Meridiam embraces impact investing with switch to Benefit Corporation

Founder and CEO Thierry Déau says the manager has been focusing on social and environmental responsibility since inception, with ‘no contradiction between impact and good returns’.

Paris-based infrastructure fund manager Meridiam has changed its by-laws to become a Benefit Corporation, confirming its commitment to balancing profit with achieving positive impact.

It is one of the first companies to do so in France, a move that was made possible with the passage of the Pacte Act in May, the firm said in a statement.

Asked whether Meridiam’s B Corp status will affect how it makes investment decisions and manages its portfolio going forward, the firm’s founder and chief executive, Thierry Déau replied: “In a way it won’t, because we were already doing it. We already make decisions based on carbon footprint impact, resilience and sustainability and have quite a lot of negative screening. But in addition to that, we also want to see and improve the positive impacts.”

The firm will be creating a special committee tasked with measuring the impact of its investments. It will comprise five or six members, including staff members, management as well as independent experts to ensure that objectives are being met.

Meridiam spent around 18 months developing its own methodology, gathering data on how it manages its assets and testing it with one of its investors – the European Investment Bank. “The EIB has been an investor in our funds and we’ve tested our methodology with them when developing it, including our ESG methodology, which we developed previously,” Déau explained.

Measurement of impact will focus on three United Nations Sustainable Development Goals. They are: building resilient infrastructure; ensuring access to affordable clean energy; and combatting climate change.

Meridiam’s focus on impact investing is part of a growing trend that has benefitted the infrastructure sector, according to a recent report from the Global Impact Investing Network. “Among the institutional investors surveyed, the asset class topped the list for growth in allocations – these increased from $336 million in 2014 to $2.3 billion in 2018. The absolute amount of capital going into infrastructure impact strategies remains small but the rise in capital allocated is significant,” Infrastructure Investor reported in its Decade issue this month.

Asked whether Meridiam has had any input or feedback from its LPs on its B Corp status conversion, Déau said: “Our core 15 to 20 LPs are happy about it. They find it’s a normal path and it doesn’t change their life because we’ve been doing since inception what we’re now saying publicly we’re doing.”

The firm is also in the process of conducting a survey that will seek input from all of its investors “to see what they would like to see more of or not,” Déau explained.

“But one thing we have to be very clear on is that there is no contradiction between impact and good returns, on the contrary,” he stressed. “It’s just that the extra non-financial return has to be measured and also has to be maximised. It requires extra work but it’s not about sacrificing returns. But impact investing creates more value for our investors.”