French experience in global context

1. Social Impact Investing
French experience in a global context
Guilhem Dupuy | Helsinki | 10/06/2015

2. Guilhem Dupuy – June 2015
Social Investment Taskforce established by the G8 :
general organisation
Source:ImpactInvestment:Theinvisibleheartofmarkets–ReportoftheSocialInvestmentTaskforce
> 15 reports released in September 2015

3. Guilhem Dupuy – June 2015
Social Investment Taskforce established by the G8 :
political agenda
“The world is on the brink of a revolution on how we solve society’s toughest
problems. The force capable of driving this revolution is ‘social impact investing’, which
harnesses entrepreneurship, innovation and capital to power social improvement”
“Despite their different models for tackling social and environmental challenges,
governments everywhere are under ever greater pressure to make meaningful progress
in tackling the social problems facing their countries. All of the countries on the
Taskforce also face growing pressure, in a context of fiscal restraint, to allocate
government spending more efficiently and effectively to social needs.”
“Impact investing does not relieve governments of their responsibilities. But it can help
to fulfil them more effectively. By financing innovative approaches, impact investing
also has the potential to help deliver services more efficiently and, in some cases, tackle
the underlying causes of growing demand for social services instead of just trying to
cope with their consequences.”

4. Guilhem Dupuy – June 2015
Social Investment Taskforce established by the G8 :
main global recommendations
1. Set measurable impact objectives and track their measurement
2. Investors to consider three dimensions: risk, return and impact
3. Clarify fiduciary responsibilities of trustees: to allow trustees to consider social
as well as financial return on their investments
4. Pay for success commissioning: governments should consider streamlining pay-
for-success arrangements such as social impact bonds and adapting national
ecosystems to support impact investment
5. Consider setting up an impact investment wholesaler funded with unclaimed
assets to drive development of the impact investment sector
6. Boost social sector organisational capacity: governments and foundations to
consider establishing capacity-building grants programmes
7. "Give Profit-with-Purpose businesses the ability to lock-in missions:
governments to provide appropriate legal forms or provisions for entrepreneurs and
investors who wish to secure social mission into the future"
8. Support impact investment's role in international development: governments
to consider providing their development finance institutions with flexibility to
increase impact investment efforts.

5. Guilhem Dupuy – June 2015
Social Investment Taskforce established by the G8 :
what are we up to ?
Significant progress across the world, National Advisory Boards engaged
in constructive discussions with governments
Renewed support from the European Commission
Social Impact Bonds are spreading, mostly in UK, US and Australia.
Experiment are going on elsewhere.
Milestone bills passed / under way : Japan on unclaimed assets, Italian
Social Enterprises Bill, French Social Sector Bill…
Increasingly deep understanding of impact investing in many countries
across all continents
August 1st 2015 : official launch of the Global Steering Committee on
Impact Investment (GSCII), set up for an initial period of 3 years

6. Guilhem Dupuy – June 2015
Reframing the global debate in our own language -
What impact investing means in a strong welfare State
G8 Taskforce focus on “efficiency” of social service providing
Strong, legitimate, popular welfare States in Northern & Continental Europe, as
well as longstanding social sectors with specific traditions
To some extent, the potential market size of impact investing in these countries is
highly (and negatively) correlated to how efficient a nation thinks its welfare
system is
In France in particular, the debate has been framed through 3 structural ideas:
Impact Investing is by no means an alternative to welfare state and public spending
Under specific circumstances, impact investing may provide additional funding to
organisations with already hybrid (public/private) balance sheets
Impact investing may foster autonomous fields of social innovation for the public
sector to get inspiration from in the long run

7. Guilhem Dupuy – June 2015
What are the investable organizations ?
Framing the definition issue
In France as in most countries, 2 specific groups of organizations are
potentially qualifying for social impact investments
• “Social sector organisations”
• “Social and solidarity economy”
• “Non-profit organisations”
• “Third sector”
• “Civil society”
• “Profit-with-purpose businesses”
• “Mission-driven companies”
• “For-profit social enterprises”
Statuses and low profitability
translating values
Emphasis on mission
Which ones are actually
“investable” ?
> A significant amount of social organisations across
the world cannot take equity, or even access private
funding
Where to find them ?
> Most of them are not (yet) registered
to a representative group or federation
Do they actually provide
significant social impact ?

8. Guilhem Dupuy – June 2015
Salient points in the French context
Historic co-constructionof social service providing between
Public and Social sectors
Industry
2%
Retail
3% Transports
1%
Financial
activities
12% B2B
Services
4%
Education
16%
Health
8%
Social
37%
Culture
2%
Sports &
Leisure
4%
Administrati
on
10%
Transports
4%
B2B
Services
7%
Education
22%
Health
18%Social
6%Culture
1%
Administra
tion
39%
7.9%
10.5%
19.8%
21.4%
24.7%
34.6%
64.6%
82.3%
67.1%
75.6%
22.5%
3.7%
3.0%
28.7%
9.8%
22.4%
4.6%
56.1%
71.6%
62.4%
6.7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Administration
Health
Education
Culture
Sports & Leisure
Financial activities
Social
Social sector Public sector Private sector
Source:CNCRESS–Atlasdel’EconomieSocialeetSolidaire,2009(2006Data)
Share of activities in the Social sector vs
(relative share in total employment)
Share of activities in the Public sector

