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FAIR - FINANCER ACCOMPAGNER IMPACTER RASSEMBLER

FAIR

FAIR est née en 2021 de la fusion entre Finansol, acteur historique de la finance solidaire, et l’iiLab, laboratoire d’innovation sur l’impact.

Lobbying Activity

Response to Retail Investment Package

25 Aug 2023

In the context of the public consultation on the roadmap, FAIR underlined the lack of EU label on sustainability related information, as well as the lack of financial products that would meet sustainability preferences, two interesting stakes that were put forward in the consultation form. However, we fear that the sustainability side remains rather underexploited in this proposal for a directive. Many initiatives are currently underway to improve the quality, readability and comparability of extra-financial information available to retail investors (Taxonomy, SFDR, CSDR), which FAIR welcomes as a cornerstone of a safe and functioning capital market. Likewise, FAIR welcomes the addition of the customers sustainability preferences to the information the insurance intermediary must consider when providing advice on insurance-based investment products. Unfortunately, we feel too few steps are taken to encourage the structuration of an offer of sustainable investment products available to retail customers ; furthermore, points of concern are raised regarding the disappearance of social criteria disclosure requirements for PRIIP. Please find attached our full contribution, as well as a detailed document on our proposal regarding the UCITS directive and fostering a more robust offer of sustainable investment products for retail investors.
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Response to Proposal for a Directive on cross-border activities of associations

28 Oct 2022

FAIR welcomes the Commissions initiative, following the Parliaments legislative initiative resolution. Our association firmly believes that in order to promote the development of an EU non-profit sector (specific objective 4), and in particular when it comes to helping them access adapted financing, cooperation and inter-operability between national frameworks is needed. Non-profit organizations pursue objectives pertaining to the common good, in particular tackling social and environmental issues that are hard to address through public policy. Therefore, it is capital that the Commission and the Member States focus on supporting those organizations, that contribute greatly to the EUs achievement of its just transitions. This can only be done efficiently if those organizations are recognized and supported according to their specific needs. Organizations that reinvest the majority (or all) of their benefit into their activity rather than distributing it to shareholders, associations and others, face comparable issues in terms of financing. Hence, we regret that most of the consultation (questionnaire and feedback on the call for evidence) revolves around associations only. Consequently, we would like to call for the two legislative initiatives to be treated separately, as called by the European Parliament. FAIR believes that the questionnaire should include all non-profit organizations at large and not only associations, in accordance with the name of the Parliaments legislative initiative resolution. We believe that the reinvestment of benefits into the organizations activity is an important thing to recognize and to incorporate in European regulation further. FAIR has been advocating for a recognition of organizations of the social economy, in particular when it comes to financial regulation. Indeed, social economy organizations are often not recognized in regulation and therefore, do not receive adapted support despite initiatives such as the Commissions Action Plan for the Social Economy. This is the case, for instance, of the draft report for a social taxonomy, where no consideration is given to the way those social economy organizations conduct business, reinvesting the majority of their benefits in their social utility mission. In particular, FAIR would like to draw attention to the potential that recognizing those organizations could have in the field of State Aid. Indeed, social economy organizations do not benefit from a special recognition under the GBER in which they are assimilated to SMEs (when they meet the conditions). Under Article 21 of the GBER, the aids from which those organizations may benefit are therefore limited to companies with less than 7 years seniority and to a total amount of 15 million. This does not address their specific needs and those structures are facing structural difficulties in accessing financing as a result of a social finance market failure. In essence, their non for profit nature makes them less attractive to investors. They need more support in accessing private financing. In short, we believe a recognition of minimum requirements for organizations that reinvest benefits into their activity could be a stepping stone, that could help identify those organizations as a group, and therefore design better regulation, in particular in relations to financial regulation and enhancing those organizations access to finance, regarding both public and private capital. To extend our feedback, you will find in attachment FAIRs note for a revision of the GBER.
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Response to Alternative Investment Fund Managers – review of EU rules

