Plans de transition

Question 1

Quelle est la prévision de l’augmentation des émissions de gaz à effet de serre d’ici 2030 selon les engagements actuels ? Quelle réduction des émissions est nécessaire d’ici 2030 pour atteindre l’objectif de l’Accord de Paris, selon le GIEC ?

Answer 1

• Les engagements actuels entraîneraient une augmentation des émissions de 10,6 % d’ici 2030 par rapport aux niveaux de 2010.
• Pour atteindre l’objectif de l’Accord de Paris, les émissions doivent être réduites de 45 % d’ici 2030 par rapport aux niveaux de 2019.

Question 2

Quels signes d’espoir sont mentionnés dans le rapport ?

Answer 2

La plupart des parties ayant soumis de nouvelles NDC ont montré une ambition accrue contre les changements climatiques, et si toutes les stratégies à long terme sont pleinement mises en œuvre, les émissions de ces pays pourraient être réduites de 68 % en 2050 par rapport à 2019.

Question 2

What has changed in the approach of central banks towards climate change?

Answer 2

A few years ago, the involvement of central banks in combating climate change was not evident, but today, it is considered an urgent priority. Central banks, including the Banque de France and the Eurosystem, are now actively supporting and complementing collective action against climate change.

Question 3

What is the role of the Network for Greening the Financial System (NGFS)?

Answer 3

The Banque de France has played a leading role in the NGFS, which now includes over 80 members, such as the Federal Reserve. The NGFS significantly contributes to the supervision of banks and insurance companies regarding climate issues.

Question 4

What steps has the Banque de France taken towards responsible investment and green finance?

Answer 4

The Banque de France is committed to a responsible investment policy and plans to completely exit from coal investments by 2024. The European Central Bank (ECB), under Christine Lagarde’s leadership, has incorporated climate change into its strategic review.

Question 5

What is the importance of greening monetary policy?

Answer 5

Villeroy de Galhau emphasized the importance of greening monetary policy, recognizing it as a significant new frontier to explore.

Question 6

Why should climate change be integrated into monetary policy?

Answer 6

Climate change is linked to the Eurosystem’s primary mandate of price stability. Climate shocks have stagflationary potential, causing both price increases and economic slowdown, and could reduce the potential growth of economies in the long term.

Question 7

What is the importance of acknowledging and addressing climate risks in the operations of central banks, particularly in the context of the European Central Bank (ECB)?”

Answer 7

Recognizing and integrating climate risks into central bank operations is essential to maintain financial stability and ensure effective transmission of monetary policy. The ECB’s balance sheet is exposed to climate risks, necessitating a more comprehensive consideration of these risks.

Question 8

What are the technical challenges and the necessity for action in considering climate risks?

Answer 8

Considering climate risk is technically challenging, especially due to its long-term nature. Market neutrality should not prevent achieving carbon neutrality in market operations.

Question 9

What actions are proposed by François Villeroy de Galhau regarding central banks’ involvement in greening the economy?

Answer 9

Forecasting and Modeling:

• Understand the effects of climate change on prices and economic growth.
• Integrate transition fiscal measures like carbon tax into economic models.
• Assess the energy sector’s impact and evaluate the influence of climate risks on economic growth potential.

Publishing and Imposing Standards:

• Demand transparency from all financial and corporate counterparts in terms of climate risk exposure.
• Harmonize metrics for assessing climate risks and move towards a unified regulatory framework.
• Work with rating agencies that properly integrate climate risks.
• Standardize data and use the European directive on extra-financial reporting.

Incorporating Climate Risk into Monetary Policy:

• Decarbonize the ECB’s balance sheet by targeting corporate assets.
• Adjust asset valuation based on climate transition risk.
• Use climate alignment as an indicator for issuers.
• Realign corporate bond purchase limits based on climate criteria.

Question 10

What is the European Central Bank (ECB) doing to “green” its monetary policy?

Answer 10

The ECB has started reducing its investments in highly polluting companies and shifting towards more environmentally friendly alternatives.

Question 11

What are the initial results of the ECB’s investment shift?

Answer 11

The ECB’s investments in the fourth quarter of 2022 targeted companies with a 65% reduction in CO2 emission intensity compared to the previous three quarters.

Question 12

What is the context of the ECB’s corporate bond portfolio?

Answer 12

The ECB holds a significant portfolio of corporate bonds, accumulated since 2018, valued at 385 billion euros. Historically, this portfolio was constituted in a “neutral” manner, leading to an overrepresentation of high greenhouse gas-emitting companies.

Question 13

What is the ECB’s goal in “greening” its portfolio?

Answer 13

The ECB aims to progressively transform its portfolio to reduce the proportion of major polluters and support less polluting companies.

Question 14

How is the ECB transitioning its investment strategy?

Answer 14

The transition is slowed by the end of active purchases of new corporate bonds by the ECB and the need to wait for the maturity of existing bonds. The ECB is gradually replacing these bonds with investments in less polluting companies.

