers.

By financing companies that contribute to sustainable development, SRI is an investment that aims to combine economic performance with social and environmental impact. HSBC, one of the first financial institutions to have made sustainable finance a priority, has long offered SRI and solidarity funds. Thus, its first solidarity fund was created in 2004.

Green savings: the other two labels

In France, two other labels exist, in addition to the SRI label.

Greenfin, which excludes fossil fuel and nuclear players, was created in 2015 by the Ministry of Ecological Transition. Guarantee of the “green orientation” of investment funds, it is certified by experts and meets the obligations of the Pacte Law. It is the most selective of the labels, with eight eligible activities: energy, construction, waste management, industry, clean transport, information and communication technologies, agriculture and forest, as well as adaptation to climate change. Novethic, EY France and Afnor certification are responsible for issuing it.

Finansol, meanwhile, is the label for “solidarity savings” funds. The money is redirected to actors whose social and environmental utility is recognized by an independent committee from civil society. It supports a variety of financial products, including life insurance contracts, savings accounts or shares in the capital of solidarity businesses. Not all are fully supportive, but the non-supportive part must incorporate an ESG analysis.

At the same time, there are also many European labels.

Banks: are they really playing the game?

Climate change is accelerating, with increasingly violent impacts. To comply with the Paris Climate Agreement adopted in 2015, it is essential to put an end to the development of fossil fuels and to plan a gradual and total exit. But not all banks are playing the game. According to the Banking On Climate Chaos 2021 report, the world’s 60 largest banks continue to finance companies in the fossil fuel sector, the main contributor to greenhouse gas emissions. As a result, their ability to finance sustainable alternatives diminishes as much, since the cash and reserves devoted to the fossil fuel giants are sums that are not used for the energy transition.

The only alternative for the general public, before investing their money: find out, in particular from NGOs campaigning for the decarbonization of finance. You can be very surprised!

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