Climate Finance Day 2021: accelerating the fair and sustainable transformation of the real economy through impact finance
Paris, October 27, 2021 – Placed under the High Patronage of the President of the Republic and the Patronage of the Minister of the Economy, Finance and Recovery, the Climate Finance Day, organized by Finance for Tomorrow, a branch of Paris Europlace, brought together speakers from all horizons to discuss the actions to be taken to accelerate the deployment of sustainable finance and democratize impact finance.
The Climate Finance Day is a multi-stakeholder event aimed at strengthening the mobilization of the Paris financial center in favor of sustainable finance. The 2021 edition, dedicated to impact finance, brought together on October 26 some 60 speakers, including 10 international ones, and over 350 participants at the Palais Brongniart, joined by 1,500 online visitors. A ‘catalyst for commitments’ by financial players, the event was once again the occasion for new announcements to meet the challenge of transforming the economy in a fair and sustainable way.
Bruno Le Maire, French Minister for the Economy, Finance and Economic Recovery, declared: ‘The Paris financial center must live up to the Paris Agreement, and I’ll give you my personal conviction: today, the Paris financial center isn’t there yet. It must do better and it must do faster. I call on the Paris financial center to commit to a trajectory for reducing the carbon intensity of [its] investments in line with the Paris agreement. This trajectory must be credible and transparent, with a binding timetable. I have asked Yves Perrier, Chairman of Amundi, to lead a mission to ensure that the Paris financial center is in line with the Paris agreement. It’s essential.’
Thierry Déau, Chairman of Finance for Tomorrow and Chairman and CEO of Meridiam, said: ‘With COP26 just a few days away, at a time when sustainable finance has risen to the top of the financial sector’s international agenda, we want to develop impact finance to ensure we have a concrete effect in the real world. At the heart of our actions, this change in mentality is necessary if we are to achieve the Sustainable Development Goals and limit global warming in line with the objectives of the Paris Agreement.
Augustin de Romanet, Chairman of Paris EUROPLACE and Chairman of ADP Group, emphasized ‘the strategic priority that sustainable finance represents for the Paris financial center, and the importance of the initial results obtained, notably in terms of the sharp reduction in investments in all coal-related activities by banks, insurance companies and asset management companies. And the need today to accelerate the process in order to achieve carbon neutrality by 2050, by bringing together the entire ecosystem of the financial marketplace: industrial companies, investors, banks and financial intermediaries.
Pauline Becquey, Managing Director of Finance for Tomorrow commented: ‘We understand the expectations of the activists who expressed their views at Climate Finance Day, but we regret that the methods used were not part of a dialogue and disrupted the organization of some of the speeches. We have always opened the doors of the event to NGOs, as it aims to bring together the entire ecosystem to transform financial practices. That’s what Climate Finance Day is all about: taking stock of what has already been achieved, but above all reminding us of the immense distance still to be covered, and making commitments to accelerate the mobilization of the sector!’
1 – New commitments on fossil fuel divestment and financing for the energy transition
On the occasion of this day, financial players announced new commitments on fossil fuel divestment to align their portfolios with the objectives of the Paris Climate Agreement.
- La Banque Postale has reiterated its commitment to a total phase-out of fossil fuels (oil & gas) by 2030, announced on October 14. See the Press Release.
- BPCE announced two main priorities: to continue decarbonizing portfolios, thanks in particular to the Green Weighting Factor climate impact tool, and to continue supporting businesses, with 21 billion euros dedicated to financing energy efficiency in buildings, renewable energies and green mobility.
- Caisse des Dépôts, in application of the commitments made at Climate Finance Day in October 2020, will accelerate in 2022 its policy of excluding from its equity and bond portfolios listed companies in the oil and gas sector that do not have a credible climate strategy, non-European and European, on the basis of shared objective criteria, listed in Appendix 1. It maintains a minority stake in a limited number of companies in the sector with which it has an effective shareholder discussion and which have undertaken to reorient their activities. In addition, in order to accelerate the achievement of national climate objectives and adopt the key principles of ‘impact finance’, Banque des Territoires and Bpifrance are committed to increasing the cumulative share of their financing in favor of the ecological transition to 40% by 2024 (this share was 26% in 2020). All the CDC Group’s announcements can be found in Appendix 1.
