{"id":28247,"date":"2023-03-31T18:17:36","date_gmt":"2023-03-31T16:17:36","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=28247"},"modified":"2023-05-04T17:20:10","modified_gmt":"2023-05-04T15:20:10","slug":"climate-and-investment-the-banque-de-france-sets-an-example","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2023\/03\/31\/climate-and-investment-the-banque-de-france-sets-an-example\/","title":{"rendered":"Climate and investment: the Banque de France sets an example"},"content":{"rendered":"

Paris, 30 March 2023 : The Banque de France has announced it will exclude companies developing oil and gas extraction projects by the end of 2024, sending a strong signal to the finance sector. It shows that engagement and exclusions can work together, and that portfolio alignment tools must be complemented with immediate sectoral measures which can secure the necessary emission reductions. For this reason, despite certain methodological limitations (1), Reclaim Finance strongly welcomes the Banque de France\u2019s new policy that now stands as an example to other central banks and investors. The NGO urges the Banque de France to extend the same ambition to European monetary policy.<\/span><\/b><\/p>\n<\/div>

The Banque de France has published its <\/span>Investment Report 2022<\/a><\/span>. This document summarizes the evolution of the bank\u2019s non-monetary portfolios and records the increase in its climate ambition<\/span>.<\/span>\u00a0<\/span><\/p>\n

The Banque de France’s responsible investment policy now combines the use of sectoral exclusions with an overall objective of aligning portfolios with a 1.5\u00b0C trajectory, a voting policy, the orientation of investments towards \u201csolutions\u201d, and a desire to take climate and biodiversity risks into account (1).<\/span>\u00a0<\/span><\/p>\n<\/div><\/div><\/div>

<\/i>

Many<\/span> investors<\/span> oppose<\/span> sectoral<\/span> exclusions <\/span>with<\/span> financing<\/span> the <\/span>transition <\/span>and<\/span> alig<\/span>ning<\/span> their<\/span> portfolios, <\/span>but <\/span>the <\/span>Banque de <\/span>France\u2019s<\/span> new <\/span>investment<\/span> policy<\/span> shows<\/span> a <\/span>synthesis<\/span> is<\/span> possible<\/span>. <\/span>While<\/span> methodological<\/span> limits<\/span> persist<\/span>,<\/span> particularly<\/span> for<\/span> passively<\/span> managed<\/span> funds<\/span>, <\/span>this<\/span> policy<\/span> offers<\/span> a <\/span>c<\/span>onsisten<\/span>t <\/span>approach<\/span> that<\/span> recognizes<\/span> the<\/span> climate<\/span> emergency.<\/span><\/span> <\/em><\/p>\n<\/div>

\u00a0<\/span>Paul Schreiber, Regulation Campaigner at Reclaim Finance<\/span><\/b><\/p>\n<\/div><\/div><\/div>

The Banque de France is taking a decisive step in recognizing the climate emergency in its investments by announcing the exclusion of any company developing new oil and gas extraction projects by the end of 2024 (2). In addition, and as announced in 2021, the Banque will complete its exit from coal (3) and will apply additional exclusion thresholds for oil and gas by the same date (4).<\/span>\u00a0<\/span><\/p>\n

These specific provisions for the fossil fuel sector aim to take into account the scientific need to put an end to the development of fossil fuels and to gradually reduce their consumption \u00a0to limit global warming to 1.5\u00b0C (5). As such<\/span>,<\/span> they complement the overall ambition of aligning investment portfolios with 1.5\u00b0C, and partially compensate for the fact that this ambition does not cover scope 3 emissions (6).<\/span>\u00a0<\/span><\/p>\n<\/div><\/div><\/div>

<\/i>

The <\/span>Banque de France <\/span>has <\/span>added<\/span> weight<\/span> to <\/span>its<\/span> engagement <\/span>approach<\/span>.<\/span> For the last <\/span>two<\/span> years<\/span>, <\/span>it<\/span> has <\/span>voted<\/span> against<\/span> approving<\/span> the <\/span>accounts<\/span> of <\/span>companies<\/span> developing<\/span> new <\/span>oil<\/span> and <\/span>gas<\/span> projects<\/span>, <\/span>and <\/span>now<\/span> unless<\/span> they<\/span> change course<\/span>, the Banque<\/span> will<\/span> exclude<\/span> them<\/span> by the end of 2024. <\/span>TotalEnergies<\/span> and <\/span>other<\/span> oil<\/span> giants<\/span> have been<\/span> warned<\/span>: r<\/span>espect the <\/span>scientific<\/span> imperative<\/span> or <\/span>there<\/span> will<\/span> be<\/span> consequences<\/span>!<\/span><\/span>
\n<\/em><\/p>\n<\/div>

