Action plan for financing the ecological transition
Six months after its operational launch by the Paris financial center, the Institut de la Finance Durable (IFD) has published its first report, ‘Action plan for financing the ecological transition’. This report responds to the mission entrusted by Minister Bruno Le Maire to Yves Perrier, Chairman of the IFD, to draw up a financing plan for the ecological transition in France, and to set up the Financing Committee responsible for steering its implementation (CFTE)[1].
To draw up this action plan, the IFD brought together players from the Paris financial center (economists, banks, insurance companies, management companies, professional federations, in consultation with the French Treasury).
The report assesses the need for additional investment, identifies the resources and tools that can be mobilized, and finally puts forward 11 recommendations for financing the ecological transition in France.
Although the investment needs are considerable – estimated at between 30 and 65 billion euros per year to meet the objectives of the SNBC-2[2] – French people’s savings, totalling almost 6,000 billion euros in assets, including 3,000 billion euros in long-term savings, are a real asset that can be mobilized for the ecological transition. The current shortfall in financing for the transition therefore lies less in the resources to be mobilized than in the projects themselves, due to the lack of economic profitability and low use value of many ecological transition projects.
The IFD’s proposals address these issues of economic profitability, as well as those of financing and ‘channelling’ savings, while remaining within the constraints of controlling public spending.
For private individuals, the report proposes ‘massifying’ the use of zero-interest loans, and coupling them with a tax advantage in the form of a tax credit obtained by depreciating investments. This combination should make these investments attractive to both individuals and investors.
With regard to support for businesses, the IFD proposes, on the one hand, reinforcing tax credit schemes with accelerated depreciation and, on the other, setting up a State guarantee fund to boost the profitability of certain industrial or technological research projects that are higher-risk, but nevertheless strategic in the transition, particularly for start-ups, SMEs and ETIs.
With regard to financing, the report calls for the adaptation of existing savings schemes, in particular regulated savings (Livret A, LDDS and PEL in particular) and long-term financial savings (life insurance and retirement savings plans), by increasing the proportion of these resources allocated to financing the ecological transition.
Finally, the implementation of these schemes presupposes a clear definition of the projects to which financing should be directed, as well as the criteria for assessing a company as ‘in transition’. Both the projects supported and the companies’ transition plans must meet both the decarbonization and reindustrialization objectives. IFD therefore calls for these activities and criteria to be defined precisely, in conjunction with industrialists, financiers and public players.