Societe Generale Wealth & Asset Management activities: Setting new standards in SRI and ESG
"Our primary mission is to protect our clients’ wealth. How they can as well invest in a positive and sustainable way is more and more at the centre of our dialogue with them.”
It is now more than 11 years since Lyxor, the asset management specialist 100% owned by Société Générale, unveiled the world’s first environmentally themed exchange-traded fund (ETF), the World Water ETF, which now has total assets under management of more than €500 million.
Since then, the SG Group has remained at the forefront of championing the development of the broader market for socially responsible investment (SRI) and of innovation in identification of investment opportunities compliant with the highest environmental, social and governance (ESG) standards.
Witness, for example, the role that the group has played in spearheading the expansion of the green bond market in recent years. Société Générale kick-started this market for corporate borrowers in 2012 when it lead-managed the first deal of its kind for France’s Air Liquide.
Five years later, the bank supported an even more eye-catching landmark for the global green bond movement, when it advised the France Trésor agency on the launch of the first green bond from a eurozone government. Aside from being the largest green bond ever issued, France’s highly successful €7 billion 22-year bond issued in 2017 was a powerful reaffirmation of the country’s commitment to the principles enshrined in the December 2015 Paris Climate Agreement.
Lyxor, for its part, has also achieved a series of important milestones for the green capital market. Underscoring its position as the second-largest player in the ETF market, for example, in 2017 Lyxor launched the world’s first ETF giving investors exposure to investment-grade green bonds.
Today, green ETFs are one of a well-diversified suite of sustainable investment products offered by SGPB to a base of clients that is becoming increasingly sensitive to the consistency between investment objectives and actual investment operations. These range from positive impact structured notes and structured products with SRI underlying to bespoke SRI portfolios and charitable structured solutions.
“Our primary mission is to protect our clients’ interests; but an increasingly notable element of our service is also to provide our clients with guidance about how they can invest on a sustainable basis,” says Jean-François Mazaud, global head of Société Générale’s wealth and asset management division.
Mazaud adds that although France has led the way in the market for SRI over the last decade, the strengthening of demand among the bank’s private clients for investment products meeting optimal ESG standards is a relatively recent phenomenon.
“Five years ago, we tested the appetite among our private clients for green, positive-impact and charity-based investment products, and the feedback was that it was still low,” he says. “Today, this has completely changed, and recent issued charity-oriented products and solutions fit an increasing audience’s request.”
As one of the most striking illustrations of this enhanced appetite, Mazaud points to the strength of demand among SGPB’s French clients for a charity-linked solution named Cristal Solidarité. This is a 10-year euro medium-term note offering investors returns linked to the performance of an index comprising 80 leading companies within the SBF120 index.
The innovative charity-oriented element of Cristal Solidarité is that Société Générale is committed to making donations to charities at two levels. The first of these takes place at the time of investors’ initial subscriptions to the product, while the second is linked to the performance of the instrument over the course of its life cycle.
The interest of the Cristal Solidarité formula has been reflected in demand for the product from SGPB’s clients, with sales having reached €170 million by the end of June 2018.
Beyond green and charity-based investment products, the Société Générale group is supporting a range of other ESG principles, one of which is enhanced gender equality. Mazaud says that SGPB itself is fully committed to pursuing a recruitment policy that embraces a greater level of equality in the workplace.
“There is plenty of research demonstrating the links between gender equality, profitability and growth in the corporate sector,” he says. “Our own experience is that many of our best private bankers are women, which is one reason why we are promoting the recruitment of female bankers.”
At the same time, says Mazaud, SGPB remains committed to proposing investment products developed by Société Générale group that are designed to offer exposure to companies with a demonstrable track record of supporting women’s rights. A notable example is the Lyxor Global Gender Equality UCITS-compliant ETF, known as ‘Elle’*, which aims to track the Solactive Equileap Global Gender Equality Net Total Return Index**.
This is an equally weighted benchmark of 150 companies from around the world that score highly for gender equality according to 19 criteria defined by Equileap, an independent organization specializing in researching topics such as the gender pay gap.
To date, more than $500 million has flowed into investment products empowered by Equileap’s data, and investors have certainly responded constructively to the Elle ETF. Launched in October 2017, by the end of June 2018, Elle’s assets under management had reached a little over $60 million, while total returns narrowly outperformed its underlying benchmark over the same period. This endorses the conviction firmly held across Société Générale group that sustainable and socially responsible investment principles can be closely observed without compromising on long-term performance.
** Please connect to https://www.lyxoretf.co.uk/en/instit/products/equity-etf/lyxor-global-gender-equality-dr-ucits-etf-acc/lu1691909508/eur for further information