On Thursday 29 October 2020, the Governor of the Banque de France – François Villeroy de Galhau – spoke at the Climate Finance Day forum bringing together financial players to discuss climate issues. Although the day gave rise to several announcements of reductions in financial support for fossil fuels, the French central bank did not follow this movement. In doing so, it is falling further behind many French players: it has still not adopted a policy to move away from coal and is not restricting its support for other fossil fuels.

While the Caisse des Dépôts et Consignation announced an exit from coal and a reduction in support for other fossil fuels, the Governor of the Banque de France missed the opportunity also to announce a reform of its investment policy to take the measure of climate change issues. Yet he has declared that he “refuses the call for inaction” in the face of climate change.

Indeed, the Banque de France is still content to exclude companies with more than 20% of their turnover linked to thermal coal. Of all the financial players on the Paris market, who have committed to adopting exit policies from the sector in July 2019, only asset manager doing worse is ODDO.

To be effective, the Bank’s exclusion should also concern the share of electricity generation from coal and be accompanied by three other criteria. As it stands, the Bank’s coal policy does not prevent it from supporting companies that develop new power plants or increase their activity in the sector, nor does it prevent it from planning an exit from coal in line with the objectives of the Paris Agreement.

Moreover, the Bank has not taken any measures to restrict financing for other fossil fuels. It is still financing the most harmful of these – the “unconventional” energies that the Minister of Economy and Finance called for to be phased out at Climate Finance Day – and companies planning to exploit new reserves.

While the Banque de France has previously stressed its desire to improve its investment practices in these areas, it must now act, adopt the best practices of financial players, and set an example. As a priority, the Banque de France must :

  • Adopt a coal exclusion policy aligned with the Paris Agreement ;
  • Adopt a policy of exclusion concerning the other most polluting fossil fuels (shale oil and gas, oil sands, Arctic extraction, deep water extraction);
  • Make the phase-out of fossil fuels and the adoption of 1.5°C alignment plans a key element of its shareholder engagement strategy.