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Ardian asset management: Finance fuelling socially responsible strategies


French investment fund leader Ardian is a signatory of the UN Charter of Principles for Responsible Investment (PRI) and has radically changed how certain investment funds operate. How does an investment fund contribute to global change?

Ardian asset management: Finance fuelling socially responsible strategies
French leadership
Ardian is an offspring from the French financial giant AXA, and gained its independence under Dominique Senequier in 2013, under whom it still operates to this day. It has covered a lot of ground since, as its initial portfolio weighed roughly 100 million euros upon launch - a small seed when compared to the 125 billion dollars it manages or advises today. But Ardian does not consider its short history, or even its outstanding growth to be its most valuable asset. The investment company went through the 2008 financial crisis. Thanks to sound and implemented investment doctrines, the firm was able to contain damage considerably better than many competitors, although it did have to postpone many projects. But the invaluable lesson was learned: unsustainable practices will lead, individually and collectively, to disappointing results, sooner or later. Hence, a re-focus of the firm’s strategy towards Socially Responsible Investing (SRI) and Corporate and Social Responsibility (CSR).
SRIs: including CSR into examined parameters
A million factors can be considered behind financial crises, but any honest examination will often lead to practices which can hardly be deemed socially responsible. The financial malpractice behind the real estate bubble which led to the aforementioned 2008 crisis is yet another modern example. Corporate and Social Responsibility aims to dislodge the deep-rooted factors which lead businesses to make individually profitable but collectively unsustainable decisions. They do require considerable investment, as much is still to be done, but Ardian is betting that the cost is worth the reward. The factors which lead to economic collapses are, in nature, similar to those which lead to climate disruptions: they are all underpinned by short-term visions of easy capital gains. Ardian therefore has historically refrained from such practices and aimed towards socially upright initiatives and environmentally beneficial ones, namely through investing into renewable energies.
Thus, in 2021, Ardian announced its launch of a joint venture, Hy24, aimed at the clean production of hydrogen: “We are proud to have been chosen by some of the world’s leading industrial players and investors to lead this initiative [...] We were early backers of the renewables market, our platform reaching 7.5GW of heat and renewable capacity today, and it is clear to us that hydrogen is facing a similar trajectory. This collaborative partnership is exactly in line with how Ardian Infrastructure operates. We are confident that Hy24 will be able to play a leading role in accelerating the hydrogen scale-up needed to decarbonize our economies”, BusinessWire reports. Ardian is therefore committed to maintaining balance in the long run, be it environmentally speaking, or socially speaking.
Breaking the old image
Investment firms are not the first image to come to mind, when it comes to making tomorrow’s world a better place - but Ardian CEO Dominique Senequier firmly believes her company can make a profound and lasting impact, by choosing to allocate funds where they can matter the most, and for the longest. In 2009, Ardian signed the UN Charter as a way to embody its pre-existing general stance. The considerations taken into account by the strategy range from environmental concerns to social care. Namely, the fund is owned largely by its employees, so as to share and distribute wealth evenly and sustainably. “What makes Ardian unusual is that the company belongs to its employees: 80% of employees are shareholders and own 55% of the capital”, reports the Strategist. This decision represents a long-standing choice to exclude short-term gains, as value will necessarily build over time, and will be shared by the investment fund’s main asset: its human resources.
A way of finding stronger growth strategies
Naturally, Dominique Senequier cannot simply shift focus away from profitability towards greener tomorrows: Ardian is a private investment house, and it injects 125 billion dollars of other investors’ money. The difficulty in the matter, therefore, is to balance long-term collective interests through CSR, without sacrificing results. Ardian’s strategy is working, supported by consistently superior performance. The Financial Times published a 2014 portrait of Dominique Senequier, highlighting performance on par with other leaders of the market: “Investors have been supportive: Ardian has attracted $14bn in additional commitments in the past 12 months, about the same as KKR managed to amass in the same period.” The market was barely recovering from the crisis at that time, but the SRI-focused strategies resisted the disruption.
Ardian is lined up with a global trend, although at the forefront of it: many other investment firms around the world are slowly realizing that short-term investments may be satisfying, but a bad bet in the end. Serving the interests of investors does not need to be at the expense of employees or suppliers: in fact, investment firms have the power, through their investment leverage, to promote the companies whose CSR practices are the best to the top of their markets.