RESULTS AND SCORES

France

Enabling Environment

France has a strong enabling environment for green finance. The government provide strong support for green finance through comprehensive subsidy schemes (tax programs and financial instruments), a clear climate strategy for France to which all public investments should be aligned and a leading position as issuer of green government bonds. With Finance for Tomorrow, Paris one of the most active and present green financial centres. As the first central bank in Europe, Banque de France has published a Responsible Investment Report based on the recommendations by the Task Force on Climate-related Financial Disclosure (TCFD).
France will further benefit from the potential implementation of the green taxonomy by the European Commissions. The French government and its agencies are heavily involved in the de- velopment of the green taxonomy. Green finance efforts could be further amplified by providing education on the relationship between finance and climate change across the board.

Supervision, Risk Management & System Stability

France obtains a medium-high score on Supervision, Risk Management and Financial Stability. This is mostly due to a strong positioning of the central bank and supervisory authorities, and to emerging practices of supervision of climate risks for banks and insurance companies. The recent awareness of regulators and supervisors of the importance of climate issues led them to a strong mobilization internally and within the Network for Greening the Financial System. This mobilization translated in implementing new supervisory practices for banks and insurance companies, with a little advance for banking supervision. Nevertheless, climate risks still lack to be taken into account in current prudential regulations, and climatic stress tests are still at the research stage.However, the regulation and supervision of asset managers and investment funds is still lagging behind. With the exception of transparency requirements in Article 173-VI, the supervision of these actors still struggles to integrate climate issues. The dominant approach remains that of monitoring compliance with the promise-client in the context of SRI funds.

Transparency and Disclosure

Transparency on climate related risks is high in France due to Article 173-VI of the 2015 Law of Energy Transition and Green Growth, which requires the disclosure of an extensive range of climate related information. The article requires French financial institutions to disclose, inter alia, how ESG criteria are considered in decision-making processes and how the ESG policy is structured, how climate related risks are identified and managed or metrics on Scope 1-3 emissions.
Transparency on French green financial products is reinforced through two comprehensive green labels, the Energy and Ecological Transition for the Climate (EETC) by the Ministry of the Environment, Energy and Marine Affairs and the Socially Responsible Investment Label (SRI) by the Ministry of Finance. While EETC caters to “dark green” projects, SRI is more broadly applica- ble for sustainable investments.
A further increase in transparency on climate related could be achieved in France by focusing on improving customer centricity, adapt accounting standards to reflect climate related risks and shift the focus on climate aspects for investment advisor duties.

  • ENABLING ENVIRONMENT

    France has a strong enabling environment for green finance. The government provide strong support for green finance through comprehensive subsidy schemes (tax programs and financial instruments), a clear climate strategy for France to which all public investments should be aligned and a leading position as issuer of green government bonds. With Finance for Tomorrow, Paris one of the most active and present green financial centres. As the first central bank in Europe, Banque de France has published a Responsible Investment Report based on the recommendations by the Task Force on Climate-related Financial Disclosure (TCFD). France will further benefit from the potential implementation of the green taxonomy by the European Commissions. The French government and its agencies are heavily involved in the de- velopment of the green taxonomy. Green finance efforts could be further amplified by providing education on the relationship between finance and climate change across the board.

  • SUPERVISION, RISK MANAGEMENT AND SYSTEM STABILITY

    France obtains a medium-high score on Supervision, Risk Management and Financial Stability. This is mostly due to a strong positioning of the central bank and supervisory authorities, and to emerging practices of supervision of climate risks for banks and insurance companies. The recent awareness of regulators and supervisors of the importance of climate issues led them to a strong mobilization internally and within the Network for Greening the Financial System. This mobilization translated in implementing new supervisory practices for banks and insurance companies, with a little advance for banking supervision. Nevertheless, climate risks still lack to be taken into account in current prudential egulations, and climatic stress tests are still at the research stage. However, the regulation and supervision of asset managers and investment funds is still lagging behind. With the exception of transparency requirements in Article 173-VI, the supervision of these actors still struggles to integrate climate issues. The dominant approach remains that of monitoring compliance with the promise-client in the context of SRI funds.

  • TRANSPARENCY AND DISCLOSURE

    Transparency on climate related risks is high in France due to Article 173-VI of the 2015 Law of Energy Transition and Green Growth, which requires the disclosure of an extensive range of climate related information. The article requires French financial institutions to disclose, inter alia, how ESG criteria are considered in decision-making processes and how the ESG policy is structured, how climate related risks are identified and managed or metrics on Scope 1-3 emissions. Transparency on French green financial products is reinforced through two comprehensive green labels, the Energy and Ecological Transition for the Climate (EETC) by the Ministry of the Environment, Energy and Marine Affairs and the Socially Responsible Investment Label (SRI) by the Ministry of Finance. While EETC caters to “dark green” projects, SRI is more broadly applica- ble for sustainable investments. A further increase in transparency on climate related could be achieved in France by focusing on improving customer centricity, adapt accounting standards to reflect climate related risks and shift the focus on climate aspects for investment advisor duties.

Transparency and Disclosure

Common disclosure framework50%
50%
Investor's fiduciary duties52%
52%
Consumer transparency4,2%
4,2%

Supervision, Risk Management & System Stability

Supervisory authority positioning70%
70%
Regulation/Supervision of banks52%
52%
Regulation /Supervision of insurance companies44%
44%
Regulation /Supervision of pension funds45%
45%
Regulation /Supervision of asset management and investment funds50%
50%

Enabling Environment

Established and maintained common taxonomy50%
50%
Supporting green finance with public incentives70%
70%
2-Degree consistency of public sector acting72%
72%
Public capacity building and awareness on green finance70%
70%
Green public-private initiatives of financial centers70%
70%

France achieves the relatively good results on all three dimensions of the 3fP-Tracker with a par- ticular strength in the enabling environment. However, as with all countries and regions consi- dered, there is still ample room for improvement for France regulatory financial environment to become truly ‘fit for Paris’. Actual financial regulation and policies would require further impro- vement to support the transition to a low-carbon economy through and by the financial sector.
The 3fP-Tracker assessment shows that France has taken the lead on investors and asset managers transparency due to the Article 173-VI since 2015. On banking and insurance supervision, new practices to integrate climate risks are emerging, mostly based on engagement with banks for now. France is a frontrunner on national climate strategies and subsequent alignment of public investments operators. This will to set example is also characterised by the leading role of the French central bank, and the emission of sovereign and local green bonds.

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