Understanding Responsible Investment #8 - Focus on Structured Products

Dorothée Chapuis: Hello everyone and welcome to the eighth episode of our "Understanding Responsible Investment" podcasts series. I am Dorothée Chapuis, Head of CSR for Société Générale Private Banking Luxembourg, Monaco and Switzerland and I am with Jean-Christophe Jouannais, in charge of positive and sustainable structured product offers at Société Générale Private Banking France.

Dorothée Chapuis: Jean-Christophe, how do you approach sustainability with structured products?

Jean-Christophe Jouannais: First of all, let's remember that structured products are sophisticated investment products aimed at clients who are competent in this area. The products that we can offer must respect your investor profile and your management objectives. They are based on several financial instruments, including a debt security issued by a financial institution and derivatives indexed on various asset classes such as equities, commodities and currencies for example. The investor invests in a security the return of which will depend on the performance of the chosen underlying. It is therefore understandable that not all structured products can meet sustainability objectives. Currencies or commodities, to name but a few of the underlying assets, do not in themselves have sustainable characteristics. However, we have developed two main families of positive and sustainable structured products. The first comprises structured products the underlying of which has sustainable characteristics, such as a stock market index based on issuers selected on the basis of their ESG performance. Or we have a basket of securities selected because the issuers are players in a sustainable theme such as energy transition, or a theme around natural resources for example.

Jean-Christophe Jouannais: There are three products that are part of our positive programs. Firstly, there are the products that contribute to the Société Générale group's positive impact finance program. This program exclusively concerns structured products issued by Société Générale. For each subscription, Société Générale undertakes to hold on its balance sheet Positive Impact Financial assets for an equivalent amount throughout the life of the product. These assets meet the interests of all players, public and private, issuers and investors, and offer environmental and social benefits such as energy efficiency and the fight against climate change, access to education or health. The sustainability of positive-impact financial assets is assessed by an independent third party according to its environmental, social and governance (ESG) assessment methodology. The second positive program accessible only to our private banking clients in France is the charity program: for each subscription Société Générale undertakes to donate part of its margin to public interest partners, associations or foundations. We have chosen five charitable partners who respond to our desire for commitment, on five major social themes, such as humanitarian emergencies with the Red Cross, poor housing with Habitat et Humanisme, welcoming mentally handicapped adults with Perce Neige, welcoming mistreated children with SOS Children's Villages and the fight against cancer with the Institut Curie. Finally, our latest program concerns a theme more closely linked to the environment: for each subscription to a structured product, Société Générale undertakes to plant a tree for every 10,000 euros invested. We have worked with our partner My Tree to identify two programs to restore the French forest. This program is currently a first test, it is currently being collected and the trees will be planted from autumn 2020 in two state forests.

Dorothée Chapuis: And what is the second family of sustainable and positive structured products?

Dorothée Chapuis:  While we cannot say that structured products are SRI products as such - I refer you to podcast #1 which clarifies the vocabulary used - we understand how they contribute to building a more sustainable world. Thank you Jean-Christophe for this comprehensive insight. We will see in the next podcast how ETFs are also participating in this movement of positive transformation. Thank you and see you soon!

This podcast is part of a series of episodes proposed by Societe Generale Private Banking to understand responsible investment. It is available on the Spotify and Apple Podcast streaming platforms via the "#Private Talk by Societe Generale Private Banking" program and on our website www.privatebanking.societegenerale.com. Feel free to subscribe to be notified when the next episode is released and to spread the word.

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