For many years, French banks have stood out through their determination to exclude the most greenhouse gas-emitting energies. They have made strong commitments with clear results.
French banks are firmly committed to the fight against
climate change. They have rolled out powerful and wide-ranging measures
for several years now to reduce their exposure to the most greenhouse
gas-emitting energies and accelerate the financing of renewable energies
and green and sustainable activities. Their commitment is concrete, as
demonstrated by the figures. Loans to the coal sector now make up a
marginal share of their balance sheets (€2bn, i.e. 0.02% of their total
balance sheet[1]), whereas renewable energy loan outstandings accounted for more than €42bn in 2021, including €14bn in new flows.
1. French banks’ lack of dependence on fossil fuels
For many years, French banks have stood out through their
determination to exclude the most greenhouse gas-emitting energies. They
have made strong commitments with clear results. While 36% of global
electricity is produced using coal, this energy source accounts for just
€2 billion for French banks, i.e. 0.02% of their total balance sheet.
In addition, hydrocarbon loans amount to €23 billion, or around 0.25% of
the total balance sheet of French banks[2].
More broadly, and despite the current geopolitical environment,
French banks are reaffirming their commitment to unconventional
hydrocarbons and, as the figures show, they have scant exposure to the
financing of the fossil fuel sector[3].
On the contrary, they are providing substantial financing for viable,
renewables-focused projects. They are supporting each of their customers
in their transition and meeting the daily challenge of helping
fossil-fuel companies to transform their business model. Support is a
key issue for banks, as they are convinced that a global and sustainable
transition hinges on the involvement of all players.
2. Large-scale financing of renewable energies and green and sustainable activities
By providing substantial financing to transition sectors and the
adaptation to climate change, French banks are contributing to the
decarbonisation of the economy. Outstanding green and sustainable loans
accounted for more than €100 billion[4]
at the end of 2021, up from €76.2 billion a year earlier, of which
nearly €30 billion in new loans granted in 2021. French banks also lead
the way on green and sustainable bond issues, with €225 billion arranged
in 2021.
It is also essential to note that for each €1 banks invest in fossil
fuels, they finance €4 in renewable energy and green and sustainable
activities, whether comparing fossil-fuel outstandings with green and
sustainable outstandings or all off-balance sheet items, with, for
example, €51 billion off-balance sheet for hydrocarbons versus €225
billion in green bonds.
Banks are therefore supporting their customers across the board in
the withdrawal from the most polluting energies and the acceleration of
renewable energy. They also ensure that financing is found for viable
projects motivated by environmental protection.
3. Ongoing work to drive a sustainable and global transition
To achieve carbon neutrality, it is essential to act collectively and
rally all stakeholders. As part of the Net Zero Banking Alliance
(NZBA), French banks have collectively developed a shared and ambitious
approach to measuring the carbon footprint of their banking portfolios
and their alignment with a net carbon neutrality objective by 2050,
compatible with the trajectory for meeting the 1.5 °C target of the
Paris Agreement.
To that end, the main French banking groups, all actively involved in
the NZBA, led an in-depth discussion and analysis for several months
under the auspices of the FBF. The aim was to develop a common
methodological approach for measuring the carbon footprint of a banking
portfolio (baseline) and setting sector targets for its alignment with a
net-zero objective by 2050, in compliance with the Paris Agreement.
The resulting method, which will be upgraded over time in line with
future market advances and international work, constitutes the
collective and ambitious contribution of French banks to international
efforts on aligning the financial sector with net carbon neutrality.
Commenting, Laurent Mignon, Chairman of the Climate Committee and
FBF, said: “It would be wrong to believe that French banks are dependent
on the financing of hydrocarbons. Every year, they are stepping up
their efforts to prove the contrary and accelerate financing for the
transition. We are fortunate to have pioneering French banks on this
subject, banks with a real desire to embrace the entire economy in this
transition. Transparency is key to that goal. This is why they publish
their figures each year and are developing this method for measuring
their footprint and trajectory, the aim being to forge common principles
and a shared approach. The ECB has estimated the cost of the ecological
transition at between €330 billion and €350 billion a year for 10
years. Banks can support the energy transition but cannot be the only
ones to do so. No single player can do this on its own. Ours must be a
collective effort.”
French Banking Federation
© FBF - French Banking Federation
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