9. Guilhem Dupuy – June 2015
The French social investment ecosystem in a nutshell
Statutory sector : key figures
• 222 800 organisations
• 2.4m jobs (2012)
• 10 % of the French GDP (200 bn€)
• +23% growth in jobs in the last
decade
Social Enterprises
For-Profit Non-Profit
Mutual insurance
Companies
Mutual insurance
Companies
AssociationsAssociations
Work integration social enterprises
EI, ETTIEI, ETTI AI, ACIAI, ACI
Work integration social enterprises
EI, ETTI AI, ACI
EAEA ESATESATEA ESAT
FoundationsFoundations
New social cooperativesNew social cooperatives
Commercial companies
(mission-driven, etc.)
Commercial companies
(mission-driven, etc.)
Social & Cooperative
Banks
Government agencies,
specialist financial
institutions
Fund Managers, Private
Equity firms
Tax Advantaged funds,
employee savings
Traditional Banks
Social Investment
Networks
Crowdfunding Platforms
Public funding
High Net Worth
Individuals, Family Offices
Institutional Investors
Mass Retail
Foundations
Corporates
MaturestageEarlystage
Channels of capitalInvestors
Organisations adapted for the disabled
Growthstage

10. Guilhem Dupuy – June 2015
Investors and investment funds -
Where does impact investment come from ?MaturestageEarlystage
Historically a strong source of capital, though not likely to grow extensively in the coming years
Widespread fiscal incentives, through multiple tax advantages, state supported working contracts, etc.
Public financing agencies, alongside their European counterparts, are strongly supporting social impact
investments funds and vehicles through co-investments
Regional and local authorities play a major role as financing partners in several social sectors : associations
(subsidies and service procurement), local social investment networks, microfinance (e.g. Crédit Municipal),
social housing, etc.
Public funding
Several investors clubs (national or local) dedicated to direct investments into social enterprises
(e.g. Cigales, Garrigue)
Growing interest for venture philanthropy and social finance from family offices
High Net Worth
Individuals, Family
Offices
Institutional investors (except for public ones) are still cautious about impact investing, due to a perceived
mismatch between high risks and relatively low returns, while increasingly subscribing socially responsible
investment funds : €107.2bn in 2012, 72% of French SRI total assets
Growing interest in risk-adjusted (“90/10”) solidarity funds, and impact venture capital to a certain extent
Institutional
Investors
Employee savings plans and company pension funds (PEE, PERCO…) now account for a significant part in
social economy funding. Solidarity-based assets have grown by an outstanding 588% between 2007 and
2014 (now €6.82bn).
Mass Retail
To foundations, adding “meaning” to the management of their assets is a growing concern – around 10%
(€1.5bn) should be allocated to social investment in the next years, provided relevant legal evolutionsFoundations
Several large companies have launched dedicated social investment funds over the last years : Danone,
EDF, Renault, Schneider, Veolia…
Most of the time these funds are linked to the companies’ employee savings plans.
Corporate Foundations : 291% growth between 2001 and 2010 (from 67 to 262)
Corporates

11. Guilhem Dupuy – June 2015
Bringing mass retail to impact investing:
the French “90/10” funds
The 2001 “Fabius” law instituted employee savings schemes, and mandated that a category of a
given company’s employee savings schemes included the option to contribute to a “90/10 solidarity
fund”. The scheme was later extended in 2008.
A 90/10 fund invest between 5% and 10% of its assets into unlisted “solidarity designed”
organizations. The other 90-95% of assets remain classic, listed securities (such as equity, fixed-
income, sovereign bonds, etc.).
French solidarity-based retail assets (m€)
Source:Finansol
0
1000
2000
3000
4000
5000
6000
7000
8000
2007 2008 2009 2010 2011 2012 2013 2014
Corporate solidarity employee-
savings funds
Open-ended funds and bank
savings accounts
Direct investment

12. Guilhem Dupuy – June 2015
French “90/10” funds : a success story
0
1
2
3
4
5
6
7
8
2007 2008 2009 2010 2011 2012 2013 2014
Total household
financial savings
Total solidarity
savings
Solidarity
employee-savings
90/10 funds
Growth of solidarity-based assets relative to
global financial assets (2007 = 100)
Source:BanquedeFrance,Finansol
Solidarity bank savings products gained significant traction lately (+17% growth yoy, to €2.2bn)
Virtuous cycle in demand-side, initiated by the 2001 & 2008 laws related to supply-side
Room for growth : solidarity-based assets amount to … 0.16% of global household financial
savings

13. Guilhem Dupuy – June 2015
Solidarity savings… for what purpose ?
Environment
37%
Employment
22%
Housing
31%
International
solidarity
5%
Other
5%
Work
integration
social
enterprises
48%Social
inclusion /
Social housing
29%
International
development
12%
Environment
11%
Source:Finansol
How many social enterprises in France ? Estimates range from 15.000 to 50.000
Uses of solidarity-based savings
by impact sector (2013) :
Source:EcofiInvestissements
Breakdown of Ecofi’s solidarity-
based investments (2014) :

14. Guilhem Dupuy – June 2015
Thank you for your attention !
Questions ?
guilhem.dupuy@ecofi.fr