Crowdfunding: responsible and remunerated savings

Responsible Finance Week ended yesterday, Thursday, October 4. Through events spread across France, it promotes various forms of responsible investment such as crowdfunding with social or environmental impact, Solidarity Finance, and Socially Responsible Investment.

Four labels for three channels of responsible finance

Responsible Finance Week [1] is supported by the Forum for Responsible Investment (FIR), an association that has supported SRI since 2001. The latter has become a label supported by the public authorities alongside the Energy and Ecological Transition for the Climate (TEEC) Label. Both are awarded to funds that meet strict specifications.

Furthermore, there is the Comité Intersyndical de l'Epargne Salariale (CIES) label dedicated to employee savings, and Finansol, awarded to solidarity savings investments since 1997. There are therefore several channels of responsible finance, including employee savings, private savings, and responsible investment.

Growing interest offset by significant lack of awareness

The latest study conducted by Ifop indicates a growing interest among savers in the social and environmental impact of their savings. While in 2017, 48% of savers surveyed expressed this interest, 63% of them reported it this year. A very encouraging progression for the FIR.
In practice, 5% of savers surveyed report having invested in an SRI fund. Furthermore, only 5% have been offered to invest in such a fund by their advisor [2].

Furthermore, knowledge of the possibilities available to savers is just as limited. Indeed, only six out of a hundred people (6%) who have at least one savings product know precisely what Socially Responsible Investment (SRI) is. Yet, 27% of them say they are willing to invest in SRI. There is therefore indeed a significant amount of work to be done in terms of promotion and accessibility [2].

13% of savers surveyed say they are familiar with solidarity savings, compared to 42% who have never heard of it. Finally, regarding crowdfunding, the figures are slightly more positive, with 22% of those familiar with it and 36% of savers having never heard of this type of scheme [2].

Why your savings are also an investment

For most French people, savings represent unspent money sitting in a bank account, such as the Livret A, for example. Some may subscribe to more complex products such as life insurance or a home savings plan.

Even in these cases, it is an investment involving both risks and rewards. Beyond that, we can even dare to say that it is an investment because this money will also be used by your bank to finance projects on which you do not necessarily have much visibility.

This is evidenced by the activist campaigns aimed at Société Générale customers, whose numerous investments in fossil fuel projects are criticized as irresponsible [3].

However, in the traditional banking sector, there are more targeted solutions, such as the Sustainable Development and Solidarity Booklet or products from Nef or Crédit Coopératif.

Crowdfunding, an accessible, committed investment that pays off

Contrary to common perceptions, investing is a very accessible action. But what's more, it can, paradoxically, be profitable while being engaged.

While crowdfunding is well known in the form of crowdfunding reward, that is, a donation in exchange for something in return, crowdlending and equity crowdfunding are less well known and more involving.
Indeed, participatory lending (crowdlending) allows a project leader to finance themselves through debt from a multitude of people like you and me. The advantage for them is to build a real community which can also prove to be a strong argument with bank financiers, for example. The advantage for everyone who finances it is that they lend money, and therefore receive interest while supporting a project that makes sense to them!

At Enerfip, several thousand people invest from 10 euros to 50,000 euros in photovoltaic, biomass or wind renewable energy projects. With a significantly more attractive return than any bank account, everyone can grow their savings while supporting the transition of French energy towards more environmentally friendly, less centralized, and more territorial production.
This last point has the positive consequence of creating jobs and activity in many geographical areas throughout France, particularly in rural areas.

In the context of renewable energy financing, the risk is also greatly minimized by project supervision as strict as that which applies to platforms specializing in lending and equity.

How crowdfunding makes energy production more responsible

For analysts at Xerfi [4, crowdfunding will soon become essential for the development of energy production projects. Indeed, the Energy Regulatory Commission is working in this direction since all projects carried out under its leadership are encouraged to carry out crowdfunding in advance in the territory where the infrastructure is located.

This incentive is effective since it is rewarded by an increase in the purchase price of electricity once the installation is put into production. You might think that this attitude is therefore solely motivated by the lure of profit, and you would sometimes be right.

Nevertheless, it is a smart system since it obliges project leaders to inform the resident population of the territory. Mechanically, this finds itself involved in a much more democratic consultation process.

References

[1] Access the SdlFR website >>

[2] The survey was conducted on a sample of 1,002 people, representative of the French population aged 18 and over. The representativeness of the sample was ensured by the quota method (sex, age, profession of the interviewee) after stratification by region and urban category. 87% of respondents reported having a savings product. Access the survey website >>

[3] Friends of the Earth. Access the source >>

[4] Xerfi Percepta, Financing renewable energies by 2023, August 2018, 223 p.