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Published on 
October 24, 2023
 Lecture: 
min

Redirecting Savings Towards Transition: What If We Reinvent the Product?

In the quest to bridge the gap between environmentally conscious savers and impactful investments, what if focusing on tangible assets and transparent impact was redefining how individuals can contribute to environmental transition? Let's dive into a new era of investing.
Redirecting Savings Towards Transition: What If We Reinvent the Product?

In its "Roadmap for the Future of Impact Investing," the Global Impact Investment Network (GIIN) made the development of impact investment products tailored to retail investors one of its top priorities for the years to come.

Indeed, it is interesting to note, even at the scale of France, the following figures:

  • On one hand, the Pisani-Mahfouz report on "The Economic Implications of Climate Action" highlights the need for an additional €66 billion in annual investment by 2030.
  • On the other hand, the total savings of French households (excluding real estate) now amount to nearly €6 trillion.
  • At the same time, according to a 2021 AMF survey, 76% of them are sensitive to the environmental impact of their investments.

The equation seems simple: 10% of the savings of environmentally conscious French individuals would help meet the annual goal set by the Pisani-Mahfouz report by 2030.

So why is this not the case yet?

Without delving into an exhaustive list of the many factors that can come into play, one reason seems crucial to us: the demand from informed savers does not meet an adapted supply.

In fact, when an individual investor seeks to make a difference with their money, they generally encounter two limitations of the current offerings:

  • Lack of transparency

This is the number one point raised by investors: the need to better understand where their money is directed and, ultimately, to obtain evidence of the generated impact.

The opacity that certain financial arrangements can create inherently limits the ability to fully track the environmental impact of their investment.

  • Return potential

Conversely, many impact investment offerings are seen as close to donations. The positive impact generated justifies a potential lack of return.

While it's desirable to see these types of offerings emerge, it automatically limits the amounts invested by individuals, as they associate investments with potential returns.

Our belief at Erable is that it's possible to address these issues by getting back to the concrete!

3 Levers we use to build Sustainable Financial Products

Directing Funds Toward Tangible Assets

Environmental transition materializes through tangible elements: mobility tools (electric vehicles, bicycles), new practices (reusable containers, more durable appliances), energy equipment (solar panels, heat pumps), and so on.

To meet the need for transparency, what could be better than allowing an investor to put their money directly into such tangible assets?

Unlike more traditional products, like buying shares of companies or funds, here we offer a direct link between the invested euro and the object necessary for the transition.

The tracking of the generated impact is very tangible for the investor, who can refer to the deployment of assets.

Directing Funds Toward Tangible Assets

Linking Impact and Returns for the Community

Let's take the definition of impact investing as proposed by the GIIN to heart: "Providing a financial return while generating a positive environmental or social impact."

Indeed, the financed asset is intended to generate both income and impact. Take the case of reusable containers in restaurants (see the Pyxo case study). Once deployed in a restaurant, these generate income with each use. And each new use means one less disposable container in the waste stream.

The model thus offers a virtuous circle where the community of investors sees their returns increase as the generated impact grows.

Moreover, these returns are effective from the moment the asset is deployed, making them more immediately tangible.

Community Engagement: Going Beyond Financing

Lastly, beyond the dimension of financial and extra-financial returns, this model reframes the role of finance as a tool primarily in the service of the common good.

It allows communities of investors to become owners of asset pools for the benefit of environmental transition, with governance potential over the deployment or repurchase of these assets.

From passive savers, they can take on a proactive role in addressing the environmental challenges of our time.

This asset-centered investment logic, with a focus on the real-world assets and flows, opens up new perspectives on the possibility for individuals to contribute transparently to environmental transition.

This same logic can also be applied to other contemporary issues intimately linked, such as reindustrialization.

Interested in the model? Visit our platform on app.erable.com

Links & ressources:

Banque de France - Household Savings: https://www.banque-france.fr/fr/statistiques/epargne-des-menages-2023t1-2023t1

AMF - Sustainable Finance and Investments Survey: https://www.amf-france.org/fr/actualites-publications/communiques/communiques-de-lamf/finance-durable-pour-76-des-francais-limpact-des-placements-sur-lenvironnement-est-un-sujet

Pisani-Mahfouz Report: https://www.strategie.gouv.fr/projets/evaluation-impacts-macroeconomiques-de-transition-ecologique

In a more casual and direct style, thank you!

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