When structured products and contributing to reforestation go hand in hand

10/05/2021

Societe Generale combines innovation and commitment for the planet by offering its individual investor and private banking clients innovative structured notes that include contributions to reforestation projects. Since 2019, nearly 550 million euros of these investment solutions have been subscribed through Societe Generale’s banking networks – a success that illustrates the growing commitment of investors in the fight against global warming.

The excessive concentration of greenhouse gases in the atmosphere is the cause of global warming. They are mainly caused by industrial activity, the burning of oil, gas and coal, but also by deforestation. Forests have the capacity to absorb and store carbon dioxide (CO2). Their disappearance releases large quantities of CO2, causing 20 to 25% of the world's greenhouse gas emissions (GIEC, 2000). According to WWF (World Wide Fund for Nature), between 2004 and 2017, more than 43 million hectares, the size of Morocco, were lost to deforestation and threatened forest areas. In 2018, 12 million hectares of tropical forests disappeared according to the World Resources Institute.

Faced with this intensifying phenomenon, public opinion and behaviors are changing. An IFOP (Institut français d'opinion publique) survey in December 2020 shows that the three most important players in the fight against climate change, in the eyes of the French people questioned, are the citizens themselves (61%), ahead of the State (50%) and companies (47%). Concerned about the disappearance of certain plant species, a majority of those surveyed consider it essential to have more restrictive regulations on forest management.

This awareness in France is reflected in the investment behavior of individual investors and private bank clients who are increasingly looking for innovative and positive solutions such as the notes that include contributions to reforestation. Their financial characteristics are those of customized equity products with automatic early redemption mechanisms linked to the evolution of Environment Social Governance (ESG) equity indices (for example the EURONEXT Euro 50 ESG EW Decrement 50 Points index). The notes also contribute to reforestation.

"Through these reforestation support notes, the Group commits to paying 0.10% per year of the total amount of securities actually placed to our partner PUR Projet, a social enterprise that is a pioneer in the operation of community-based agroforestry and reforestation projects that can reverse climate change, fight against biodiversity erosion and stem deforestation" , explains Eric Nghe, Retail Sales within Societe Generale’s Global Markets department. As an indication, a total amount of 10 million euros of securities placed would lead Societe Generale to pay 10,000 euros to PUR Projet. According to PUR Projet estimates (Source: PUR Projet reports), such an amount would make it possible to involve one to two farmers, plant 1,000 trees, restore the fertility of 33 000 m2 of soil and absorb 18 tons of CO2 per year.

"No matter the age group, client mindsets on environmental issues have changed. They now feel more responsible. They choose to invest in notes that support reforestation – notes that deliver the same quality of financial performance as standard structured products while also allowing clients to contribute to the fight against global warming, to take concrete commitments for the planet”, says Sophie Roué, Head of Financial Savings Products in Societe Generale‘s French Retail Banking division

Chosen by Societe Generale for its innovative expertise, PUR Projet works with several thousand local farmers and small producers in some fifty countries to plant or replant millions of trees of various species in the heart of the most vulnerable agricultural areas. The social enterprise manages some forty agroforestry and forestry programs that generate multiple benefits for the soil, biodiversity, climate, farmers' living standards and crop quality. Through these structured notes, Societe Generale contributes to the programs that the bank has chosen to support. These include reforestation projects in France, Côte d'Ivoire, Colombia and Indonesia.

The notes supporting reforestation thus make a positive contribution to the planet and are a strong addon to the Sustainable and Positive Investment Solutions offer that Societe Generale provides to its clients.