French finance regulators unveil monitoring process for ESG and climate, starting in September.
Thierry Philipponnat, former President of FIR, the French SIF, will lead the work of the AMF securities regulator.
France’s AMF (Autorité des Marchés Financiers) securities regulator has announced how a new Climate and Sustainable Finance Commission will operate, in a further indication of its tightening supervision regime of ESG practices and reporting by French investment groups under the internationally-known Article 173 rule for action on ESG and the climate transition.
The new AMF Commission will be chaired by Thierry Philipponnat, AMF Board member, and former President of FIR, the French SIF. In September, the AMF will announce the Commission’s committee members, who are being selected for expertise in climate risk and sustainable finance across various market sectors and civil society.
A mirror committee for ESG and climate monitoring of activity by France’s banks and insurers is being set up by the country’s Autorité de Contrôle Prudentiel et de Résolution (ACPR), the prudential supervisory authority for banks and insurers set up in 2010 following the global financial crisis. It will consist of banking and insurance experts.
In September, both committees will start monitoring and evaluating the ESG and climate actions of French financial services companies, while at the same time providing technical expertise and a forum for dialogue and work to promote the development of sustainable finance. Philiponat was a former Secretary General of Finance Watch, the Brussels-based financial watchdog set up by a cross-party group of Members of the European Parliament (MEPs). He was a former investment banker and executive of Amnesty International, and was appointed to the AMF board back in 2013.
Read RI’s 2015 interview with Philipponat.
The AMF has made sustainable finance a building block of its “#Supervision 2022” strategic plan.
As RI reported on August 1, it recently sent out a team of investigators to examine the sustainability policy, practices and reporting of five French asset managers running SRI funds or integrating ESG into their investments.In 2015, France introduced its law on energy transition for green growth, with clear guidelines on ESG reporting requirements, in particular relating to climate change. The requirements of the law are regularly referred to as ‘Article 173’.
A recent government review of Article 173, reported by RI, however, found that half of France’s 48 biggest financial services companies are falling short of its reporting requirements.
The new Commission will operate under the regulatory umbrella of both the AMF and the ACPR. The ACPR looks after France’s input into the framework of the Central Banks and Supervisors Network for Greening the Financial System (NGFS), which was created by France and comprises almost 50 central banks, supervisors and international organisations.
In practical terms, the ACPR and the AMF will jointly publish an annual report on their sustainable finance monitoring, indicating the climate-related commitments and implementation steps of companies across the finance sector. The annual report will make recommendations on how to improve the monitoring of commitments and on developing the tools and regulatory framework to support the development of sustainable finance. Both regulators will establish a joint action protocol to support their monitoring.
Francois Villeroy de Galhau, Governor of the Banque de France said: “The ACPR and the Banque de France play a leading role in national and international initiatives on green finance and climate change, in particular through the NGFS. The new Committee will benefit from all these experiences. We will work with the AMF to support initiatives that improve the resilience of the financial sector to climate risk and contribute to better financing an orderly transition of businesses and society towards a sustainable economy”.
Robert Ophèle, Chairman of the AMF, said: “The creation of a Climate and Sustainable Finance Committee represents a new stage in the AMF’s roadmap. Its role will also be to help implement the ambitious reforms launched at the European level, to accompany innovations in the field and to contribute to improving the quality of information and methodologies”.