- The Crédit Agricole Group joins the collective commitments made by major financial institutions by supporting Net Zero Alliances in all business lines: banking, asset management (Amundi) and insurance (CA Assurances); and by committing to the coalition of France’s six biggest banks against global warming, with, as of January 2022, a total halt to all financing of projects linked to the extraction of shale oil and gas, and tar sands. The Group is supplementing these collective commitments with undertakings to: protect the Arctic zone, where direct financing of oil and gas projects will be excluded; significantly reduce the financing of oil production by 20% by 2025. The Crédit Agricole Group is also stepping up its commitment to financing renewable energies by increasing its investments and exposure to non-carbon energies.
- The insurers , through the FFA, have announced an initiative to define their policies for dialogue with companies in the fossil fuel sector, including timetables for halting the financing of companies that do not give up their new unconventional fossil fuel production projects.(press release)
The announcements of certain partners, in particular AXA, were postponed by a few days, again within the framework of Paris for Tomorrow Week, due to the intervention of activists who disrupted the event’s agenda in the morning.
Other financial players also announced commitments on the fossil fuel sector on the sidelines of Climate Finance Day (see appendix 2).
2 – Accelerating the transformation of the financial sector to strengthen the impact of sustainable finance
In 2021, the community of committed financial players is expanding, with 17 new members joining Finance For Tomorrow, bringing together 86 member institutions representing the diversity of the Paris marketplace. Their action for sustainable finance must take the form of a fair and sustainable transformation of the real economy. To achieve this, the players insisted on the need to develop impact finance. A few days before Climate Finance Day, the Impact marketplace group, coordinated by Finance For Tomorrow, presented the first results of its work to promote a common ambition for the Paris marketplace: a common definition, an evaluation grid for funds’ potential contribution to sustainable transformation, and a series of recommendations for developing impact finance. The documents are available online.
Innovation is also key to accelerating the evolution of financial practices and the financing of the ecological transition. To support this dynamic, Finance for Tomorrow has organized the ‘Fintech for Tomorrow’ Challenge for the past four years. This year’s winners are Neuroprofiler, an e-learning platform based on behavioral finance and gamification principles, to assess savers’ ESG preferences, and Qarnot Computing, which decentralizes data centers to generate energy savings.
3 – A mobilization of the Paris financial center on an international scale, just a few days before COP26
Climate Finance Day consolidates the Paris financial center’s position as a key player in sustainable finance issues within an international dynamic:
The mobilization of the financial center on just transition issues, embodied by the launch of the ‘Investors for a Just Transition’ investor coalition last June, is a key focus of Finance For Tomorrow’s work. In the run-up to COP26, Nick Robbins, co-founder of the UK’s Financing the Just Transition Alliance, called on European finance for just transition coalitions to work together.
At a time when biodiversity issues are becoming ever more pressing, the speech by Elizabeth Maruma Mrema, Executive Secretary of the United Nations Convention on Biological Diversity (UN CBD), was a call for the financial sector to mobilize in the run-up to COP15, which will define the objectives and framework for action over the next decade. For several months now, Finance For Tomorrow members have been mobilizing to help launch the TNFD, and the association is now a member of the observer group. A number of players have announced their ambitions in terms of biodiversity:
- Axa recently strengthened its commitment to preserving biodiversity, setting up a plan to combat the degradation of forest ecosystems and investing 1.5 billion euros to support sustainable forest management. See the press release.
- AFD recalled its objective announced in early 2021 to invest 1 billion euros by 2025 in projects linked to biodiversity protection, and to commit to ensuring that 30% of our climate financing has biodiversity co-benefits by 2025(link).
Every year, Climate Finance Day is a catalyst for new commitments from the financial sector. To monitor, analyze and make these commitments accessible, Finance for Tomorrow has developed a Sustainable Finance Observatory, supported by the European Union as part of the Finance ClimAct project. One year after its launch, the Observatory lists over 1,300 commitments from 380 voluntary players. An announcement will be made on October 28 on the international monitoring of private sector commitments, as part of the One Planet Summit.