New French investment law could boost social enterprises
By broadening criteria the French government is hoping more companies will become socially responsible investors
A new law governing how French workers' company pensions are invested could boost social enterprise and 'solidarity' initiatives in France.
On 24 July the junior minister for the social and solidarity economy (SSE), Beno�t Hamon, will present a new bill to the French president and ministers' council. As with social enterprise, solidarity activities seek to achieve social good and address social wrongs.
France introduced its first "90-10", socially responsible employee savings scheme in 2001. For the first time this obliged companies to offer their employees access to savings funds schemes which invested between five and ten per cent of their capital in non-listed organisations and activities with a 'solidarity label'. The solidarity label is administered by French prefectures and functions as a form of quality assurance in this regard.
In 2008 the Sarkozy government extended the initiative to all employee saving schemes throughout France. But it has had mixed success. Cyrille Langendorff works with Cr�dit Coop�ratif, a French co-operative bank that specialises in financing social economy organisations. He says the mixed success is partly the result of unfamiliarity with the label and a reluctance to engage on the part of fund managers. "The prefectures which deliver the [solidarity] label sometimes don't know it exists or how it works. Also, for fund managers, it's a lot of work and analysis of organisations and sectors they don't know much about for 5% of the portfolio."
At present, in order to secure the solidarity label a company must fulfil one of two conditions. It must either undertake to source a proportion of its employees from a disadvantaged background or it must conform to certain criteria of democratisation in its governance.
Hamon's new bill proposes five new criteria that must be secured simultaneously for companies to secure the solidarity label; a business's purpose must be conducted in line with the government's social policies; its financial importance must be impacted by the social mission it is trying to fulfil; there must be a cap on the spread between salaries at the top and bottom of the business; equity securities are not to be listed on a regulated market and the business's social mission and a salary cap must be included in its terms of association.
Minister Hamon has described the new law, in part, as a response to the development of "a movement in favour of this way of entrepreneurship". By broadening the criteria, the French government is hoping to increase the number of companies involved in socially responsible investing, and so increase their social impact.
However it could also risk the dilution of social criteria. Companies could be attracted to the scheme "for marketing purposes or to get funding at a cheaper rate", says Langendorff. Minister Hamon hopes the bill will become law by the end of 2013.
According to the European commission, in 2008-9, the social economy in France grew by 2.9% and created more than 60,000 paid jobs. Over the same period, the rest of the private sector shrank by 1.6% and the public sector by 4.2%. The French government has agreed to a series of other initiatives to support the social economy, including the more efficient collation of statistics for monitoring purposes, the development of common principle of definition of the social and solidarity economy and financial support for social entrepreneurs.
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posted by pension333 @ 13:01
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