Solidarity financing: how to invest to become a “responsible saver”?

What areas of activity does the Social and Solidarity Economy (ESS) cover?

Fanny Gérome: Solidarity funding supports four main issues or areas of activity: employment, such as integration through economic activity, adapted work for disabled workers, revitalization of areas in difficulty, structures supporting equal opportunities, etc., social area and housing; environmental sectors such as organic, renewable energy or nature conservation; and international solidarity such as development aid, microcredit or fair trade.

What types of buildings can be financed by solidarity savings?

All structures of the social and solidarity economy, that is, whose internal functioning and activities are based on the principle of solidarity and social benefit. They can be trading companies, cooperatives, mutual companies, associations, foundations, etc. However, in this type of activity, savings are often oriented towards the associative area. But we also find, for example, integration companies that employ people very far from the world of work, in other words private structures, sometimes partially supported by public authorities. To group them together, we can say that they always have a project of social utility at the center of their approach, with a question of corporate democracy and profitability goals that are not the same as for society, say “traditional”. To give a few examples, among these almost 200,000 structures we find sports associations, social tourism players (UCPA), health-social facilities (Ehpad), agricultural cooperatives, etc. The whole employs 10% of the workforce in France.

Can you give some examples of projects financed by France Active, i.e. solidarity savings?

Of course, for example, the Ethiquable cooperative, a pioneer of fair trade in France, received funding in the amount of one million euros. In the associative field, we can mention Siel Bleu, which promotes physical activity for everyone and at every age and employs 800 employees in France. Or Solidarity and Village Ownership Villages Vivants, which develops solidarity properties to revitalize rural areas.

Through what types of investments or supports can we invest in ESS?

Solidarity savings are supported by three main types of support. First, employee savings through Enterprise Savings Plans (PEE) and Collective Pension Plans (Perco). The two investments must now represent at least one product that contains solidarity funds. The second part is banks and mutual companies. These are different types of products, but often they are passbook accounts, where part of the saved savings goes to finance solidarity savings, or so-called “shared” products, when the saver decides not to benefit from his interest and donate it to the ESS company . Finally, the third support is life insurance. The Pact Law requires that from January 1, 2022, all life insurance contracts offer at least a solidarity fund that dedicates 5 to 10% of its assets to the social and solidarity economy. Finally, you can choose to invest yourself by taking equity shares in ESS. But it is a type of investment that is inherently riskier.

What is the amount of solidarity savings in France?

Savings obtained through these three main supports (employee savings, banks and mutual insurance companies and life insurance) amounted to €26 billion in 2022. However, not all of these windfalls are earmarked for the ESS. And it remains low compared to the total savings of the French: solidarity savings represent only 0.45%. In terms of funding strictly speaking, the results are encouraging, on the other hand, as last year almost 1,600 impact projects were financed in France thanks to solidarity savings of 840 million euros and donations of around 5 million euros.

Can you explain the 90/10 rule to us?

When you jointly invest in your company savings plan, the 90/10 rule applies. This means that most of your savings (90%) are placed in classic vehicles (shares, cash bonds, etc.) that are selected according to their financial performance, but also according to social, environmental or governance, so that the product presented is not inconsistent. And the remaining 10% is invested in EZS. This makes it possible to reduce the saver’s risk by pooling it and achieve a level of performance comparable to traditional funds.

So does this rule allow solidarity investments to be so profitable for savers?

There are two subjects involved: security of savings and profitability. The diversification allowed by the 90/10 rule reduces the saver’s risk. And when it comes to profitability, savers who make this choice often choose social profitability first. They want to make an impact with their savings more than financial performance. The question does not arise, for example, with those who decide to donate their interests. And for others, the risk pooling system in any case enables profitability comparable to other non-solidarity supports.

What should we advise savers who want to start solidarity savings?

We can advise them to identify the Finansol brand, which is managed by the French association (FAIR) and whose purpose is to promote savings and solidarity financing. They can also, if they are employees, inform themselves about solidarity funds within their PEE or their Perco. Finally, they should not hesitate to ask their bank, mutual or insurance company about the offer of solidarity products, as they are not always highlighted.