France should have SRI label and tax breaks for sustainable investments: government report

CSR reporting rule suggestions for French companies also outlined.

France should introduce a state-backed SRI label and consider tax breaks for responsible investments in private equity and the country’s huge life assurance fund market, according to a major public report called for by four French government ministries. While it is focused principally on boosting corporate sustainability (CSR) in France, the Brovelli-Drago report, named after its authors Lydia Dravelli, a former trade unionist, and Xavier Drago, ex sustainable development head at Air Liquide, makes several recommendations to push SRI as a lever for improving CSR. The report was commissioned by the Ministry of Economy and Finance, the Ministry of Foreign Commerce, the Ministry of Ecology, Sustainable Development and Energy, and the Ministry of Work, Employment, Professional Training and Social Dialogue. A French SRI label, the report said, could be based on the existing joint RI transparency code of the FIR, the French SIF, and AFG, the French asset management lobby group. To make the grade, the report says funds should be able to explicitly state their SRI objectives, use ESG analysis, describe their investment and responsible investment approaches, have an engagement policy, and demonstrate continuous transparency and depth of information to clients. Other potential boosts for SRI, it says, include a recommendation for possible tax breaks for responsible private equity funds that can clearly demonstrate the long-term sustainability of the companies they invest in.The French government has already proposed that asset managers should be obliged to state their ESG policies under its Loi Grenelle II proposal. The latest report says this should also be extended to asset owners, notably France’s €270bn Caisse des Dépôts sovereign wealth fund.
And significantly it suggests that France’s huge life assurance funds market (assurance vie), could be orientated towards more responsible investment via a special tax bracket if part of the investment is made sustainably. Almost one in three French people save into tax efficient life assurance funds.
On the CSR side, the report proposes that large French companies should start to publish the extra financial ratings that are assigned to them by ESG ratings firms following a suggestion made last year by French President François Hollande. It also suggests the creation of a European reference point for the methodology that ESG research firms use , which it says would serve to reinforce the credibility of extra-financial ratings.
The report also proposes that French companies start to take steps towards integrated financial and non-financial reporting by consolidating the number of reports they already produce.
Link to Brovelli-Drago report

Addendum Caisse des Dépôts has asked RI to clarify that it already publishes a broad group ESG policy as well as a set of governance guidelines