Hundreds of financial institutions are meeting today, Thursday, October 29, 2020, at the Palais Brongniart in Paris for the 6th edition of Climate Finance Day. Reclaim Finance sorts out the real progress from the greenwashing of French financial institutions and sets out the priority efforts needed to respond to the climate emergency, on three critical aspects.
1. Putting an end to coal
- Following the commitment taken by the Paris financial centre on July 2, 2019, commitments, 16 French financial institutions grouped into ten financial groups have kept their promise and adopted robust coal exit policies. Six groups are not far off, but more than ten still have only incomplete and insufficient policies: among them are Carmignac Gestion, Covéa, Groupama, Oddo BHF AM, SMA, Tobbam, Tikehau Capital, and SCOR as a reinsurer.
To take stock of where each bank, insurer, investor, and asset manager stands, go to the international Coal Policy Tool and/or the version dedicated to French institutions.
The verdict is clear: the collective failure of the financial centre to keep its promises shows the failure of voluntary commitments and the need for regulation. We therefore once again call on the French government to sanction financial institutions who do not have a robust coal exit policy by the end of the year.
For the time being, Minister Bruno Le Maire praised the efforts made by the financial community as a whole on this subject. Still, he called for harmonization and alignment of policies with best practices. The Coal Policy Tool can help financial institutions who are lagging in complying.
On the other hand, we welcome the transparency efforts made by the financial centre with the publication of the Sustainable Finance Observatory. Other than the AFG, federations did not try to disguise their members’ coal policies as exit policies from the coal sector. Unfortunately, visitors wishing to learn more will quickly get lost in a mass of non-harmonised and awkwardly presented data. We welcome the financial data revealed by the FFA that allows us to measure the evolution of its members’ absolute exposure to the coal sector.
Finally, we condemn the FBF’s choice to use a list of 500 names provided by Trucost to calculate the exposure of French banks to coal. It would have been much more relevant to choose the Global Coal Exit List, with more than 700 groups and thousands of subsidiaries, as the FFA did and as recommanded by the French regulatory bodies AMF and ACPR in their assessment report of French coal policies.
2. Stopping the expansion of fossil fuels
Avoiding a climate catastrophe certainly requires an exit from coal, but also strong measures in other sectors, starting with the gas and oil sectors. The science is clear: limiting global warming to 1.5°C by the end of the century means stopping today the exploitation of any new oil reserves and the development of any new polluting infrastructure.
Minister Bruno Le Maire recognized the urgent need to go beyond coal and called on financial institutions of the Paris financial centre to tackle unconventional oil and gas.
Yet, at present, the policies adopted by financial institutions in the sector are still lacking, covering only part of specific oil and gas sub-sectors. CDC has gone much further than others institutions, including BNP Paribas, by excluding companies deriving more than 10% of their revenues from shale oil and gas, oil sands and Arctic zone resources.
However, all players forget to draw a line between companies active in oil and gas and those developing in these sectors, including the riskiest ones, such as shale oil and gas and in the Arctic.
We face the same limitations as those related to the first policies adopted on the coal sector, namely policies whose only strict criteria are based on a snapshot, in a moment T, of the relative exposure of a company to an activity, and not on dynamic parameters related to the trajectory and investment plan of that company.
- To take an example, Crédit Agricole and Natixis made a commitment in May 2020 to no longer finance companies specialising in shale oil and gas. Apart from focusing only on extraction and ignoring the rest of the value chain, their commitment will not cover diversified companies, even if they are among the biggest developers in the sector. We can mention Shell, but also Total, whose interest in shale gas and oil has increased in recent months, despite its so-called climate commitments.
- In the same vein, there is no guarantee that Société Générale’s objective of reducing its exposure to gas and oil by 10% by 2025 will not lead to a reduction in its financing to the sector and a break with its massive support for shale gas export projects such as the Rio Grande LNG terminal.
It has taken French financial institutions 5 to 10 years to start developing robust coal policies. Let us avoid repeating the same mistakes because time is running out. The financial actors must use relevant metrics and criteria now to stop contributing to the expansion of fossil fuels.
3. No longer be complicit in deforestation
If tropical deforestation were a country, it would be the third-largest emitter of greenhouse gases in the world, just after China and the United States. The IPCC states that eliminating deforestation is one of the most effective ways of mitigating climate change, in addition to being a major challenge in terms of protecting biodiversity.
However, despite the growing number of positions on these two issues, the policies of financial institutions on the fight against deforestation or the conversion of natural ecosystems are deficient, if not simply lacking.
While France and the International Union for Conservation of Nature (IUCN) will host the One Planet Summit on Biodiversity in 2021 as part of the World Conservation Congress, the financial sector must get its act together and adopt concrete and specific measures capable of triggering sectoral transformations and a reduction in deforestation and conversion of natural ecosystems. A first step would be to make all financial services to traders in agricultural commodities such as soy conditional on the application of a zero-deforestation policy.
Media contact at the Climate Finance Day:
Lucie Pinson, founder and Executive Director of Reclaim Finance, lucie@reclaimfinance.org, 06 79 54 37 15