MAIF chooses Societe Generale's structured products for their contribution to reducing CO2 emissions
MAIF Solutions Financières, a subsidiary of the French insurer, is distributing a unique type of structured notes that supports, through the purchase and cancellation of carbon credits, a project contributing to the reduction of greenhouse gas emissions in sub-Saharan Africa. This product, which supports a voluntary climate action, is an innovation of Societe Generale’s Global Markets department.
Within the ESG1 and SRI2 product ranges that are dedicated to its French clients, MAIF Solutions Financières, the asset management subsidiary of the insurance group MAIF, has been offering structured notes with ESG underlyings that include a contribution to a greenhouse gas emission reduction project in sub-Saharan Africa – a Societe Generale innovation. "Structured products are part of the solutions we offer to our clients, but for the past three years we have been systematically offering them with ESG indices as underlyings. We have this goal of making our entire range of financial solutions 100% SRI by the end of 2021 by integrating solutions with innovative and positive contribution underlyings. After integrating Societe Generale’s reforestation notes3 into our offer two years ago, we decided to enhance it with the bank's structured notes that include a contribution to a greenhouse gas emission reduction project in Sub-Saharan Africa », explains Olivier Weller, Deputy Director-General of MAIF Solutions Financières.
These structured notes are tailor-made equity products with automatic early redemption mechanisms linked to the evolution of an ESG equity index, the Euronext Euro 50 ESG EW Decrement 50 Points. They contribute to the reduction of CO2 emissions thanks to a mechanism that commits investors to pay back 0.2% of the total amount of the notes effectively subscribed by all the investors to an external service provider. In return for this payment, the service provider buys "VER” certificates (Verified/Voluntary Emission Reduction) or "CER" certificates (Certified Emission Reduction). These certificates are carbon credits which, once purchased, are cancelled. The certificates selected by the service provider are certified according to an international standard and come from projects that contribute to the reduction of greenhouse gas emissions. Each certificate represents one tonne of carbon dioxide equivalent (CO2e).
"Our service provider is helping us research, analyse and choose the best emission reduction projects on the voluntary carbon market. Among the projects proposed by Societe Generale, MAIF chose the one on the theme of improved cooking stoves in sub-Saharan Africa", explains Kristell Herbault, Sustainability Solutions Products Engineer within Societe Generale’s Global Markets department. According to the external provider, the use of improved cooking stoves, instead of the traditional three-stone stoves, reduces wood consumption, CO2 emissions, pollution and the workload associated with collecting wood for rural families, especially women and children.
"The choice of the project in sub-Saharan Africa is based on the effectiveness of the scheme which has one of the best ratios in terms of money give versus environmental impact; and the diversity of its impact in terms of both environmental and social aspects", adds Olivier Weller. "These notes are very appealing to individual investors because they know what their investments are actually doing and what impact they are having. This is not the case with other products on the market that focus on more generic causes.”
"The social dimension was a strong argument in our support and in MAIF's project choice”, says Charlotte Giacomel, Head of Large Retail France within Societe Generale’s Global Markets department. Virginie Danon, Sales Senior Private Wealth within Societe Generale’s Global Markets department adds that these notes "illustrate the alignment of the concerns and priorities of retail clients with those of end-customers who are increasingly behaving as responsible savers and are willing to accept a lower financial performance to contribute to positive projects.” These products are in line with the roadmap and fundamental values of MAIF, a pioneer in responsible investment and a signatory of the Principles for Responsible Investment (PRI) since 2009.
This innovation opens up the field of possibilities in terms of CO2 emission reduction projects supported through structured products and contributes to the diversification of the range of sustainable investment solutions on ESG underlyings offered to clients by Societe Generale.
[1] ESG: Environmental, Social and Governance criteria
[2] SRI: Socially Responsible Investment
[3] Read also the article When structured products and contributing to reforestation go hand in hand