Pacte Law: Life insurance in support of socially responsible investment

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An article written by the ISR Label

Adopted in March 2019, the Pacte law contains several provisions whose stated aim is to orient savings towards socially responsible investment (SRI) by making the supply of life insurance contracts greener, in particular with the obligation to offer products that have obtained the label ISR .

New obligations for life insurance contracts

The section of the Pacte law devoted to the greening of life insurance contracts organizes these changes according to an action plan in three parts:
o Since January 1, 2020, all multi-support life insurance contracts must include at least one Unit of Account (UC) labeled SRI (Socially Responsible Investment) or a green UC or a solidarity UC.
o From January 1, 2022, contracts must contain at least one ISR CU, one green CU and one solidarity CU.
o Also from January 1, 2022, information for savers must be made clearer and more accessible as to the commitment of the chosen fund in the ecological transition. Thus, upstream of each subscription, each contract must present the percentage of labeled CU that it contains. The insured will also receive information every year on the policy for integrating environmental and social impacts into the management of the euro fund under the contract, as well as on the amounts invested in labeled funds.

Give meaning to your savings

By directing savings towards responsible, solidarity-based investments that help finance the energy transition, the public authorities are responding to the growing expectations of savers, who are increasingly sensitive to environmental and social issues and are now seeking to achieve their financial goal while giving meaning to their savings.
Thus, a 2019 survey confirms the interest of the French for responsible savings and investment products (1) :
? 6 out of 10 French people say they place an important place on environmental and social impacts in their investment decisions, a trend that is stable compared to 2018.

? Among the subjects that respondents want to see taken into account as a priority in their savings, environmental subjects are arousing growing interest:
– pollution: 82%, compared to 80% in 2018,
– climate change: 76%, compared to 71% in 2018,
– biodiversity: 69%, compared to 63% in 2018.

? The interest shown in social and societal subjects is also important:
– Employment: 78%,
– Respect for human rights: 76%,
– Working conditions: 73%,
– Local economic development: 72%,
– Gender equality: 68%.
? Biodiversity, which was the theme of Responsible Finance Week in 2019, has increased by 5 points compared to 2018. More than a third of respondents say they are ready to invest in a financial product dedicated to this theme.

This new obligation enshrined in the Pacte law pushes insurance companies and private banks both to adapt their fund offerings and to reorganize their communication with their savers. A welcome boost in the shift from savings to greener contracts, even if in fact many operators had already anticipated the trend for several years by including in their life insurance contracts Unit of Account (UC) labeled SRI.

A route marked in green

These regulatory obligations, geared towards supporting the ecological transition, represent an opportunity for SRI labeled funds: savers and future savers are looking for clear and easily understandable information, even without in-depth financial expertise.

In this landscape, the SRI label, placed under the aegis of the Ministry of the Economy and Finance, constitutes a reliable and easily identifiable beacon. Labeling of candidate funds is carried out by independent organizations, following an in-depth audit and according to criteria of strict social and environmental requirements. The SRI label is awarded for a renewable period of three years, and checks take place during this interval to verify that the fund continues to comply with the requirements of the specifications. In November 2020, 527 funds from 86 management companies had already obtained the SRI label, for an outstanding amount of 211 billion euros.

(1) “The interest of the French in responsible finance is confirmed”, IFOP survey for the FIR and Vigeo Eiris, September 2019.


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