Profits, People, Planet: impact entrepreneurs’ (complex) path

?? As progress towards a more sustainable and fair society becomes increasingly urgent, impact enterprises, i.e., businesses that generate both profits and social or environmental change, are fast gaining momentum. But to reach their full potential and continue growing, these companies need to overcome significant hurdles.

• Also known as “social entrepreneurs”, impact entrepreneurs are launching ethical, transparent companies that leverage market strategies to drive positive changes for society and strike a balance between the “3Ps” – people, planet, and profit. Their work addresses a wide range of issues, from poverty or access to education and healthcare to climate change or the circular economy.
• In fact, from developing green hydrogen technology or small modular reactors to investing in healthy, sustainable food and protecting deep-sea ecosystems, impact entrepreneurship can take many forms – so much so that there are now 10 million social enterprises around the world, producing $2 trillion in annual revenue and providing 200 million jobs.
• But despite their significant economic weight and social and environmental utility, impact enterprises face sizeable business challenges, our recent survey of French impact entrepreneurs finds, conducted in partnership with leading crowdfunding platform Ulule . While some challenges, such as rising raw material costs and post-Covid decreases in purchasing power, are common to all economic actors, others are specific to impact entrepreneurs.
• Among these, funding emerges as a crucial challenge. The impact entrepreneurs we surveyed brought up a strong need for financial assistance: 80.7% of them report they would be interested in accessing low-rate loans; almost 60% would like to benefit from loan guarantees, while approximately 50% expect funders to offer flexible lines of credit and networking or matchmaking support.

• In fact, financial actors have a crucial role to play in empowering impact entrepreneurs to drive positive social and environmental change. At BNP Paribas, we have been working to support impact entrepreneurs for years. Act For Impact by BNP Paribas , the bank’s dedicated mechanism, provides impact entrepreneurs with both financial and non-financial support. To date, the program, which operates in seven countries, has provided €2 billion in financial support to nearly 3,500 environmental and social entrepreneurs, as well as dedicated guidance, technical expertise, and access to a partner ecosystem.
• Building on Act for Impact, BNP Paribas launched the Positive Impact Business Accelerator (PIBA), a team that experiments with tailored solutions for impact entrepreneurs. PIBA pioneered a new type of collaboration between public authorities, the private sector, and the Social & Solidarity Economy (SSE), the Impact Bond (IB). IBs allows impact investors to support an innovative, government-certified, prevention-based program implemented by a SSE player in a variety of areas, from assistance to homeless persons to fighting food waste. Between 2016 and 2023, we signed 24 Impact Bonds, for a total amount of $82 million. Beyond IBs, PIBA had, by late 2023, supported 230 organizations, benefiting 1.4 million individuals and capturing nearly 160,000 tons of CO2, PIBA’s first report, reveals.

• Among the other significant challenges faced by impact entrepreneurs is measuring their company’s impact. Our survey shows 40% of impact entrepreneurs use certificates to this end, while 26% rely on labels such as BCorp. An additional 25% calculate their greenhouse gas emissions on their own. Notably, 23% apply no assessment method at all. Yet measuring impact is crucial for these entrepreneurs to demonstrate their social or environmental contribution and the relevance of their products or solutions to potential or existing investors. Indeed, for an investment to qualify as “impact investing”, it must be made with a specific and deliberate objective (“intentionality’) aimed at providing concrete solutions to poorly met social or environmental needs addressed (“additionality”). But these solutions should also, in turn, generate quantifiable positive impacts (“measurability”).
• To address this need for measurability, BNP Paribas co-created, in 2014, the MESIS (Measurement and Monitoring of Societal Impact) impact measurement methodology in partnership with Groupe Caisse des Dép?ts, the INCO group, and Kimso. MESIS encompasses 13 impact domains, broken down into 38 thematic sub-domains and equipped with 400 indicators, allowing for precise qualification and measurement of the actions carried out by impact entrepreneurs. The methodology revolves around three key questions: who are the project's beneficiaries, what goods or services are provided to meet their needs and in what quantity, and what are the resulting social or environmental impacts.
• Impact measurement is not just about helping impact entrepreneurs prove their contribution. It’s also about normalizing the setting of social and environmental goals, making them as natural and essential as financial targets. That is the key to helping impact entrepreneurship grow… and our chances at reaching our sustainability and social justice goals with it!

?? Introducing BNP Paribas Asset Management ’s first fund dedicated to forests!

• A crucial material for the green transition, wood is in high demand, and with good reason: it can replace plastic in food packaging, offer an alternative to steel or cement in construction, and even transform into biofuel! To effectively manage this resource as well as reach carbon neutrality, sustainable forest management strategies, which can prevent deforestation and preserve forests’ carbon sink properties, are of vital importance.
• Launched with the IWC (International Woodland Company) , a Danish specialist in responsible forest investment, the new BNP Paribas Future Forest Fund (FFF) fund will help bring sustainable forestry investment into the mainstream for institutional investors eager to combine sustainability and profitability.
• The FFF will focus on forests located in mature regions (United States, Oceania, Europe) and certified by the Forest Stewardship Council , ensuring sustainable forest and land management, preservation of the ecological functions, respect for workers’ rights, and support for local communities’ socioeconomic well-being. Find out more below ??

?? Meeting our climate commitments and monitoring our trajectory requires robust ESG data. Gathering this often recent (or, at times, non-existent!) data is a daunting challenge for our customers… and for us!

• While some of this data is available internally, we frequently rely on our customers’ published information, starting with CSR reports. But when data isn’t readily accessible, other solutions are required. That is why we recently conducted a feasibility study using data from satellite imagery specialist Kayrros to measure methane emissions from oil and gas operations. The goal: to better assess the environmental risks associated with our clients’ operations.
• Such is also the rationale behind the open-source tools we are developing to align our portfolios with our climate goals, including a method for measuring the climate performance of French residential property portfolios.
• Interested in learning more? Our colleagues Enam Ehe , Head of Data & Systems at Group Data Office (GDO) and Imène Ben Rejeb-Mzah , Head of Climate Analytics & Alignment, sat down to explore ESG data’s essential role in our CSR commitments.

?? BNP Paribas Asset Management is taking a major step in its climate action by excluding primary market bonds from oil & gas companies active in exploration and production.

• While continuing to support oil and gas companies in their transition towards sustainable energy sources, BNP Paribas Asset Management has opted to screen out those lagging behind in their adaptation.
• This choice is consistent with our Group’s decision to refrain from participating in conventional bonds issuance to companies active in oil & gas exploration and production (including diversified and specialized actors).
• It also reinforces BNP Paribas Asset Management’s sustainable investment strategy, aiming for a net-zero trajectory. Finally, it builds upon BNP Paribas Asset Management’s previous restrictions on investments in oil and gas companies operating in the Amazon and the Arctic, as well as those involved in other unconventional oil and gas resources such as shale or oil sands.

?? If you’ve ever tried mountain climbing, you’ve surely felt that unique blend of dread and excitement – reminiscent of how many of us feel about climate change.

• ?In this regard, “At the foot of the wall” (“Au pied du mur”) is an apt description of where we stand relative to the climate emergency, writes Ghislain Mercier , Director of Ecological Transformation at BNP Paribas Real Estate . It is also the title chosen by Nathalie Roseau and bruno tassin for the latest issue of Transitions (Presses des Ponts), which offers 26 contributions on possible socioecological futures, like so many possible ways of climbing the wall. Read Ghislain’s full critique here.