The French Association of Institutional Investors, Af2i, has released a series of proposals and recommendations for long-term investment to its members – which count 85% of French institutional investors and €3trn in total assets – taking into account the current geopolitical environment.
In 2022, the COVID-19 shock and major geopolitical events have radically disrupted the world economy and its conditions for long-term investments, the association noted.
Af2i has, therefore, come up with several recommendations around three key pillars:
- helping institutional investors;
- bringing institutional investors and companies together; and
- controlling financial innovation.
Under the first key pillar, Af2i will look to promote long-term investment by pushing for regulatory constraints, such as IFRS and Solvency II, to be eased. It also aims to facilitate institutions’ long-term investment strategies by adapting income taxation, and to reinforce the role of capitalisation.
The association is also looking to promote a European standard for ESG data and free databases as well as promote the concept of dual materiality.
Under the second key pillar, Af2i will look to create a long-term investment risk mutual fund (Fonds Commun de Placement à Risques, FCPR) category accessible to as many as possible.
Additionally, it will also facilitate the accounting of long-term investments in amortised costs and the pooling of portfolio performance, while facilitating the financing of activities of a strategic and sovereignty nature.
For the third key pillar, Af2i will, among other things, create a semi-public reinsurance and/or guarantee fund for long-term investments targetting energy, infrastructure, technological innovations and climate transition.
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