PROJECT M
 
PROJECT M
Philippe Dutertre

All paths lead to responsibility

True commitment to socially responsible investing takes more than a dash of green marketing. In France, it takes a well-thought-through course

© Bill Miles

All paths lead to responsibility

True commitment to socially responsible investing takes more than a dash of green marketing. In France, it takes a well-thought-through course


PROJECT M

What does the approach associated with socially responsible investing (SRI) consist of? And what is the current state of this sector in France?

Philippe Dutertre

The main idea behind SRI is to direct investors’ savings toward companies and bond issuers that show respect for a certain number of social and environmental values. In France, the SRI market is particularly healthy and boasts an impressive growth rate, growing 35% in 2010, while the asset management market overall only advanced by around 18%. SRI management in France currently accounts for almost €70 billion. In the area of employee savings, one in every six euros is invested in alignment with an SRI approach.

PROJECT M

Where does the keen interest in SRI within France originate?

Philippe Dutertre

This SRI dynamic is driven by a number of investment-related initiatives, such as the first SRI Week in France, in 2010. This event was instigated by a steering committee made up of key individuals involved in SRI, including representatives of partnering investment organizations and of the Ministry of Sustainable Development.

I should also mention the Grenelle round table, which has instigated a series of policy meetings on environmental protection. This has resulted in a new law, of which two articles pertain specifically to SRI. This type of institutional encouragement initiated by governmental policies is catalytic, and is contributing to an increase in the number of responsible asset owners. Additionally, there are also certain trade unions committed to SRI, especially CIES, an inter-union employee savings committee and a real driving force in this sector.

PROJECT M

Would you say that there is a particularly French style of SRI?

Philippe Dutertre

There is a process particular to France. Until recently, SRI was traditionally dominated by a best-in-class approach, but it is now diversifying. The French method is not exclusionary; in fact, it is very much based on open dialogue among all involved. It’s a path that emphasizes an intelligent process of responsible investing. By continuing to succeed and grow, this approach should increasingly influence the mindset of those involved, whether they are share or bond issuers, governmental agencies or businesses.

Even if those involved in SRI initially choose differing paths, ultimately they end up at the same place. It’s like the road to Santiago de Compostela: pilgrims leave from different places, but after crossing the Pyrenees, everyone ends up on the Camino Francés (French Way) that takes them to Santiago de Compostela. Once this point is reached, we can truly say that SRI has become part of everyday investing, but at the moment I can’t tell you how far we are from the Pyrenees.

PROJECT M

What are some of the major challenges that responsible investors have had to deal with?

Philippe Dutertre

Around 10 years ago SRI was subject to ridicule and disregard. The desire to pursue responsible investments was hard to justify against the stock market performance of investments such as the Vice Fund. Company managers who didn’t adhere to Milton Friedman’s famous dictum that “the social responsibility of business is to increase its profits” were thought to be poor managers who failed to complete their mission. This debate is still ongoing and continues to enrich our approach to SRI.

PROJECT M

Does SRI yield results in the medium and long term?

Philippe Dutertre

We have to look at the mission that investors assign to their asset managers. The key to the road map they agree on are the political and social goals of the investor. The challenge is then to translate this set of values into concrete investment criteria, without concentrating solely on financial aspects. Of the €14 billion in assets that we manage at AGICAM, €1.5 billion is managed “responsibly.” The SRI funds that we manage have performed better than their respective market indices.

PROJECT M

So, the SRI approach is still the best choice, even over the short term?

Philippe Dutertre

No, obviously one has to qualify that. For example, someone who invests over the short term can ignore the impact of CO² emissions; however, someone who has a long-term investment horizon has to include this concern in his approach. Responsible investing is based on evaluating extreme risks. In a company, problems pertaining to labor law, human resource management, environmental issues or compliance can have severe consequences. That is why extreme risk management is central to SRI.

PROJECT M

You once said, “If you think responsibility is too expensive, try irresponsibility.” Is this a convincing argument for investors?

Philippe Dutertre

Actually, I borrowed the expression from [CEO of ERAFP, the French public service supplementary scheme] Philippe Desfossés. It’s based on something that Derek Bok, a former president of Harvard University, is quoted as saying: “If you think education is expensive, try ignorance.” It shows that responsible investing, like education, is an investment that pays off over the long term.

At AG2R LA MONDIALE, SRI represents an evolution spanning over 10 years of initiatives, commitment and discussions with other players in the SRI sector. We proceed with a lot of humility and trust and are always guided by our values. One doesn’t declare oneself to be responsible; responsibility is exemplified by actions.

PROJECT M

Is this philosophy also applied at AGICAM?

Philippe Dutertre

AGICAM is an asset management company governed by paritarian management and mutualism. We are at the center of this alchemy between financial performance and the need for responsibility – responsibility both for the company and for the investor. Our commitment on the path toward greater responsibility is therefore twofold. On the one hand, we are increasingly managing portfolios with SRI principles, and on the other, we are also trying to contribute to the growth of SRI by playing a leading role in its further development.

PROJECT M

What is your prognosis for the future of SRI in France and elsewhere?

Philippe Dutertre

Development is linked to the commitment of asset owners, asset managers and, more widely, all other stakeholders. SRI’s primary risk lies in making overly hasty decisions. At AG2R LA MONDIALE, our approach is based on a method so that SRI is implemented in a sound manner, step by step, strategy by strategy and territory by territory.

But not everyone operates like we do. Being 100% committed to SRI takes more than a “green” dash of eco-consciousness in a marketing strategy. It takes a sound method to constructively participate in discussions on SRI performance. That is how we will convince further investors to think and to live responsibly, whether they are shareholders or lenders. As the philosopher Blaise Pascal said, “Man is but a reed, the weakest in nature; yet it is a thinking reed.” Investors of tomorrow owe it to themselves to embody that capacity to think and be responsible.

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