How can French people’s savings be mobilised for a civic purpose?

Since the Covid-19 pandemic began, there have been many discussions around the consequences of this event, identifying or outlining the opportunity that it represents to create “the post-Covid world”. To what extent will the pandemic disrupt our societies?

And the financial world is no exception. As researchers Amira Karray and Daniel Derivois explained in an article published on The Conversation France in May 2020, solidarity has proved itself to be essential, as the pandemic “pushed everyone to intimately redefine their relationship with collective identity, citizenship and otherness.”

How might this relationship promote a change in savers’ behaviour? This question is all the more relevant, given that the pandemic facilitated a significant increase in saving.

In France, there was a surplus of nearly €200 billion accumulated in 2020 and 2021. Certainly, some of these savings will have been used post-lockdowns, catching up on consumption, but part will likely have been kept as precautionary savings.

This is not a matter of possible savings transfers to the NGO or charity sector in the form of donations, but about the ways in which citizenship can be expressed through savings behaviours.

Here, we discuss the results of research based on studies in two areas, finance and marketing, on the respective themes of the democratisation of finance and the challenges of consumer citizenship, as well as a document review. This research was presented at the 20^thannual EURAM (European Academy of Management) and was published in the co-edited work Organisons l’alternative !  (Beji-Becheur, Vidaillet, Hildwein -Éditions EMS 2022)

Be a citizen investor

The world of finance talks about “investors” rather than “savers”, as savings are used to respond to the financing needs of other economic agents, households, companies, associations, and public authorities. This is the term we will use to refer to individuals who have the ability to save, even just a little, and who do not keep their savings as a nest egg.

Historically, investors were part of the social elite. But as finance became more democratised, through, for example, funded pensions, collective management (life insurance, UCITS) and new forms of salary remuneration, their profile changed. Now, they are widely represented among the middle class (Frank 2000). These individuals invest to have protection against risks related to their life cycle. They are therefore mainly concentrated on their own interests and those of their family..

However, the impact of their investment goes beyond their own interests. Through financing, they can help improve the quality of life of other households, create jobs or pay for educational, health and recreational facilities. But they may also contribute to funding companies who mistreat their employees or disregard their environmental or societal footprint, without the investor necessarily realising.

Marketing research shows that consumption does include a civic dimension. It is possible for an individual to covet, purchase and use goods and services while acting as a citizen that cares about public life..

The shift to a more active citizenship during this pandemic period, something that was possible and hoped for, could accelerate the development of the civic aspect of saving, transforming investors into citizen investors, i.e. who make financial choices that consider social issues, in the sense that they are partially guided by concerns around well-being, justice, and public life in general.

But which choices are available to them?

Citizen investors can also fund positive-impact projects, in particular through participative finance platforms. These platforms propose projects to be crowdfunded. Some are specialised in funding projects in support of the energy transition, such as Lendosphere.

However, investors still need a certain amount of knowledge and time to choose which projects they want to fund - that is the particularity of direct finance. Otherwise, investors can use an intermediary.

Banks are the classic historic intermediary. When people deposit their money in a savings account at the bank, they are financing projects for people or companies without having to select them. However, this means that they may be funding unethical companies.

Investors are much more likely to be guaranteed to be investing in a citizen project if their savings are invested in a specific account, like a sustainable development and solidarity savings account, aimed at funding small and medium-sized companies and members of the social economy. This is also the case when investing in a responsible investment (RI) fund. RI aims to combine economic performance and social and environmental impact.

A responsible range of options

The asset management companies that manage these funds do take non-financial criteria into account, to select the values in which to place investors’ money. The “best-in-class” approach, which is the most common in France, involves selecting companies that have the most ethical and responsible practices in their sector.

France has a particularly extensive range of RI funds. It recently expanded, following the PACTE law that came into force in 2019, which made it mandatory for insurance companies to offer products that support environmental preservation and solidarity projects in life insurance contracts, the most popular form of investment in France.

Highlighting citizenship issues in finance allows us to consider a framework in which households with the ability to save can exercise their citizenship through their financial choices, and thereby support political initiatives, without having to renounce their own interests. In so doing, their power to act will be strengthened.

The range of options at their disposal also supports this. However, this should not overshadow the institutional efforts that are still needed to clarify such options – the use of labels will avoid greenwashing and social washing – and help French investors to develop their financial education.

These efforts, in combination with the development of citizens’ relationship to finance, could make it possible to prioritise both the funding of projects with high civic and collective impact and drive the development of responsible companies in the post-pandemic world.