A French working group backed by a raft of big investors is officially starting work on the social taxonomy this week, with its first meeting due to be held on Friday.

As revealed by Responsible Investor in July, a group convened by FIR, the French SIF, along with private equity association France Invest and social impact organisation FAIR, is looking to revive the idea to establish a comprehensible and shared way of defining what a socially sustainable activity or company, after such plans were dropped by the EU.

AXA Investment Managers, HSBC Global Asset Management, La Banque Postale Asset Management (LBPAM), Mirova, Sycomore Asset Management and public pension fund ERAFP have all confirmed their participation in the working group to RI.

They will each have one representative, including AXA IM ESG analyst Matthieu Firmian; HSBC AM head of sustainability advocacy and assurance Laetitia Tankwe; LBPAM business and human rights advisor Camille Bisconte De Saint Julien; Mirova head of private markets sustainability research Sarah Maillard; Sycomore ESG analyst Claire Mouchotte, and ERAFP ESG analyst Valentin Georges.

French SIF executive director Grégoire Cousté told RI that the working group is planning to meet once a month, aiming to finalise its work by next summer.

Other key participants include former member of the EU Platform’s sub-group on the social taxonomy, Thierry Philipponnat, who is also a chief economist at Finance Watch and a member of EFRAG’s sustainability reporting board; as well as Gregory Schneider-Maunoury, CEO of Defis Impact, who last month published a paper on the social taxonomy alongside Sciences Po students.

Germany is also separately working to put the social taxonomy back on the agenda, as reported by RI in March.

However, RI understands that, while the German multi-stakeholder social taxonomy working group intends to refine the structure and content previously outlined by the Platform, French stakeholders will be looking for a new approach, while still building on previous work.

Take two

Philipponnat is due to introduce the first meeting this week, and told RI that one benefit of the lack of attention currently being paid to the social taxonomy by the commission is additional time to develop ideas further.

“It is perhaps not a bad thing that the social taxonomy is not currently a political priority for the EU, because it gives us time to do some more thinking,” he said. “There is certainly room for improvement.”

He added that he thinks the group may need to take a different approach to what the Platform proposed in February 2022, as he is “conscious of the political obstacles, so we need to make proposals which make sense, but which are also realistic in terms of what has the best chance of being adopted”.

He notes that one of the main arguments against the social taxonomy has been that it could make things more complicated for investors, especially if it is structured differently to the green taxonomy. “It will be interesting to see what the investors on the working group think of my ideas,” he said.

For Philipponnat, his current best approach to a social taxonomy would be to “take 100 criteria on human, social, labour rights – across various social topics – and apply them per entity. Once a reasonable percentage of those criteria have been met, a company would receive an alignment score with the social taxonomy”.

He suggested that, to decide on the criteria, the taxonomy could refer to internationally accepted norms – such as the International Labour Organization, the UN and the OECD. This would be in line with the platform’s social taxonomy report, which also made reference to existing global guidelines and norms to help set criteria.

“With those three organisations, you have the vast majority of what you need. The great thing about referencing international criteria and principles is that there is a huge amount of work behind it, and there is already a consensus – I do not think reinventing the wheel is necessary or possible.”