A senior French finance official says Article 173 of the country’s Law on Energy Transition and Green Growth, which requires investors to disclose how they factor ESG criteria and carbon-related aspects into their investment policies, should be adopted at the European Union level to bolster its chances of success.
France’s Article 173, introduced in 2016 is a major comply-or-explain green finance mechanism that requires investors to report on how they integrate ESG into their investment processes, outline the greenhouse gas (GHG) emissions of their investments and explain how their assets contribute to the financing of a low carbon economy.
Campaign groups have been pushing for some time for the law to be rolled out into European legislation
Speaking in a personal capacity, Jean Boissinot, Director of Financial Stability at the General Directorate of the Treasury at the Ministry of Finance told an event organised by the European Responsible Investment Network (ERIN) in The Hague yesterday (September 14) that he would support the adoption of Article 173 in a broader European context: “Personally I’d say yes,” he said in response to a question on the issue. He said he saw EU adoption of Article 173 as a way to implement the recommendations of the global Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD).
Article 173 is being championed by some as an important regulatory advance in investor ESG reporting. But Mirova’s CEO Philippe Zaouati – writing as part of Responsible Investor’s series on the High Level Expert Group – said it had not yet demonstrated its real impact: Link to article said Article 173 could be taken “one step further” by the EU. He said French officials had been worried about “being alone” on the ESG reporting regulatory front but have been pleased with the broader policy direction internationally. Article 173, though, he said, was just one piece of a wider policy development and “not a panacea”. He said that French officials are now combing through the first Article 173 submissions from investors in order to assess progress. He said Article 173 was an instrument for putting climate disclosure on the agenda at organisations; an “impulse for action”, he said.
Separately, RI understands that the French government is keen to promote a form of Article 173 at the EU level to back up its voluntary regulation, and has been making overtures to the EU to introduce it.
Speaking on the same panel at the ERIN conference, Esko Kivisaari of the Federation of Finnish Financial Services and a member of the HLEG, said the group’s term may be extended and that the final report will be “much shorter” and “as clear as possible” in terms of making recommendations to the EU to take things forwards.
The final report will feed into an action plan, and Kivisaari said: “Next year is when the real discussions start.”
One of the main focus areas is getting taxonomies and green definitions right, he said. But he gave an example of how definitions can change: 10 years ago diesel cars would have been seen as environmentally friendly, which is not the case now.
Additional reporting by Hugh Wheelan