16 Mar 2022

FAIR, representing its 120 members consisting of banks, asset managers, NGOs, schools, social enterprises and committed individuals, would like to thank the Commission for the opportunity to provide feedback on the review at hand. However, as an association working towards the development of inclusive finance at the service of social impact through the mobilization of both retail and institutional investors, FAIR believes the review does not address certain aspects of the AIFMD and especially UCITS directive that require improvement for a full realization of the Capital Markets Union. Indeed, current regulation prevents certain social financial products from being distributed to retail investors in Europe, and specifically the French model of social fund known as “90/10 fund”. FAIR would argue a revision is needed to allow these funds’ solidarity based assets to be eligible under the UCITS directive. This specific form of investment funds was created 20 years ago in France to facilitate social enterprises’ access to financing. A 90/10 is required to invest 5-10% of its assets in social enterprises, while the remaining 90-95% are listed assets that need to be managed according to ESG criteria. Thanks to a favorable legal framework and a strong demand from investors, 20 years later, 90/10 funds are thriving in France, with 13,7Mds€ outstanding amounts in 2021. These funds present benefits for all actors : - Social economy actors: access to financing solutions that are adapted to their specificities is paramount to them achieving their social objectives. Social economy plays a major role in achieving the environmental and social transition in Europe:. It is estimated that social economy represents 2.8 million entities and enterprises in Europe, employing 6.3% of the working populations. However, European social economy actors are facing structural difficulties in accessing financing as a result of the social finance market failure. 90/10 funds are addressing this failure, in line with the objectives defined by the Commission’s recent Action Plan for Social Economy. - Asset managers: 90/10 funds represent an innovative investment vehicle with high social impacts. - Investors: 90/10 funds provide a reliable way of giving meaning to their savings, with the opportunity to invest directly into projects with significant social utility, participating to just transitions. However, since UCITS IV and the AIFM directive, 90/10 funds have been excluded from the UCITS passport. Being considered AIF, 90/10 funds can only be sold to professional investors. The reason for those funds being considered AIFs lies in the very component that makes them social investment funds : the 10% of assets invested in social economy actors. Indeed, the debt instruments used by those funds or the FPS they invest through do not appear to fall under the authorized 10% of transferable securities, money market instruments other than those referred to in paragraph 1 of article 50 of the UCITS directive. Therefore, 90/10 funds are not accessible to retail investors outside of France. This restriction aims at protecting retail investors from risky products. However, it can be argued that 90/10 funds are in fact no more risky than similar funds that are considered UCITS, while having much more important social benefits, which could be observed during the past 20 years in France. In this context, FAIR and its members would like to emphasize the need for a targeted review of current regulation, in order to remove barriers to the development of such social financial products on the European market. You will find attached FAIR’s paper on 90/10 funds as a proof of concept for social investment funds, which presents in more detail the functioning of those funds, their impact, and the hurdles they face. Case studies are included to better illustrate the need for those funds to be scaled up to a European level.
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Response to Social Economy Action Plan

21 Apr 2021

Finansol welcomes the Commission’s Roadmap, and especially the focus it puts on access to public and private finance. Finansol, the French association of social finance, cannot stress enough the major importance of proper access to resources for social economy organizations to properly emerge, develop, and produce considerable social and environmental impact. While the COVID-19 crisis has further demonstrated the essential nature of social economy organizations and of their activities, it has also shown how remarkably resilient social finance is compared to its counterparts in times of crisis. It appears as a safe and impactful vehicle for Europeans to harbour their savings, which may have amassed during these times of reduced consumption. French models of SOLIDARITY EMPLOYEE SAVING PLANS or 90/10 FUNDS can be used as an example of mechanisms that could be replicated across the Union, that have kept steadily developing despite the circumstances. However, there are still barriers that hinder proper public and private investment in social enterprises, in particular when it comes to the GBER regime social enterprises fall under. Indeed, these enterprises face specific structural difficulties as a result of the financial markets failures; however, they are assimilated to SMEs in the GBER, which hinders their access to State Aid that is justified by the fact that their need for support is not cyclical but instead structural. Indeed, the lower remuneration of investors that is a constituting characteristic of social enterprises impairs their attractiveness and causes difficulties to access equity capital all along their life. Finansol’s submission for the future REVISION OF THE GBER is attached. Likewise, other changes in the EuSEF regulation could make it easier for social economy organizations to access funding: EuSEF funds could be opened to non-qualified investors, and to non-financial securities, both central to social finance. Likewise, Finansol’s position paper on the matter is attached. Furthermore, Finansol salutes upcoming EU initiatives such as the extension of the Taxonomy Regulation to social matters. We strongly believe that a harmonization of sustainability criteria, especially regarding social and governance aspects, is necessary to accompany the development of social finance across all Member States. We also believe that putting forward a common referential and common methodology paves the way to further development, namely the birth of a EUROPEAN LABEL CERTIFYING SOCIAL INVESTMENTS. These labels already exist at a national level, such as the FINANCITE & FAIRFIN label in Belgium, or the FINANSOL label in France. They are based on demanding criteria, regarding the social nature of the investment, its transparency and governance... Based off those examples, a Europe-wide label would earmark investments for social economy organizations and guarantee their social nature, within and across Member States. Finansol would also like to command the inclusion of the objective of better understanding the specific features and impact of social economy organizations, and increasing their visibility. This dynamic also needs to be extended to the market these actors operate on, and the investments they have access to, regarding offer (characteristics of social investment) and demand (organizations’ needs). In this regard, the recent study of French local currencies’ social impact (attached) is a good example of how research can help to better understand the benefits of social economy innovations and how to support them. This dynamic would allow to better tailor financial instruments (such as guarantees and loans), to make it easier for them to be better absorbed by European social economy organizations. This can only be achieved through the coordination and funding of significant research, within and across Member States, that needs to be made available through a European center for resources and expertise.
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