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Finance Digest spoke with Ms Claudia Belli, Global Head of Social Enterprises and Microfinance, at BNP Paribas to find out about their venture in Social Entreprises. 

Can you tell us why BNP Paribas supports the Social Entreprises?

BNP Paribas wants to participate in building a more sustainable future, the Group thus has included as one of the engagements of our CSR policy to finance and supports projects with a high positive impact and directly contribute in reaching the Sustainable Development Goals of UN.
Naturally we decided to support the Social Enterprises, a fast growing and young sector.  Social Entrepreneurship (“SE”) lies at the crossroads between sustainable financing for the economy and the fight against exclusion, both of which are fundamental priorities for BNP Paribas. Social Enterprises share the same primary goal which is to generate a strong and positive impact on society and environment through a sustainable economic model.  BNP Paribas provides, now, EUR 890 million support to SE and microfinance, the bulk of it being in Western Europe, under the form of long, medium or short term loans and investments.

Can you tell us more about the unique business model BNP Paribas uses to support businesses?

BNP Paribas began supporting a first micro-financing institution 25 years ago. Microfinance is a good example of Social Entrepreneurship, since it tackles the problem of financial inclusion through a sustainable economic model. Microfinance Institutions receive loans and investments from BNPP, EUR 250 million at year end, and we indirectly serve approximately 300,000 micro-borrowers. We felt that we could expand to other kind of companies (Enterprises, Charities, NGOs, social Cooperatives, etc.) and look at other social challenges. We want to serve them as per our role of banker.

In order to provide the best suited banking service for the social Enterprises, we try to be as close as possible to them: do they need working capital? We design specific ways to propose it; do they need to be recognized on their specificities and innovative solutions while they implement a difficult economic challenge? We propose them dedicated Relationship Managers, trained to understand the SE ecosystem; do they need financing? We design a Specific Credit Policy dedicated to this segment so to be able to apply specific analysis; do they need coaching? We create a team that matches the volunteers of the bank who want to provide their skills pro bono and the social enterprise in need.

The specificity of BNP Paribas is that we applied this methodology to all our “Domestic markets”, i.e. BNP Paribas in France, BNL in Italy, BNP Paribas Fortis in Belgium and BGL in Luxembourg. And now we are doing the same in other retail markets where BNP Paribas has a full retail banking licence, as in Tunisia through UBCI, Morocco through BMCI, Senegal through BICIS, achieving an outstanding of Euro 643 million of loans and investments only dedicated to social Enterprises.

How do your business advisors help those with a business creation project?

The Relationship Managers (RM) trained in Social Enterprises try to help them during all stages. The RMs are in close contact with impact funds, with venture and equity funders and can introduce the SE to them. But we also decided to create partnership with some of the incubators of social Enterprises (as it is the case with the ESSEC’s incubator ANTROPIA) in order to be able to accompany some of them.  We work with all actors of the SE ecosystem like France Active, BPI, Sensecube, La Ruche in France, Poseco in Belgium.
Also in some countries we have our own post-incubator like the Lux Lab in the Luxembourg and the We Are Innovation (WAI) in France who welcome SEs: The Social Entreprises occupy at least 10% of the space and we also create connections between them and our clients so to help the SE fostering their model thanks to stable clients.

In your opinion what are the biggest challenges facing entrepreneurs? How is BNP Paribas helping meet the challenge?
Biggest challenges are scaling up and measuring impact. We help on both:

To scale up you often need stable long term funds: This comes through impact funds: BNP Paribas Investment Partners recently achieved to manage EUR 1.3bn Impact Funds of which 6% to 10% is invested into Social Enterprises in France i.e. EUR 60 million long term debt (or quasi equity) to 20 social Enterprises.

The measurement of the impact of the SE is a fundamental turning point too.  It is a strong need of SE.  They all know that their end beneficiaries have improved their lives but measuring it is another story.  This is why we have implemented a pilot with Investment Partners and we are working now together with the French CDC and Comptoir De l’Innovation to create a common instrument: MESIS.
What types of on-going support do you offer entrepreneurs, SME’s and corporates?
For example:

We offer stable funding through 5 dedicated “Solidarity Based Funds” (Fonds Solidaires) like the “FCP BNP Paribas Social Business France” and “BNP Paribas Social Business Impact France”, or other FCPs dedicated to employees like the Multipar Solidaire Action or Multipar Solicaire Oblig. All of them have the “Finansol” label that qualifies the social and environmental impact.  We also are investing through our own capital into dedicated impact funds like into the Oltre 2 done by Oltre Venture in Italy or the NOVESS promoted by CDC in France.   These funds help Social Enterprises to grow while providing a standard remuneration but also “Social Dividend” to the investor.

In some countries we propose specific conditions to consortia of Social Cooperatives like in Italy (CGM consortium); in Belgium we have a fund that donates a part of the revenues to a foundation (Roi Baudoin) fostering small Social Enterprises and charities: close to 1 m Euro have been served in 2016 to the Roi Baudoin Foundation;in Luxembourg we created the first Microfinance institution who offered its first loans to migrants.

What unique products and services have been created in direct response to customers’ needs and wants?

I’d like to mention the latest. We just signed our 2 first Social Impact Bonds, innovative structures where we use our structuring and investment capabilities with a social purpose.

One in New York for 11 M USD which allows the Department of Children and Families of Connecticut to foster family care for children under 6 years of ageand one in France for Euro 1.3 million: it is one of the 2 first “Contrats à Impact Social” in France, signed with the French Microfinance Institution ADIE which aims at providing a stable job for 320 persons in 3 rural regions of France through an innovative process.

Both projects involve the public Authorities that will repay investors only in case of success i.e. a proven social impact.

What are your future plans for development?
We are deploying this project now beyond the 4 European “domestic” countries: into Morocco through the BNP Paribas subsidiary BMCI, in Tunisia through UBCI, in Senegal through BICIS, in Poland through BGZ and California through Bank of the West; each time our owned subsidiary will be the one providing loans and implementing this specific strategy.  Also we start to deploy the impact measurement to a larger part of our portfolio beyond Investment Partners and soon reach all of the 900 social Entreprises we support.

But we also look at other ways to support social Enterprises where we do not have a retail presence. I’m thinking about developing Impact investments in India, in Brazil, in the US, in UK, in Switzerland and then we would like to structure other Social Impact Bonds in France and in other European Countries.

Quote for box

The support of Social Entrepreneurship is part of the economic responsibility of our Bank. It fosters financing with a positive impact into the society.” – Claudia Belli

“Original publication in Finance Digest Issue 1
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