Société Générale has just announced the launch of its impact loan. “We are responding to the request of the local authorities, who have co-constructed this new offer with us,” says Robert Le Bourgeois, director of the public finance market at Société Générale.

For bankers engaged in this segment of offerings, this financing solution has a great future in the next three to five years. Launched three years ago, Arkéa Banque Entreprises et Institutions has already exceeded its targets for 2021 with 79 new PACT loan customers for a commitment of almost 500 million euros.

Caisse d’Epargne, which opened its offer to local authorities last December, has set itself an ambitious goal: one billion euros per year for loans made with local authorities from 2024. A common ambition for different financial products.

An ambition for an ESG approach

Arkéa’s PACT loan is based on the fulfillment of around thirty commitments in the form of ESG policy (Environment Social Governance), the monitoring indicators are defined by the extra-financial analysis and consulting agency Ethifinance. “From the first report, the client can obtain 100% of the bonus as long as he places himself above a reference benchmark (the scoring grid for comparable clients). From the second report, the client is evaluated based on this positioning but also on his own progress. If he responds positively to one of these two criteria, his bonus is 50%. If he does not respond to any, he can return to the level of the contractual rate at the start,” specifies the deputy director of development at Arkéa Banque Entreprises et Institutions.

Société Générale, which also relies on Ethifinance’s expertise, has made a comparable choice: “Before the customer seeks a bonus, with the impact loan, the customer chooses to enter into a CSR approach,” says Robert Lebourgeois.

A single performance indicator

The criteria are therefore divided into three themes: environment, social and governance. For Virginie Bonneton, CSR project manager in the public finance market, “unlike some colleagues, we have defined differentiated and tailored benchmarks according to three customer segments: society, social landlords and EPL (local public enterprises)”.

Caisse d’Epargne has made a simpler choice by offering customers two categories of loans (environmental loan and social loan), each accompanied by a single criterion to be met. “The criterion chosen always goes beyond the applicable rules and there is not necessarily a correlation between the investment and the performance indicator, because it is not possible to allocate the allocation of funds in a budget. “a loan for an operation,” explains Jérémy Estrader, director of the public market of the Caisse d’Epargne.

External validation or internal engagement

For both Société Générale and Arkéa’s customers, an estimate is made by Ethifinance when the loan is signed. Customers engage in areas of improvement in return for benefiting from a bonus on their starting rate. “Clients know that the benchmark can evolve according to new ESG issues, but our goal is to do so gradually, taking into account the capacity of clients, especially in environmental issues, to invest in monitoring tools”, specifies Carine Bourras. , Deputy Director of Development at Arkéa Banque Entreprises et Institutions.

Each year, a report assesses the progress of customers. For Société Générale, only three evaluation reports are planned (N, N+2 and N+4). For Caisse d’Epargne loans, customers must provide documents every year and throughout the loan period confirming their progress. “Before launching the loans, we set up indicators and a monitoring methodology validated by the international social and environmental assessment agency Vigeo” specifies Jérémy Estrader.

Comparable earnings

For Caisse d’Epargne, the minimum loan amount is DKK 1 million. For Arkéa, it rose to 2 million euros. The loan terms are quite tight, from 5 to 25 years. “Finally, the bonus can allow the customer to earn up to ten basis points on the starting rate,” adds Jérémy Estrader.

Objective shared by Société Générale: The agency’s three evaluations are paid for by Société Générale, the bonus can reach a maximum of 10 basis points. For Arkéa, it can reach a maximum of 20%, from which 0.50% of the support costs must be deducted. The next step and the banks are preparing for it, providing in the continuity of the impact loan offer the expertise that allows customers to measure their results.