Following the publication of its new policy, the Banque de France, when asked by Reclaim Finance, clarified that :
- Its exclusion threshold for unconventional hydrocarbons applies to the exploration and exploitation of hydrocarbons.
- Opposition to any new fossil project has been included in the voting policy and – in the absence of a specific resolution – will result in a vote against the approval of the company’s accounts.
Monday 18 January 2021 – The French central bank – Banque de France – just published a new policy drastically reducing its investments in the fossil fuel sector. By doing so, the Banque de France caught up with and went further private financial players, it now plans on exiting coal and excluding oil and gas companies such as Total from its investments by 2024. Reclaim Finance welcomes the bank’s bold step but regrets the absence of strict criteria preventing it from supporting new hydrocarbon projects. Most importantly, it calls on the bank to apply the same level of ambition to the immediate decarbonization of the European Central Bank’s (ECB) monetary policy.
The new policy adopted by the Banque de France is a revision of its responsible investment policy established in 2018 (1). The Banque de France is lowering its exclusion threshold for companies deriving more than 20% of their revenues from coal to 2% today, and to zero in 2024.
By using a single criterion for identifying coal companies, against three for best practices (2), the Banque de France has set itself an honorable objective of exiting the coal sector by 2024 while failing to ensure that it will not support the expansion of the sector between now and then. Indeed, the Global Coal Exit List (3) lists between 67 and 118 companies planning new coal-fired power stations whose revenues from these activities are not indicated or are less than 2%.
Along the same lines, the Banque de France says “it will initiate an exit from unconventional hydrocarbons from 2021”. However, its exclusion of companies whose activities in shale oil and gas, tar sands and/or exploration in the Arctic (4) and deep water represent more than 10% of revenues does not prevent it from investing in companies which develop new projects in this area. Moreover, the bank does not plan to reduce this threshold to 0%.
Particularly important is the fact that only exploration in the Arctic or deep water is covered, and that production activities in these areas are not. Thus, the Bank of France will be able to continue investing in companies such as Total, which is planning four new projects in the Arctic (5).
“Though it was spared today, Total should fall firmly under the policy of the Banque de France, as it plans to exclude all companies for whom oil represents more than 10% of turnover or 50% for gas by 2024 (6). ” remarks Lucie Pinson, director of Reclaim Finance. In fact, the Bank of France plans to align its investment policy with the European “Paris Aligned benchmark” (PAB) (7). “But the Banque de France, which claims to oppose any new fossil fuel project, is missing an opportunity to translate this position into firm measures. The bank says it will use its voting policy to follow this objective but does not specify what actions it implies: given that resolutions requiring an end to investments in fossils are not commonplace at AGMs, will the Banque de France commit to vote against Patrick Pouyanné and all the other executive boards of booming oil and gas companies? “
As with its entire responsible investment policy, the Banque de France‘s fossil fuel policy applies only to directly managed portfolios, hence around 22 billion euros in assets in 2019. It does not apply to monetary policy portfolios (8) which constitute the bulk of the assets managed by the central bank. The bank had notably purchased 125.7 billion euros of assets from private issuers by end of 2019 by enacting the European quantitative easing policy.
Paul Schreiber, campaigner at Reclaim Finance, concludes: “With this announcement, the Banque de France is catching up with and overtaking private financial players (9) and recognizing the urgency of cutting off financial support for fossil fuels. Now, it must apply this dynamic to its core business, by advocating for the immediate decarbonization of European monetary policy, and not wait another three to five years as recent comments from its governor suggest.”
Contacts presse :
Angus Satow, press officer at Reclaim Finance | firstname.lastname@example.org , +447847754046
Paul Schreiber, chargé de campagne à Reclaim Finance | email@example.com | +33 6 89 02 07 88
Lucie Pinson, Director | firstname.lastname@example.org | +33 6 79 54 37 15