Bridging the gap: why social and economic inclusion is everyone’s business

? Together, the Covid-19 pandemic and recent waves of inflation have widened social and economic inequalities across the globe. Achieving inclusion – the guarantee of essential rights like housing, fair wages, healthcare, food, and education for all – is thus more crucial than ever.

• ?While recent decades have seen considerable progress towards social and economic equality – with 1.3 billion lifted out of extreme poverty over the past 30 years, the global picture remains stark. 730 million still live in extreme poverty, and 60% of the world population earns below $12 a day, writes 麦肯锡 . This includes 300?million?individuals living in high-income countries, often struggling to cover their basic needs and trapped in low-quality housing. The pandemic has worsened their situation, with inflation driving food and energy prices up. Today, the poorest half of the global population owns just 2% of the world’s wealth, while the richest 10% own 76%, notes the World Economic Forum .
• ?Fostering social and economic inclusion requires acting on multiple fronts at once. Governments must ensure equal access to education and public services as well as the fair distribution of public financial aid. But businesses, too, have a critical role to play, lifting barriers to employment, creating inclusive workplaces where all can thrive, and offering products and services that meet the needs of vulnerable communities.
• ?Cooperation between the public sector, civil society, and the private sector is thus necessary to real progress – and can reap powerful results: in France, for example, the “Action C?ur de ville” program, leveraging local leadership and innovative partnerships, has breathed new life into devitalised city centres. In 245 mid-sized towns, the program has helped boost employment and public service accessibility and improve housing quality in central neighbourhoods. ?
• Another vital aspect of achieving economic and social equality? Ensuring low-income households aren’t left on the sidelines of the green transition, starting in the two areas that most weigh on vulnerable populations’ wallets: housing and mobility. In fact, while housing makes up 22.5% of final household expenditures in OECD countries, that share can be significantly higher for vulnerable individuals: close to 20% of low-income households in OECD countries spend more than 40% of their income on rent or mortgage payments. These households are more likely to live in substandard housing and to lack the finances required to conduct pricey thermal renovations.
• Similarly, for many, the cost of low-carbon mobility remains out of reach, as electric vehicles continue to be more expensive than traditional cars. This is compounded by the fact that high housing prices in city centers are pushing these households to ever more remote areas, where public transportation is sparse or nonexistent, increasing their reliance on cars and adding to their financial burden. Addressing this imbalance is crucial. Programs combining support from local associations, companies pledging to offer specific products with appropriate pricing, as well as private funding and public guarantees to encourage lenders to support fragile households can help ensure the green transition and the fight against inequalities go hand in hand. As Nobel Prize-winning economist Esther Duflo told the 纽约时报 in 2022, “one big error […] in our thinking about climate has been to dissociate the effort to reduce climate change and the effort to reduce inequality. The two are intimately connected”.
• ?Regular readers of this newsletter will know we often stress the need for appropriate indicators to accelerate the green transition. The same is true of economic inclusion. We need clear indicators that can measure the value of inclusion for economic actors, to show that economic interests truly can align with social cohesion. In fact, better inclusion can lead to countless quantitative and qualitative benefits for companies, from reduced turnover to an increase in job applications. To make corporate dedication to inclusion more visible, an “Inclusion Index”, similar to diversity indices, could be developed for both the public and private sectors.
• ?More generally, the positive impact of inclusion should be made more tangible for companies and public bodies. That way, a more balanced financial load, evenly spread between public and private actors and associations, can maximize avoided costs and socioeconomic benefits for all. A good way to start would be by including inclusion-based criteria in all public tenders. Another would be to promote social impact contracts addressing a wide range of social inclusion issues (e.g., for people with disabilities, refugees, etc). These contracts leverage both public and private funding to foster high-impact projects, with the public sector shouldering most of the risk. More generally, a better distribution of the financial costs of inclusion among private and public actors and associations can help maximize avoided costs and socioeconomic benefits for all.
• ?But none of this change can take place without fostering a broader inclusion culture. Just as the green transition requires raising awareness about climate change and biodiversity across society, an inclusion culture must be built through education and engagement at every level. This could start with educating students about inclusion from an early age, but it must also extend to training corporate executives and board members as well as local authorities on how to support the social and economic inclusion of vulnerable populations.
• ?These proposals are all part of a set of recommendations born from the Cercle de Giverny Forum, held on 13 September, where a working group on social inclusion co-chaired by antoine sire , former Head of Company Engagement at BNP Paribas, and now senior advisor on social inclusion and impact economy, laid out a roadmap for fostering greater inclusion. The common thread in all these recommendations? They all hinge on collaboration across sectors and a shared commitment to action. A blueprint for building a more inclusive future!

?? Circular economy is key to the transition. But a number of obstacles still stand in its way.

• 85% of manufacturers see the circular economy as a genuine opportunity to improve their competitiveness. But for banks, funding circular economy projects remains challenging: with limited historical data on these models’ financial impact and few tools to assess the unique risks associated with them, many circular projects struggle to secure the investment they need to unlock their full potential.
• That is why BNP Paribas has teamed up with La Banque Postale and Oney to form the Circular Finance coalition, in collaboration with experts from Circul'R , a network of sustainable innovation experts. Their goal? First, to identify under-funded circular projects and understand the reasons behind their funding gap. Then, to select use cases to identify bottlenecks and develop practical solutions. A hands-on approach to finally help the circular economy take off!

?? As Asia Pacific accounts for 51% of global GHG emissions, companies across the region are facing increasing pressure to comply with ESG regulations.

• In fact, a survey commissioned by BNP Paribas among CEOs, CFOs, and CSOs in Asia Pacific reveals that many are struggling with inconsistent regulations, lack of clear strategies, and funding and data gaps, particularly when it comes to carbon emissions.
• In return, many are turning to banks for guidance; financial institutions can bring corporates precious help navigating the complex regulatory landscape, implementing effective ESG strategies, and defining emissions goals.
• Another area where banks can help? According to the survey, only 6% of Asian companies are currently tracking their Scope 3 emissions. Read on to find out how BNP Paribas is working with corporates to address this challenge through sustainable finance solutions and partnerships that promote greener supply chains.

?? The BNP Paribas Solar Impulse Venture Fund reaches an exciting new milestone!

• ?This summer, BNP Paribas Solar Impulse Venture Fund, a unique collaboration between Bertrand Piccard ’s Solar Impulse Foundation and the BNP Paribas Group, reached its target size of €150 million.
• After investments in five flagship startups like NatureMetrics or Hello Watt , the fund, managed by BNP Paribas Asset Management ’s Private Asset division, is now set to back 15 to 20 more high-potential European and North American startups in sectors as varied as the energy transition, sustainable agriculture and food, water and ocean management, or sustainable mobility. With one mission in mind: to support game-changing companies that are making a positive impact on the environment and will accelerate the green transition.

?? Some summer reads stick with us long after the holidays are gone.

• That is the case for Marie-Sophie Pastant , Head of the ETF/Index & Synthetic Systematic Strategies at BNP Paribas Asset Management , and Kukum, a novel by Canadian author Michel Jean, of the Mashteuiatsh First Nations Reserve in Quebec. Kukum recounts the story of a Quebecker orphan who, having fallen in love with a young Native man, adopts his tribe’s nomadic lifestyle.
• A vital account of the cruel treatment of indigenous peoples throughout history, Kukum (grandmother in the Innu language) is also a vibrant ode to nature and to lifestyles that celebrate and protect it, rather than undermine it. “For me as a reader, it’s an escape and the discovery of a lost way of life where essential values are omnipresent. What a breath of fresh air!”, writes Marie-Sophie.