Lucie Pinson, <\/span>Reclaim Finance <\/span>director<\/span><\/span>
\n<\/span><\/strong><\/p>\n<\/div><\/div><\/div>

In recognition of the growing number of climate resolutions, the Banque de France has also updated its voting policy The Banque wants companies to publish non-financial information on their climate strategies and says it will analyse them \u201con a case-by-case basis\u201d. It also supports shareholder resolutions aimed at reducing emissions and risks related to climate change. <\/span> <\/span><\/p>\n<\/div><\/div><\/div>

<\/i>

Following <\/span>in the <\/span>footsteps<\/span> of <\/span>the AMF, the Bank of France <\/span>says<\/span> th<\/span>at<\/span> Say On <\/span>Climate<\/span> is<\/span> good <\/span>governance<\/span> practic<\/span>e<\/span> that<\/span> is<\/span> u<\/span>seful<\/span> for<\/span> shareholders<\/span> and <\/span>investors<\/span>. <\/span>More <\/span>broadly<\/span>, <\/span>s<\/span>hareholder<\/span> resolutions<\/span> have an important <\/span>role<\/span> to <\/span>play<\/span> in <\/span>bringing<\/span> companies<\/span> up to speed <\/span>with<\/span> the <\/span>climate<\/span> emergency. I <\/span>would<\/span> mention a <\/span>small<\/span> caveat<\/span>, the Bank of France <\/span>does<\/span> not <\/span>yet<\/span> allow<\/span> us to <\/span>see<\/span> how<\/span> its<\/span> voting<\/span> policy<\/span> is<\/span> being<\/span> applied<\/span> because<\/span> it<\/span> does<\/span> not <\/span>publish<\/span> its<\/span> votes, <\/span>n<\/span>or<\/span> indicate<\/span> the <\/span>criteria<\/span> it<\/span> intends<\/span> to <\/span>use to <\/span>determine<\/span> whe<\/span>ther<\/span> climate<\/span> plans are <\/span>adequate<\/span>.<\/span><\/span>
\n<\/em><\/p>\n<\/div>

Lucie Pinson, Reclaim Finance director
\n<\/span><\/span><\/span><\/strong><\/p>\n<\/div><\/div><\/div>

Reclaim Finance notes that the ambition of the Bank of France\u2019s investment policy stands in contrast to the monetary policy measures taken at the European level. Companies developing new oil, gas or coal extraction projects are still accepted by the European Central Bank (ECB) within asset purchase programmes and as collateral<\/span> (7), and are not treated as specifically risky (8). Moreover, the ECB is yet to take any measures to support the European transition (9). \u00a0<\/span>\u00a0<\/span><\/p>\n<\/div><\/div><\/div>

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Just as <\/span>the Ban<\/span>que de<\/span> France <\/span>asserts<\/span> itself<\/span> as the leader of central <\/span>banks<\/span> in <\/span>sustainable<\/span> investment<\/span>, <\/span>it<\/span> must <\/span>become<\/span> the locomotive of the <\/span>Eurosystem<\/span> on the <\/span>greening<\/span> of <\/span>monetary<\/span> policy<\/span>. In <\/span>concre<\/span>te<\/span> terms<\/span>, <\/span>fossil<\/span> fuel <\/span>developers<\/span> must <\/span>be<\/span> excluded<\/span> from<\/span> Eurosystem<\/span> asset <\/span>purchases<\/span> and <\/span>collaterals<\/span>,<\/span> and <\/span>central <\/span>banks<\/span>should<\/span> instead<\/span> co<\/span>ntribute<\/span> to <\/span>financing<\/span> the transition, <\/span>notably<\/span> through<\/span> lower<\/span> interest<\/span> rates for green <\/span>activities<\/span>.<\/span><\/span>
\n<\/em><\/p>\n<\/div>

Paul Schreiber, Regulation Campaigner at Reclaim Finance<\/span><\/b><\/p>\n<\/div><\/div><\/div>

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Contacts:<\/h2><\/span>
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