January 29, 2004
French SRI Assets and Funds Grow in 2003
by William Baue
Novethic documents growth in the number of socially responsible investing funds available in
France, as well as the amount of SRI assets under management.
Socially responsible investment (SRI) is growing in France. The number of SRI funds (108 at the
end of 2003) has grown by an annual average of 35 percent since 2001, according to Novethic, a French
provider of SRI information. The total SRI assets under management in France rose to 2.8 billion
euros at year-end 2003 from 1.25 billion at year-end 2002 and tenfold compared to five years ago,
an increase Novethic called "nothing short of spectacular."
Financially, French SRI
funds underperformed the overall set of funds available on the French market in 2003, generating
average returns of 14.37 percent compared to average returns of 16.64 percent for the broader
French fund universe, according to Novethic.
"Examined over a three-year period, SRI funds
hold up well against the market average," said Jean-Pierre Sicard, CEO of Novethic, a subsidiary of
Caisse des Depots et Consignations (CDC), a public financial institution that
safeguards and invests private deposits.
Over the past three years, French SRI fund
returns were down 14.51 percent while the broader universe of French funds' returns were down 14.61
French institutional investors must take such performance into account when
considering socially responsible investment.
"Today, the majority of French institutional
investors consider that their fiduciary duty is first of all financial and that SRI should be
financially neutral or positive to be adopted," Mr. Sicard told SocialFunds.com. "The example of
the French Pension Reserve Fund is emblematic of this: when it launches tenders, the first criteria
are performances and risks, but the law requires it to take into account social and environmental
criteria in its management orientations, so alongside these criteria it can adopt an SRI approach."
Novethic credits last year's increase in SRI assets in large part to institutional
investment. In 2003, BNP Paribas
Asset Management switched retirement funds with assets of 550 million euros to SRI management,
in addition to launching a large SRI bond fund. These moves catapulted BNP PAM's total SRI assets
to over 900 million euros, making it the SRI market leader as of the end of 2003, surpassing IDEAM
(Credit Lyonnais) and CDC IXIS Asset Management.
According to a survey released by Novethic in September
2003, French institutional investors are increasingly taking up SRI. Novethic and Amadeis, a Paris-based independent investment
consulting firm, surveyed 41 French institutional investors holding more than 80 billion euros in
total reserves. The survey found almost half (46 percent) have made at least one SRI investment,
up six percent since the previous year's survey.
French institutional investment in SRI
promises to increase, according to the survey. Almost two-thirds (62 percent) of the respondents
said they plan to invest in SRI funds by 2006. And the concentration of investment in SRI shows
signs of increasing as well. While three quarters of respondents currently invested in SRI
allocate less than one percent to this strategy, four fifths (80 percent) of all of those surveyed
said their total commitment to SRI would exceed one percent by 2006.
continued growth for SRI this year.
"2004 is expected to be another year of strong growth
in total assets under SRI management, for several reasons: first, improved retail distribution via
major channels; second, growing interest in SRI on the part of institutional investors; third, SRI
funds have been in the French market long enough to begin to have a track record; and fourth, even
non-specialists now concede that SRI criteria have a positive impact on shareholder value," said