{"id":29346,"date":"2023-05-10T10:04:30","date_gmt":"2023-05-10T08:04:30","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=29346"},"modified":"2023-05-10T10:05:34","modified_gmt":"2023-05-10T08:05:34","slug":"green-industry-law-misses-the-target-on-financing","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2023\/05\/10\/green-industry-law-misses-the-target-on-financing\/","title":{"rendered":"\u201cGreen Industry\u00a0\u00bb law misses the target on financing"},"content":{"rendered":"

The government will soon introduce in Parliament the \u00ab\u00a0Green Industry\u00a0\u00bb bill, which aims to decarbonise industry and develop new sectors for the \u00ab\u00a0green\u00a0\u00bb economy. The financing part of this law claims to mobilize French people’s savings for the ecological transition, without proposing sufficiently ambitious measures likely to massively direct private investments from carbon-based activities – in particular fossil fuels – towards companies and sectors truly committed to the ecological transformation. Critical analysis and alternative proposals by Reclaim Finance.<\/b><\/p>\n<\/div>

The \u00ab\u00a0Green Industry\u00a0\u00bb bill (1), which will be presented to the Council of Ministers next week, is part of a series of measures that the government plans to adopt by regulation or through the 2024 Finance Act. These measures have a twofold objective: to make French industry greener on the one hand – in particular the most polluting production sites such as metallurgy, petrochemicals and cement (2) – and to meet the industrial needs of the energy transition on the other.<\/p>\n

This law is also a national translation of the European will to take part in the race to \u00ab\u00a0green\u00a0\u00bb industrialisation, in which the United States and China have already taken a certain lead (3), and this in a context of chronic deindustrialisation of the French economy (4).<\/p>\n<\/div>

The financing aspect of the law<\/h2><\/span>
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Among the various areas covered (5), this bill contains four articles related to financing which aim to mobilize private investment for the ecological transition, in particular the \u00ab\u00a0patient\u00a0\u00bb part of the 5,700 billion euros (6) saved by the French (i.e. long-term savings for retirement or future purchases, which are less concerned with return or liquidity than with security).<\/p>\n

The main novelty comes from the \u00ab\u00a0Avenir climat\u00a0\u00bb savings plan (Article 11). Reserved for minors, this new investment product will be managed by a public institution, will receive government contributions (7), and will benefit from tax advantages equivalent to those applicable to the Livret A. All withdrawals will be frozen until the saver reaches the age of majority.<\/p>\n

Two other provisions related to existing savings products are proposed. Firstly, the bill revisits the obligation under the PACTE law for distributors of life insurance policies to offer at least one green-labeled unit of account (Article 10). On the other hand, it aims to direct investments towards SMEs, SMIs, real estate and major infrastructure projects (Article 13) and authorizes investment in private equity through life insurance and retirement savings plans (Article 12).<\/p>\n<\/div>

Modest mobilisation of savings, with no guarantee of their proper allocation<\/h2><\/span>
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Although it states that its objective is to \u00ab\u00a0finance the productive economy and the ecological transition\u00a0\u00bb, the bill provides no guarantee as to how the funds of the \u00ab\u00a0Avenir climat\u00a0\u00bb savings plan will be invested (8). For example, for the energy sector, its investment perimeter does not provide for the exclusion of companies that continue to develop new oil and gas production and transport projects. A fortiori, no guarantee is required as to the transition trajectory of the companies, such as a decrease in hydrocarbon production in the medium term. Contrary to what its name implies, the \u00ab\u00a0Climate Future\u00a0\u00bb savings plan could support activities that serve the objective of limiting global warming to 1.5\u00b0C.<\/p>\n

With this \u00ab\u00a0Avenir climat\u00a0\u00bb plan, the government also wishes to enable minors to \u00ab\u00a0build up capital for integration into working life\u00a0\u00bb (9) and to \u00ab\u00a0familiarise minors with the workings of savings products, and even financial markets, in order to eventually train informed investors\u00a0\u00bb (10). Considering that only a wealthy minority of the population has the possibility of building up a safety net by investing their savings in the financial markets, this \u00ab\u00a0Climate Future\u00a0\u00bb plan could, in addition to continuing to maintain the primary causes of climate change, contribute to the widening of inequalities.<\/p>\n

The absence of significant earmarking and restrictive filters on other investment products poses similar problems, including for investments in SMEs and SMIs, where there is no guarantee of their contribution to the ecological transition. Worse, without any guarantee on the future of the SRI label (11), the law goes back on the only measure guaranteeing the – minimal but real – earmarking of a part of life insurance contracts towards activities useful to the transition (12).<\/p>\n<\/div>

Our proposals to mobilise savings for the ecological transition<\/h2><\/span>
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During the preparation phase of the bill, Reclaim Finance sent the government a series of proposals to mobilise savings for the ecological transition:<\/p>\n

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  1. Encourage savers to reduce the proportion of their investments in controversial activities <\/b>by improving transparency on the allocation of their investments. To do this, we propose on the one hand that a tricolour indicator illustrating the exposure of investment products to controversial activities such as fossil fuels, deforestation, tobacco or arms be displayed next to each financial product (13). On the other hand, only savings products with rules excluding certain controversial activities can offer tax and\/or social benefits (14).<\/li>\n
  2. Define minimum criteria for the investment policy of the various savings products <\/b>that receive public support (regulated savings accounts, life insurance, employee savings (15), retirement savings plan, future \u00ab\u00a0Avenir climat\u00a0\u00bb savings plan) and those of green bonds (16). These criteria should make it possible to judge the credibility of the transition plans of the companies that would benefit from these funds (17), and on the other hand to exclude companies that are developing new oil and gas production and transport projects or that do not foresee a decrease in their hydrocarbon production;<\/li>\n
  3. Create a preferential borrowing rate <\/b>for \u00ab\u00a0credits\u00a0\u00bb allocated in the framework of the financing of projects contributing to the ecological transition (18)<\/li>\n<\/ol>\n

    Without criteria to ensure that savings are rigorously channelled towards activities that are compatible with the objectives of limiting global warming to 1.5\u00b0C, the government is missing its target and losing a precious opportunity. Not only should it have strengthened the measures governing life insurance – a product with almost 2,000 billion euros in assets (6) and which benefits from more than one billion euros in tax advantages (14) – but it should also have looked into the implementation of strict measures guaranteeing the absence of investment in fossil fuels from the 520 billion euros in the Livret A<\/i> and Livret D\u00e9veloppement Durable et Solidaire<\/i> (LDDS) (19).<\/p>\n<\/div>

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    Contact:<\/h3><\/span>
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