French social taxonomy group targets summer for first milestone

The stakeholder group has divided itself into three working groups covering employees, end-users, and supply chains to tackle the project.

Diverse hands holding up pieces of a puzzle

A French social taxonomy working initiative backed by a raft of big investors has divided into three smaller working groups and is targeting the summer for a preliminary conclusion.

The group has tabled a stakeholder social taxonomy “investor pledge” for the summer, according to French SIF executive director Gregoire Cousté and the project technical adviser Grégory Schneider-Maunoury, CEO of Defis Impact.

They told Responsible Investor that this will be an initial stocktake of the group’s work so far and the first step towards meeting its goal of establishing consensus on how to develop social targets, indicators and thresholds.

The group – convened by FIR, the French SIF, along with private equity association France Invest and social impact organisation FAIR – was launched last summer, and held its first meetings in September.

The aim is to revive the idea to establish a comprehensible and shared way of defining a socially sustainable activity or company, after such plans were dropped by the EU.

Participating investors include Amundi, AXA Investment Managers, HSBC Global Asset Management, La Banque Postale Asset Management (LBPAM), Mirova, Sycomore Asset Management and public pension fund ERAFP.

The total number of participants is around 70 people, also including individuals from impact investors, private equity firms and unions, with new potential members also lining up to join the initiative.

“There is a lot of interest in what we’re doing, and we can see good momentum and mood around the topic,” Cousté said. “We know this is a ‘Pandora’s box’. There are lots of obstacles, but the fact that there is a good dynamic is a very good sign.”

Asked about the upcoming European elections and the existing European Commission’s decision to park the social taxonomy, Cousté said that given the uncertainty, France has decided to take a “bottom-up approach”, which is very much “investor-led”.

“If the Commission wants input from this community, they will be welcome to it,” he said. “We will translate the work into English and share it with other countries to get more input and maybe some contradicting ideas and opinions.”

Regardless of what happens at the EU level, some of the work developed is likely to be used by investors involved in the initiative and implemented into their respective strategies, Cousté said.

The participants have been divided into three sub-groups covering employees, end-users, and supply chains, with some sitting across all three groups.

So far, each sub-group has had one introductory and one topic meeting, project leader Schneider-Maunoury told RI.

“We have been able to provide a characterisation of social targets, indicators, and reflect on potential thresholds for each sub-group,” he said.

He added that, despite coming from different standpoints, members have been able to reach a consensus, or agree on questions which could be asked to define indicators.

Other EU social taxonomy work

Separately, several European financial institutions in October called on the European Commission to put a social investment framework on its agenda.

In a letter seen by RI, the Commission did not confirm that it would do this.

However, it said an informal working group on social investment was established last July by the Spanish Presidency of the Council of the European Union and the incoming Belgian Presidency.

The working group is made up of member states, the European Parliament, the Commission, the chairs of Employment Committee and the Social Protection Committee, and the European social partners.

RI has reached out to both presidencies for comment.

The Commission wrote that the group’s objective is to “better understand the empirical evidence on micro and macroeconomic returns of social investments, as well as on the monitoring and evaluation methodologies for tracking social investment returns”.