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Solidarity economy saving accounts are booming in France

Weekly newsletter of Coop Exchange
Weekly newsletter of Coop Exchange
There is a real life example of a mass movement of ordinary people regularly investing in cooperatives in France.

  • Over a million people in France regularly invest in solidarity economy mutual funds, up from 50,000 only a decade ago. These funds invest 5-10% in solidarity economic enterprises, with cooperatives explicitly included as one of the main types of enterprises eligible for investment. The other types also resemble cooperatives in some key ways such as having similar distribution of surplus.
  • The funds have grown eight fold in the last 10 years. The funds had £15.6 billion in assets and had helped the creation of over 1650 new solidarity enterprises in 2019. All companies in France with over 50 employees must offer all employees an option to switch to a solidarity economy savings account. 8-10% of employees whose workplace offers solidarity savings accounts have already joined one.
  • Examples of investments include RailCoop, the first cooperative rail company in France and Cameroon Cocoa Cooperative, a 2000-member farmer cooperative in Cameroon. Because the Solidarity Funds invest in cooperatives around the world, they present a great opportunity for global online cooperatives and could be an ideal funder for new accelerators and incubators for cooperative start-ups in emerging areas of the economy.
Railcoop, over 12,000 members strong passenger owned rail company
Railcoop, over 12,000 members strong passenger owned rail company
The two largest fund managers are Finansol, set up in 1995 by a number of cooperative banks. It has experienced dramatic growth in recent years - its social savings assets (which includes solidarity mutual funds among other similar schemes) have doubled since 2017 to €20 billion (Finansol, 2020)
The other one is Amundi, a division of the largest cooperative in the world, the Credit Agricole bank. Amundi is also the largest European asset manager and 10th largest in the world. This makes it unique in the asset management industry, which is driving unprecedented concentration of voting power with three largest asset managers in the US casting 25% of all votes in S&P 500 companies. Unlike other asset managers, Amundi is owned by the cooperative Credit Agricole, which has over 10 million members which is governed on a one-member-one-vote basis. We have covered the asset management industry in more detail in our earlier newsletter. Solidarity fund assets under its management surpassed €2.4 billion in 2018, more than 20 fold increase from 2009. While still a tiny part of its overall assets of €1.8 trillion, the pace of growth is so drastic that if maintained (and that is a very big if), equivalent of 60% of current Amundis assets would be in solidarity funds in twenty years.
The success of Solidarity Savings Accounts shows that there is massive, untapped popular demand for investment into enterprises like cooperatives. Solidarity Savings accounts represent a step towards the type of socially beneficial investment that was advocated in an earlier issue of this newsletter as a better alternative to the questionable mainstream ESG investment.
This new approach is based on the idea that for investment in companies to make a difference, we need to invest in companies that are different. To change how businesses behave, we need to change how businesses structure their ownership and governance - because incentives for behaviour are derived from those structures. A monopoly might have CEOs and corporate culture that is committed to great moral values and beliefs, but it has the economic incentive to exploit consumers to increase its profits - unless it’s structured as a consumer owned cooperative, in which case the profits flow back to the consumers.
However, there are limits to an approach like the French solidarity funds. The most obvious one is that 90-95% of the funds are still invested in conventional capitalist firms. This is due to regulations that restrict employee saving scheme investments into unlisted corporations. It is not due to lower returns - in fact, existing research suggests that “there is no compelling econometric evidence pointing to the under-performance of solidarity funds”. 
In addition, while Solidarity Savings Accounts provide a more convenient way for individuals and institutions to invest in cooperatives, for the movement to expand into new frontiers, new investment instruments for cooperatives need to be developed. We must not just create new, easier ways for people to invest in cooperatives, we need new ways to arrange how the investment works. The sectors solidarity funds have allocated most investment in have been housing and agriculture. An investment arrangement suitable for these sectors might not be suitable for a cooperative developing a software application - for example, there are no tangible assets like real estate property or farm land that can be used as a collateral. We at Coop Exchange seek to not just to make it easier for ordinary people to invest in cooperatives - we also want to help cooperatives access new forms of investment.
Make sure to subscribe to our newsletter - the next issue will be focused on an elegant strategy for the cooperative movement to challenge the dominance of big tech.
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Weekly newsletter of Coop Exchange
Weekly newsletter of Coop Exchange

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