The ambition is strong: “Successful climate transition implies carrying out an industrial revolution on a global scale and setting up a new political economy”, immediately states the Perrier report, submitted last Wednesday to the Minister of the Economy, Bruno Le Maire.
This 139-page document was coordinated by Yves Perrier. The president of Amundi, the leading French and European asset manager, is also the vice-president of the Paris Europlace lobby. At the end of three months of work and the hearing of more than 200 professionals, the study proposes twenty-four ways to “align the actions” of banks, management companies, investors and other stakeholders, with a view to achieve the goals of the Paris Agreement. Namely carbon neutrality in 2050, in order to limit global warming.
Bercy’s expectations disappointed
For Paris to stay one step ahead in sustainable finance in Europe and around the world, the authors recommend “establishing CO accounting2 (carbon budget of companies and financial institutions), “a common methodological corpus for extra-financial analysis”, with data and methods that are too heterogeneous, or even “new governance practices” (executive compensation indexed to climate indicators …).
However, an essential aspect remains very vague: how to “determine a trajectory for reducing the carbon intensity of projects and companies financed”. However, this was the main objective set by Bruno Le Maire in the fall.
Several NGOs denounce “an empty roadmap” and “a report hiding misery, which offers no concrete and immediate solution to reduce the support of banks, insurers and investors for fossil fuels”.
“This report achieves the feat of not taking any concrete measures to guarantee an exit from coal and unconventional hydrocarbons, when it would have sufficed to copy and paste the work already carried out by the scientific committee of the Observatoire de la finance sustainable,” laments Lorette Philippot, campaign manager at Friends of the Earth. This Paris market body delivered its recommendations last September.
“The subject of the necessary stop to fossil fuel expansion is only mentioned to be questioned,” supports a joint press release published with Reclaim Finance and Oxfam. In fact, the document refers to the simulations of the International Energy Agency (IEA), which calls for the immediate cessation of any oil or gas exploration project. But for the authors, there is “debate”, for lack of analysis “to ensure the feasibility of such an option and the conditions for substituting carbon-free energies for fossil fuels”.
New “Climate Transition” label
The Perrier report tackles the issue of reducing the carbon footprint of financial players and their loan or financial asset portfolios. Instead, he proposes a working group to “define a reference scenario for 2025, 2030 and 2050”, which would be added to other instances of reflection suggested by the report.
The whole would be overseen by “two coordinating bodies”: one led by Bercy, the other “operational”, with a budget of 6 million to 8 million euros and chaired by “a recognized leader”. At the same time, there should be “more cooperation”, even “integration”, between existing market bodies, such as the Louis Bachelier Institute, Finance for Tomorrow of Paris Europlace or the Sustainable Finance Observatory.
Finally, the authors put forward the idea of a “Climate Transition” label for investment funds, despite the proliferation of ESG products (based on environmental, social and good governance criteria), which are often difficult to read .
Between the very generalist French SRI label and the Greenfin environmental label, which excludes nuclear power, which is nevertheless very present in French funds, it will have to “value investments in the carbon transition and not only in assets already considered green”.