We have built our expertise on our deep historical knowledge in environmental & social risk management, structured finance and capital markets to meet the increasing demand of our clients for financial solutions that match their sustainability agenda.
We believe that supporting our client’s positive impact helps create a world of new business opportunities.
Our E&S Advisory and Impact Finance Solutions department, a unique team of experts capable of analysing and structuring deals involving multiple parties, can assist our clients in their Sustainable and Positive Impact Finance projects.
We capitalise on our extensive skills and global presence to offer made-to-measure financing solutions, ranging from export credit, to sustainable bonds, to securitisation, as well as ESG rating advisory services for issuers.
In 2018, we financed €12bn Positive Impact projects and lead managed €18bn of green and sustainability bonds.
Renewable Project Finance
With a global presence and recognized expertise in the energy sector, Societe Generale is a leader in renewable energy (solar, wind and biomass energy, etc).
Since 2017, we have more than doubled our funding to renewable energy projects, reaching up to €22 billion in June 2019. In September 2019, Societe Generale -as a founding signatory of the Principles for Responsible Banking- announced the following additional commitments:
• Societe Generale is committed to raising €120 billion to the energy transition between 2019 and 2023, of which €100 billion of sustainable bonds issues3 and €20 billion dedicated to the renewable energy sector through advisory & financing.
• Societe Generale will progressively reduce its exposure to the thermal coal sector to zero by 2030 at the latest for companies with thermal coal assets located in EU or OECD countries and by 2040, elsewhere.
3 Sustainable bonds issues directed or co-directed by Societe Generale. Sustainable bonds are composed of Green and Sustainability Bonds (as per ICMA guidelines and EU Green Bond Standard) as well as bonds linked to climate objectives.
Green, Social & Positive Impact Bonds
Societe Generale’s platform combines our longstanding environmental, social and impact structuring expertise with our leading debt capital markets structuring and distribution services.
Since 2016, Societe Generale has acted as Lead Manager for over 100 green and social bonds, as well as one sustainability bond amounting to a total exceeding €82bn equivalent4. In addition, Societe Generale acted as the structuring advisor for highly visible inaugural green, social and sustainability bonds for key clients in all asset classes – corporates, financial institutions, sovereigns, supranationals and agencies (SSA) – in Europe and Asia, highlighting the bank’s strong advisory capabilities in the Sustainable and Positive Impact finance field.
In a drive to support the further development of the sustainable bond market globally, Societe Generale is taking an active part in several initiatives, such as being a member of the ICMA Green and Social Bond Principles and being the first French bank in 2018 to join the Climate Bond Initiative’s Partnership Programme.
4 Figures at end of October 2019.
As an issuer, Societe Generale Group has already raised five Positive Impact bonds. The latest one to date being the €1bn 10-year inaugural Positive Impact Covered Bond by Societe Generale SFH issued on July 10th, 2019. This was the first green covered bond in France and the proceeds are used to refinance mortgages on residential properties that belong to the top 15% carbon efficient dwellings in France. Of note, not only did the transaction follow best market practices (ICMA GBP, UNEP-FI PPIF) but the asset selection methodology has been recognised by the Climate Bonds Initiative (CBI), which has certified the bond issuance and has also retained the methodology as Standard CBI for residential properties in metropolitan France.
Societe Generale became the first foreign bank to be granted approval by the Financial Supervisory Commission, Republic of China (Taiwan), to issue TWD denominated Positive Impact Bonds in Taiwan. The proceeds of the issuance will fund renewable energy projects in Taiwan, including Taiwan’s first commercial-scale offshore wind farm.
Societe Generale places ESG evaluation at the heart of its equity research. Societe Generale’s Cross Asset Research is evolving its offer to systematically integrate an analysis of Environmental, Social and Governance (ESG) dimensions into its equity publications, in addition to the fundamental financial analysis. This new offer will be available from January 2020, making Societe Generale one of the first players to develop this holistic approach for equity research.
Sustainability-linked loans & bonds
As an innovative way to value our client’s sustainability performance, Societe Generale has developed an Impact Loan offer, linking the financing structure to the client’s achievements in terms of corporate and social responsibility (CSR) targets.
Defined on a case by case basis, the targets are discussed with our clients and supported by an incentivised mechanism. With this tailormade structured offer, Societe Generale joins forces with our clients to help them achieve their sustainability ambition and reach their CSR goals. Sustainability mechanisms offer multiple structuring opportunities and can also be used in the structuring of bonds.
In 2018, we have granted €1.4bn loans with positive impact features to our clients.
Partnerships with Supranationals, Multilaterals & Development Finance Institutions (MDFIs)
As an international lender with a historical presence in many developing countries, we are convinced that the strong complementary relationship between local knowledge, the know-how of development finance institutions and our own product expertise makes us collectively stronger in addressing the development challenges of these countries.
