The 2nd largest French Bank launches a Social & Environmental Impact loan

October 15, 2020
Putting impact at the heart of financial strategy is a growing trend. From international commitments such as the Business for Inclusive Growth initiative from the OCDE, to more concrete cases as the one we present in this article. At KOIS, we are happy to see these becoming a real part of how finance is done on a global scale. The latest example to date? A Social and Environmental Impact loan from the 2nd largest French Bank. This new offer aims to valorise the social or environmental engagement of its clients in the real estate and social housing sector.

In recent years, KOIS has been happy to witness the growth of impact topics within larger corporations and businesses. A growing set of sustainable initiatives has drawn a crowd of new actors to the impact stage. Recently, initiatives such as Business for Inclusive Growth (B4IG) from the OCDE and Danone have gathered actors from leading corporations such as Unilever, Mars, Ikea, Microsoft and more. These have all signed a pledge to take concrete actions ensuring the benefits of economic growth benefit a wider population.

The positive trend has rippled into the financial sector all the same. For instance, major banks are now involving their CSR department into more business activities. This has led to the design of innovative and sustainable financial products such as funds dedicated to impact, and more broadly integrating impact measurement into the heart of banking strategy.

In fact, just last week, the 2nd largest French Bank (the BPCE group), launched an interesting product: a Social & Environmental Impact loan. This loan sets extra-financial objectives that, if met, can result in a reduced borrowing cost for the client.

Lancement du Prêt à Impact Social & Environnemental Caisse d'Epargne

A Social and Environmental Impact loan for the real estate industry: a transformative idea

The Impact Loan of the BPCE group is a simple yet transformative idea: incentivizing real estate developers and social housing companies to put impact measurement at the heart of their project, with the reward of a reduced interest rate. The concept even rises further, with the option to donate all or part of the money saved to a pre-defined NGO.

The current setup allows the borrower to choose which criteria to consider. Criteria include for instance: inclusion, ageing and health of the tenants, energy performance and greenhouse gas emissions. The chosen one will be evaluated throughout the loan lifespan. The customer will then benefit from a reduced interest rate if the project reaches or surpasses the objective. Part of the savings can also be donated to a non-profit.

The first French Impact Loan includes three parties:

All three parties signed a € 25M tripartite convention. Thanks to the innovative financing mechanism, the Social Housing company will benefit from an interest rate reduction of 0.15% if, each year, it rents a minimum of 20% of its housing to a target population officially flagged as priority group. The Abbé Pierre Foundation will directly receive 50% of the bonus granted each year.

At KOIS, such evolutions in the banking world rejoice us, as hey help move towards more sustainable financing solutions for all. We look forward to seeing if other banking players follow these footsteps!

About the authors

Ladislas de Guerre is a Manager at KOIS

Follow KOIS on social media or subscribe for more updates! 

Subscribe to our newsletter

    You may also like…

    L’Echo: The neglected potential of social impact bonds as a way out of the crisis

    Chronicle by Pierre Hermant, CEO of
    Social Impact Bond mechanisms consist of calling on private investors to finance innovative projects that aim to make a measurable contribution to solving problems with a known social cost. We are therefore talking about venture capital. Could Impact Bonds be our way out of the crisis?

    A year of impact: Season’s Greetings

    2020 was an unexpected year for all. Many of the communities we serve struggled, but we also witnessed a great resilience in the world of impact. This resilience, is what we want to share & celebrate with you as we end 2020 and jump into 2021.