Corporate Impact Venturing (CIV) is a relatively new approach, marrying classic Corporate Venturing with social entrepreneurship. It is particularly apt for venturing into low-income markets, as our recent report shows.
Oh la la! Many of the pioneers in CIV are French multinationals:
- The French utility Engie started “Rassembleurs d’Energie” in 2011 with a total investment capacity of €10 million, later raised to €50 million, to invest in promising energy startups and fulfil its mission of “clean and sustainable energy for all”.
- French food multi Danone runs the Ecosystem Fund, with a €100 million endowment, and the Communities Fund, with €1 million. It has spun out Livelihoods Ventures, which runs three funds, investing a total of €260 million into carbon credit projects with strong social and economic impacts. Besides Danone, other investors are contributing to and make use of these funds.
- French energy technology provider Schneider Electric is managing three different funds to invest in businessthat provide access to clean energy. The Energy Access Ventures Fund of €60 million is also backed by public partners.
All funds also support their investees with technical assistance, often provided by employees of the firms. And even the third party funds supported by several actors, like the Livelihoods Funds, invest strategically along the value chains of participating firms.
Alors, why are the French so advanced in CIV? Of course, one explanation is the social fabric that has been woven since the revolution and that emphasizes employee rights and equal opportunity. Companies’ license to operate is based on this social contract. In addition, this perspective of the business role in serving all stakeholders is also embedded in the law.
For-profit companies with more than 50 employees must share some of their profits with their employees. Employees can either directly receive this extra remuneration in addition to their taxable income or place it in corporate savings funds and thereby benefit from a tax exemption on the investment. These funds, also known as 90/10 Solidarity funds, have to invest 5%-10% of total assets in social enterprises. The remaining 90%-95% is invested in traditional investments following Socially Responsible Investment principles. Engie and Schneider Electric both cited this law as an important driver for setting up their CIV funds and a key motivator for employees to engage more deeply in their CIV activities.
The 90/10 rule is a legal incentive worth copying. It drives long-term investment into next-generation business models that enable an inclusive transformation. Building our future systems requires capital as well as creative entrepreneurs and seasoned professionals. The French CIV Funds bring all of it together. On y va! Let’s do this everywhere!
This article was previously published on the Business Innovation Facility and is reproduced with permission