Environmental Finance's Sustainable Debt Awards 2024

Empowering businesses: Bpifrance's impactful support for SMEs

Small and medium-sized enterprises (SMEs) in France need to be supported on both a national and localised level Jean-Yves Caminade, CFO of Bpifrance tells Environmental Finance as he outlines how the public sector investment bank's Social Financing Framework aims to support employment on a targeted basis.

Environmental Finance: What sets Bpifrance's Social Financing Framework apart?

Jean-Yves CaminadeJean-Yves Caminade: There are two main threads in our framework. The first is how we created a very strict definition of our target populations, especially about our micro, small and medium-sized enterprises (MSMEs) in deprived territories which are computed on a local level. We can also include companies based in understaffed medical areas and underserved educational areas with a medical or educational purpose.

The second idea is the eligibility of an innovative company in underperforming areas. Given our mission as a development bank involved in helping both SMEs and innovative companies, we try to include innovative companies located in underperforming areas as we believe they are key players to help create growth and employment in these regions.

EF: What will Bpifrance achieve with this framework? What are the targets?

JC: The first one is to develop sustainable finance in France. There are already many thematic bonds in France, especially on social goals. However, there is a need to reorient social bonds for the benefit of MSMEs. We see social bonds as a route for sustainable investors to not only be focused on the traditional mission of welfare states but to be more oriented towards development.

The second idea is to complement the Green Framework we have for green bonds. A huge part of Bpifrance's activity is oriented towards the energy transition but we also believe in the fair transition. As such, we see the Social Framework and Green Framework as two faces of the same coin. If we are to succeed with the energy transition, we need to convince the population that it is working for them too.

A few years ago in France, we had an opposition to the carbon tax with the 'yellow jackets' (gilets jaunes) protest. When you look at the opinion polls, a huge majority of the population is in favour of energy transition. But you have also a very large part of the population, which is afraid of the social consequences of this energy transition. We need to make sure that we bring everybody in the trend and that we're working in the same way.

The last target is to make sure that capital access is available for any entrepreneur in France and to underline the social commitments of Bpifrance in France. It is an opportunity to highlight our strong social and societal commitment, especially for the benefit of MSMEs and employment.

Bpifrance's mission is to support MSMEs in their development, innovation, digitalisation. We believe that the sustainable growth of MSMEs and mid-caps will be a source of new employment and will generate positive economic externalities. Additionally, we finance a lot of start-ups and innovative companies, but we want to grant financing to everyone, everywhere, especially where there is a lack of financing from traditional banks. We seek to help entrepreneurs who may have more social impact, even in the event of reduced economic prospects.

EF: What updates have been made to your Green Bond Framework?

JC: Two eligible categories have been added to the existing renewable energy loans category: the first category is the green buildings loans that are eligible for the energy transition. The second category is green tech loans.

There are seven innovative solutions that can be eligible in this green tech loans category. They are; new kinds of green energy, green industry, agricultural and food industry, environmental transition, clean mobility, green building and protection of ecosystems.

A speciality of Bpifrance is to finance innovative solutions to energy transitions. For example, Bpifrance financed a company that uses artificial intelligence and robots to assess the quality of the water ecosystems. This is typically the kind of green start-up that will be eligible for green tech loans.

EF: What is next for Bpifrance's sustainable finance approach? Where do you see the market developing?

JC: We want to be in the top 20 of environmental, social and governance (ESG) issuers in the Euro market, excluding sovereign and supranational. To be there, more than half of our funding programmes will need to be issued through green and/or social bonds.

Given the importance of the transition that society needs to tackle, we need more capital. Historically, Bpifrance has been a lender of state budget money, granting loans under the state's finances. This is not sufficient. We need to have more private capital take part in the sustainable finance movement in France and globally. The idea is to reinvent finance towards more impact-oriented goals.

Finance in the 19th century was all about profit. In the 20th century, it was still about profit, but also risk. In the 21st century, impact investing will definitely be the mantra. We of course need profits and investors also need to manage risks, but that is no longer the full picture. They also need some meaning and to measure the impact. Bpifrance wants to be part of this movement.

For more information, see: www.bpifrance.fr/sustainable-financeĀ