French sustainability funds grow rapidlyMarch 2004
The value of French funds managed along socially responsible investment lines more than doubled in 2003 and is now above €2.8bn ($3.5bn, £1.9bn), according to Novethic, an SRI resource centre which is wholly owned by Group Caisse des Depots.
If funds domiciled outside France, but available to French investors, are included, the growth in funds under management is less dramatic, but still a healthy 76 per cent. Total funds under SRI management at the end of the year were €4.4bn, compared with €2.5bn in December 2002, and the number of such funds was also up, from 80 to 108.
While the figures still represent only a tiny fraction of the overall French investment market, they nevertheless underline the strong growth of SRI in the country. At the end of 2001 there were only 60 SRI funds, and the value of such funds has risen tenfold in the last five years, according to Novethic’s annual review of SRI in France published last month.
The ‘exceptional’ growth rate in the French market is partly due to the decision by a single fund manager, BNP Paribas Asset Management, to bring €550m of retirement fund assets under SRI management, and to create a large bond fund. This has made the asset manager the SRI market leader in France, with more than €900m under management.
New entrants in the market included ABN Amro, DWS Investment and Pro BTP Finance. UK fund managers Henderson and Jupiter also established themselves in the French market.
When making investment decisions, nearly all the funds took account of a company’s contribution to sustainable development, 68 of them focusing on this SRI criterion alone. Only a tiny fraction used ‘negative’ criteria such as involvement in tobacco or weapons manufacture to exclude companies from portfolios.
Most used external analyst firms to provide data on the social and environmental performance of companies, with Vigeo the most widely used. The Paris-based provider, which is jointly owned by companies, institutional investors and trade unions, delivers data to almost half of all French SRI investment funds, Novethic figures suggest. London-based Ethical Investment Research Services, Sustainable Asset Management (Zurich) and Ethibel (Brussels) are the next biggest in terms of market share, though each has less than ten per cent of the French SRI ratings market.
In terms of financial performance, Novethic found that the funds underperformed their respective Standard & Poor’s benchmarks in 2003, rising 14.37 per cent compared with 16.64 per cent. But over the three years to December 2003, SRI funds in France comfortably beat the benchmark by 1.52 per cent, returning 24.08 per cent compared with 23.06 per cent, according to Novethic.
Already a member? click here to login