FRANCE – A dispute has emerged over the size of the French SRI market, with estimates that the market is worth up to 4.5 billion euros criticised as “Alice in Wonderland”.

In April Caisse des Dépôts subsidiary Novethic’s estimated the French socially responsible investing market to be worth 4.5 billion euros.

Now Vincent Auriac of SRI consultant Axylia has taken issue with that figure. He told IPE that the market was worth between two and a half and three billion euros. He said in an email: “The expansion of the French SRI market is less tremendous than indicated.”

“Do not play with billions,” Auriac added. “I know well the functioning of SRI in France. Imagining the French SRI market to be worth 4.5 billion euros is like Alice in Wonderland.”

Novethic, he said, had come to the 4.5 billion-euro figure by adding the assets of the Luxembourg SRI funds distributed in France.

“Doing that is like estimating the car sales in France by adding the sales of the German automakers in Germany to those by French ones in France.”

“The 4.5 billion-euro figure, which indeed includes the assets of Luxembourg SRI funds, of which a non-quantifiable portion are managed on behalf of French investors, also includes funds that are registered in France and open to French investors,” explained Garance Bertrand of Novethic.

Auriac said that conventional funds have been transformed into SRI funds over the last three years. “Notably old, big and not performing ones.”

“To transform a fund has not the same meaning as to create a new one: it’s all the difference between forced selling and voluntary purchase.”

The impact of the transformation could add up to half a billion euros making the market shrink to 2.5 billion euros, Auriac said.

Novethic acknowledged some asset managers, such as BNP Paribas Asset Management converted existing funds into SRI funds - increasing assets by approximately 500 million euros.

But Novethic’s Bertrand added: “In the case of BNP PAM, this shift was part of a conscious decision to change the focus of fund management.”

“Incidentally, BNP PAM does not appear to be rethinking this decision.”

Auriac conceded the “rapid rise” in the number of SRI funds in France, but said: “Whatever the final figure, this market remains very small compared to the 975 billion euros for all French mutual funds” he said. He added that SRI funds for retail investors had been a “a commercial failure” in France.