SRI, green, solidarity investment: how to find your way around?

With the climate emergency and the growing awareness of the impact of human activity on the environment, more and more investors are seeking to invest their money in a responsible and sustainable manner. This has led to the emergence of investment practices such as Socially Responsible Investing, ESG investing and responsible investing. However, these terms can sometimes be confusing. In this article, we will examine these investment practices.

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ESG : definition and main principles

ESG (Environmental, Social and Governance) criteria are increasingly used by investors to assess the risks and opportunities associated with an investment. ESG criteria can cover many indicators, for example:

• The environmental pillar: Environmental criteria focus on the company's impacts on the environment. The investor will follow criteria such as the production of renewable energy, the reduction of greenhouse gas emissions (GHG), the sustainable management of water, forests, waste reduction...
• The social pillar: Social criteria concern the company's impact on society, such as customer/supplier relations, health and safety in the workplace, absence of discrimination, employment of disabled people.
• Finally, the governance criteria concern the way the company is managed and directed, such as transparency, ethics, fair remuneration and respect for shareholders' rights.

SRI, “green”, “solidarity” investment... How to find your way around?

The terms SRI (Socially Responsible Investment), “Green” investment and “Solidarity” investment are all investment approaches that consider social and environmental considerations. However, there are differences between these approaches:

• Socially Responsible Investment (SRI): SRI is an investment approach that generally considers environmental, social and governance criteria simultaneously in the selection of investments.
• “Green” Investment: Green investment is an investment approach with a more focused theme as it concentrates specifically on the environmental pillar. It considers companies that have positive environmental practices or that offer solutions to environmental challenges.
• “Solidarity” investment: "Solidarity" investment is an investment approach that aims to finance projects with a strong social utility such as the resolution of social problems such as poverty, access to water or education.

Sustainable finance labels: what's the difference?

The Finansol, Greenfin and SRI labels are certifications that guarantee that the corresponding financial products respect certain standards of responsible investment.

• The Finansol label: The Finansol label certifies that the products finance the social and solidarity economy. Financial products with the Finansol label must respect precise criteria of solidarity and social impact.
• The Greenfin label: The Greenfin label guarantees that they invest in the ecological transition, such as renewable energy, energy efficiency, sustainable management of natural resources, etc. Greenfin-labeled financial products must meet specific criteria in terms of environmental impact and transparency.
• The SRI label: The SRI label is awarded to financial products that integrate all ESG criteria into their investment process.

What is the SFDR regulation?

The Sustainable Finance Disclosure Rule (SFDR) aims to establish harmonized transparency rules for financial market participants on sustainability, particularly about the integration of sustainability risks and negative impacts. The SFDR regulation requires financial companies to provide clear, accurate and comparable information on the sustainability of their financial products. In addition, it aims to combat “greenwashing” practices, i.e., ensuring that what is communicated by green product distributors reflects reality.

In conclusion, ESG criteria, responsible investment approaches and sustainable finance labels are increasingly important for investors concerned about the social and environmental impact of their investments. The SFDR regulation plays a key role in promoting transparency and comparability of information on the sustainability of financial products, while combating "greenwashing". By integrating these ESG criteria into their investment process, investors can contribute to a more sustainable and responsible future.

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