France’s government and financial regulators are partnering on a new pilot project to “align” the country’s sustainable finance efforts with the EU’s Action Plan.
The new Finance ClimAct project, which has a budget of €18m, including €10m from the European Commission, will run for five years and aims to provide financial institutions and businesses in the country with practical tools to integrate climate issues into their investment decisions.
The initiative was devised earlier this year by the French Environment and Energy Management Agency (ADEME) and 2° Investing Initiative (2DII), the Paris-based think-tank that helped develop France’s pioneering ESG disclosure mechanism for companies, Article 173 and the EU’s sustainability agenda.
Brune Poirson, France’s State Secretary to the Minister of Ecological Transition and Solidarity, said she welcomed the new project, promising that “France will continue to play its pioneering role in the making method development in addressing climate risk by investors”.
ADEME will lead the project in collaboration with the Ministry of the Environment (CGDD), the French financial market authority (AMF), the French prudential authority (ACPR), 2DII and private sector partners including GreenFlex, Finance for Tomorrow, and the Institute for Climate Economics (I4CE).
The announcement of the initiative comes hot on the heels of the European Commission’s sweeping Green Deal proposals, released earlier this week.
2DII role in the project will span three main areas:
1) Capacity-building with France’s supervisors and stakeholders on topics including climate scenario analysis, stress testing, and climate-related disclosures.
Last month, the governor of the French central bank, Francois Villeroy de Galhau, reportedly said that it would subject banks and insurers to climate change stress tests next year.
2) ADEME will also work with the 2DII to support French financial institutions in adopting climate targets and decarbonisation plans as laid out under Article 173.
3) The AMF will join with ADEME and 2DII to promote the integration of sustainability considerations into financial advice and product information, including the launch of a free online advisory tool and the development of a framework for assessing the accuracy of product manufacturers’ environmental impact claims.
In September, the AMF announced members of a new Climate and Sustainable Finance Commission focusing on France’s asset managers. The 24-strong body includes representatives from NGOs, investors, data providers and ratings specialists. RI understands that one of the areas the Commission will be exploring next year is the alignment of Article 173 with the EU’s taxonomy, the disclosure framework that identifies credible investments and business activities supporting the climate transition.
Another regulatory committee, which will focus on banks and insurers overseen by the ACPR and will monitor and evaluate the ESG actions of country’s financial services companies, was confirmed in October.
“For an organisation born in France, it is nice to ‘close the loop’ and ‘bring home’ the tools and knowledge developed with other authorities like the Bank of England, EIOPA, the California Insurance Commissioner and the Swiss Ministries”, Stan Dupré, CEO of 2DII, said, referring to a number of projects the think-tank has undertaken with overseas bodies on climate risk, scenario analysis and disclosure. “We are looking forward to helping the French market strengthen its historical leadership on sustainable finance and pioneer new best practices that can later be exported.”
Brune Poirson, France’s State Secretary to the Minister of Ecological Transition and Solidarity, said she welcomed the new project, promising that “France will continue to play its pioneering role in the making method development in addressing climate risk by investors”. However, the announcement comes in the same week that France has been accused of slowing down the EU’s sustainable finance agenda by blocking the approval of the taxonomy in key political negotiations on Wednesday.