Multilateral development banks and other development finance institutions represent key partners with whom Societe Generale enjoys long-lasting and fruitful relationships. Our cooperation is based on a wide range of co-financing instruments such as B-loans, sovereign risk guarantees, risk sharing facilities, or partial credit guarantees. Over the years, we have designed solutions to apply these instruments across many of our areas of financial expertise, from project and commodities financing to capital markets and risk management.
With a global presence, Societe Generale is a leader in export finance and contributes to the long-term financing of investments in emerging countries.
Since 2017, the Export Finance team has incorporated the Sustainable Development Goals into its business model resulting in the financing of numerous projects. In 2018, these included a number of industrial and infrastructure projects in Africa, such as potable water, bridge and city infrastructure projects, meteorological equipment projects, as well as train maintenance workshops.
We are proud of our commitment to Africa5, where we have a long historical presence and strong local franchises contributing to the development of local economies and communities. This longstanding presence on the continent provides our clients with unmatched access to local markets.
5Grow with Africa: https://www.societegenerale.com/en/strengh-of-africa/african-strategy
Impact based finance, a new territory
While positive impact finance is a critical step in any company’s or investor’s impact journey, transitioning to an impact-based model is a disruptive shift that implies a complete change in business model, financing model and performance monitoring, so that all three are aligned and centred on impact6.
Impact-based business models put positive impact outcomes at the core of a company’s strategic goals and decision-making, on the grounds that sustainable profits and long-term value creation are derived from the ability to deliver positive impact to a company’s constituencies and the environment.
Impact Based Finance aims at funding emerging business models by maximising and monetising impacts.
Technological solutions to many of the world’s challenges exist already but traditional business models do not work, especially since the places that face the biggest challenges are in developing countries including remote rural areas.
Working with our clients’ innovation & business development teams we co-construct new profitable business models to help them access new markets and ensure their company’s sustainable growth while solving for the needs of the planet and its people.
By using the power of digitalisation to maximize positive impacts, we connect different industries, create new partnerships to deliver impact-based, cost-efficient solutions that meet the needs of local communities in geographies perceived as risky.
These impact-based finance projects highlight that economic development, infrastructure, education and healthcare are intimately connected and that the resulting enlarged client base and diversified business risk enables improved access to funding.
6 More details can be found in “Rethinking impacts to finance the SDGs”, a report co-authored by Societe Generale and UNEP-FI Positive Impact Initiative http://www.unepfi.org/positive-impact/rethinking-impact/
Illustration of an impact-based programme with the smart lamppost
In this illustration, the smart lamppost becomes a tool of development in both cities and rural areas, a means to address two of the populations’ major pain points: access to electricity and to connectivity.
- Electricity improves safety for people and businesses which in turn translates into higher economic activity, more jobs, and ultimately the strengthening of the social fabric.
- Connectivity allows people to access banking services, advancing financial inclusion, new healthcare, and new education notably in rural areas.
How does it work?
As the classical framework links users of a service to a provider and involves straight repayment by the user to the provider, impact-based solutions identify the multiple potential beneficiaries of an infrastructure, highlighting that economic development, infrastructure, education and healthcare are intimately connected. This allows multiple beneficiaries to contribute to the project thus securing both industrials and financers, by enlarging their client base and diversifying their risk.
In this case, by relying on a new economic model focused on positive impacts generating income and savings, and by centralising the necessary expertise, the building or renovation of public lighting parks could be performed in a more efficient manner and generate revenues from new services.
Tomorrow’s societies will need to respond to severe challenges. They will need to support urbanisation and infrastructure projects in emerging countries, as well as reinvent the cities of ageing countries using digital innovation and smart city programs, all with an inclusive and articulated approach to environmental and social challenges.
Societe Generale contributes to supporting cities, suppliers and governments in this transition, through concrete actions and initiatives.
- The French retail banking network is deeply committed to the “Greater Paris” programme.
- The Corporate Banking, Investment Banking and Financing activities are involved in multiple urban infrastructure projects in developed and emerging countries.
- ALD Automotive has launched several initiatives to meet the requirements compulsory in European cities to limit GHG or fine particle emissions and is adapting its service offer to a move towards “Mobility as a Service”.
- The Equipment Finance business is involved in programmes to equip new forms of urban lighting and transport.
- Sogeprom is actively working on innovative approaches to urban renewal.
- And in line with our longstanding commitment to the African continent, Societe Generale is strongly committed to the “Grow with Africa” initiative, including infrastructure financing of energy projects, water purification, waste management, creation of public transport...
All of this positive change calls for new models, open to technological, societal or cultural innovation, and imbued with the environmental and social impact analyses that the Group is developing.
In this context, the Bank has decided to contribute to research efforts by becoming a founding partner of the “Smart Cities Accelerator” programme launched by Netexplo under the auspices of UNESCO and the French Ministry of Transport.