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From commitment to action: a look back at the 2018 Climate Finance Week in Paris

30 November 2018 - Blog post

This week, the finance community gathered in Paris for a series of events focusing on climate change and sustainable development. With more than 1500 participants and 100 speakers from the financial community, the week was marked by major events of this week were the UNEP FI’s Global Roundtable and the 4th Climate Finance Day.

 

 

On one hand, the week began with a ‘reality check’ through the publication on Monday of a report by Oxfam France demonstrating that between 2016-17 French commercial banks reduced investments in renewable energy as much as they increased investments in fossil fuels. On the other hand, the financial community reiterated their engagement with several commitments and calls to action made during these three days including:

 

  • AXA Group, the French global insurer, announced that its newly acquired division, AXA XL will no longer underwrite the construction and operations of coal plants, coal mines, oil sands extraction and pipelines, as well as arctic drilling.
  • Eric Lombard, CEO of the French Caisse des Dépôts announced the lowering of its threshold for carbon exclusion from 20% to 10% of the total of a company’s annual turnover;
  • Bruno Le Maire, Minister for the Economy and Finance of the French Republic called on banks, insurers and asset managers “to make commitments to stop financing mines and coal-fired power plants. These commitments must be controlled and transparent. If these commitments are not met, they will be made binding.”
  • François Villeroy de Galhau, Gouvernor of the Banque de France highlighted that the publication of the Network for Greening the Financial System’s (NGFS) first progress report in October. This report represents an important step as for the first time this coalition of 21 supervisors and central banks unanimously acknowledged that as climate-related risks are a source of financial risk – and thus it is within the mandates of central banks and supervisors to ensure the financial system is resilient to these risks.

 

 

I4CE contributed to discussions throughout the week

Benchmarking emerging practice: In the run-up to the week, I4CE released week a report produced with WWF France presenting a first stock-take of the implementation of the Article 173-VI of the French Energy Transition Law, and its impact on the evolution of reporting and investment management practices.

 

Taking stock: Pierre Ducret, I4CE’s President, and Maria Scolan (Caisse des Dépôts) published the special report on finance of the 2018 Global Observatory on non-State Climate Action. The report presents the progress made towards the greening of the global financial system. It gave a concrete basis for discussions for Climate Finance Day, taking stock of private and public actors’ commitments and achievements on green and climate finance issues.

 

Moving from commitments to action: As Secretariat of the Climate Action in Financial Institutions Initiative, Benoit Leguet, I4CE’s Managing Director moderated a panel session of Climate Finance Day that presented the concrete experience of 5 of the 42 financial institutions participating in this Initiative in making climate change an operational priority across business lines.

 

Read the summary of the session

 

Advancing research: I4CE organized a side-event with the Institut Louis Bacheliet, the Banque de France and Finance for Tomorrow bringing together academics, finance practitioners and regulators to discuss together the recent research advances in the field of modelling climate-related financial risks, provide a better understanding of the role of central banks in addressing these risks, and formulate the relevant research agenda for the years to come.

To learn more
  • 10/25/2024 Blog post
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  • 07/05/2024 Foreword of the week
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    Following the European elections on June 9, the EU is adapting to a new, more conservative, political reality. Yet despite changing political tides, a new EU leadership will still need to find a credible answer to how the continent is to reach climate neutrality by 2050. To understand how to get there, we need a clear understanding of the progress already made. This is where the European Climate Neutrality Observatory (ECNO) comes in.

  • 06/28/2024
    From Stranded Assets to Assets-at-Risk: Reframing the narrative for European private financial institutions

    Private financial institutions must rethink their approach to managing stranded asset risks. The current narrative on quantifying fossil fuel sector exposures within a limited scope of financial portfolios (mostly loans) largely underestimates potential stranding losses. As the low-carbon transition impacts all economic sectors, private financial institutions (FIs) must consider material transition-driven stranding risks within their overall transition risk management framework using a ‘whole of economy’ lens. Traditional risk management approaches are ill-suited to the methodological and quantification challenges of transition-driven stranding risks, so a flexible, dynamic, forward-looking approach is necessary. Strong, incentivising public policy coordinated with financial regulatory and supervisory impetus is necessary to preemptively identify, monitor and manage stranding losses on ‘assets-at-risk’ (i.e., potential stranded assets). The ECB finds that 40% of the total loan portfolio of euro area banks is exposed to energy-intensive sectors*, making them vulnerable to transition risks, including stranding. It is time for an urgent reframing of the stranded asset narrative to avoid significant financial losses (endangering financial stability) and direct orderly transition finance flows to retire or transform assets-at-risk before they become fully stranded.

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