Question 15

What are the reactions and perspectives on the ECB’s efforts?

Answer 15

While the ECB’s efforts are appreciated, some observers consider them insufficient and too slow. The ECB acknowledges that much remains to be done but believes that these initial steps contribute to the fight against climate change and the achievement of the Paris Agreement goals.

Question 16

What is the ECB’s long-term role in financial markets in relation to climate change?

Answer 16

In the long term, the ECB aims to influence financial markets by making financing cheaper for less polluting companies, acting as a compass for sustainable investments.

Question 17

What are the next steps for the ECB in integrating environmental criteria?

Answer 17

The ECB plans to introduce environmental criteria for collateral used by banks when refinancing, applying a discount to polluting companies by the end of 2024. 

Question 18

Quelles sont les principales conclusions du rapport de l’ACPR et de l’AMF sur les engagements climatiques des acteurs financiers en France ?

Answer 18

Le rapport souligne un manque de progrès concrets dans la mise en œuvre opérationnelle des engagements climatiques, des incohérences dans les politiques d’exclusion du charbon, et des difficultés méthodologiques dans le calcul des expositions au pétrole et au gaz.

Question 19

Quelle est la position des assureurs concernant leur politique d’exclusion du charbon ?

Answer 19

La majorité des assureurs n’ont pas modifié leur politique d’exclusion du charbon par rapport à l’année précédente, avec seulement cinq des 17 assureurs étudiés ayant introduit des restrictions supplémentaires.

Question 20

Quelles sont les exigences réglementaires croissantes mentionnées dans le rapport ?

Answer 20

Les autorités rappellent l’importance de se conformer aux obligations de reporting en vertu de la réglementation européenne (SFDR) et de la loi énergie-climat française, et alertent sur les textes réglementaires à venir qui seront plus exigeants en matière de publication d’informations extra-financières.

Question 21

Quels axes d’amélioration l’ACPR et l’AMF suggèrent-ils ?

Answer 21

Ils suggèrent la clarification des indicateurs de suivi pour le financement des énergies fossiles, le renforcement des contrôles périodiques, et la fixation d’objectifs intermédiaires plus nombreux.

Question 22

Quel est l’objectif des plans de transition prudentiels pour les banques dans le cadre réglementaire européen ? Quels seraient les impacts attendus de l’intégration de ces plans dans la réglementation prudentielle ? Quels secteurs de l’économie réelle seraient impactés par ces plans de transition ?

Answer 22

• Ces plans visent à renforcer l’engagement des banques envers la neutralité carbone et à assurer une mise en œuvre effective de leurs engagements climatiques.
• Cela offrirait une vision stratégique étendue, garantirait la crédibilité scientifique des cibles fixées, aiderait les banques à surmonter les blocages internes, et influencerait positivement plusieurs secteurs clés de l’économie réelle.
• Les secteurs des énergies fossiles, de la rénovation énergétique et de l’automobile seraient particulièrement impactés, avec une sortie progressive des énergies fossiles et un soutien aux stratégies de financement plus durables.

Question 23

What percentage of FTSE 100 companies have disclosed credible transition plans according to the EY analysis? What stage are the majority of FTSE 100 companies in regarding their transition plans?

Answer 23

• Only 5% of FTSE 100 companies have disclosed transition plans that align sufficiently with the TPT Framework and are considered ‘credible’.
• 78% of these companies have published partially developed plans with public targets for Net Zero emissions by 2050, but these plans lack detailed strategies and execution methods.

Question 24

What does Frank Elderson emphasize about banks becoming climate change proof?

Answer 24

Frank Elderson emphasizes the urgent need for banks to be capable of identifying, assessing, controlling, and mitigating risks arising from climate and environmental crises, stating that there’s still a significant journey ahead for them to be fully climate change proof.

Question 25

What are the results of the ECB’s thematic review on climate risks?

Answer 25

The ECB, along with 21 national competent authorities, assessed 186 banks holding total assets of €25 trillion, focusing on banks’ strategies, governance, and risk management practices concerning climate and environmental risks.

Question 26

What are the current gaps in banks’ preparedness for climate-related risks?

Answer 26

Most banks have only partially developed plans, with 96% showing blind spots in identifying climate-related and environmental risks, and many banks’ strategies are not yet translating into significant shifts in revenue sources or concrete actions aligned with their green commitments.

Question 27

What are the supervisory expectations and timelines set by the ECB for banks?

Answer 27

The ECB expects banks to fully manage their climate-related and environmental risks by the end of 2024, involving categorizing these risks, assessing their impact, and integrating them into governance, strategy, and risk management processes.

Question 28

What are some encouraging progress and good practices observed in some banks?

Answer 28

Some banks are using transition planning tools, aligning their portfolios with the Paris Agreement, setting concrete intermediate targets, mapping out data needs for disclosures, and considering climate and environmental factors in their capital needs assessments.

Question 29

What are the supervisory consequences for banks failing to meet their climate responsibilities?

Answer 29

The ECB has communicated clear supervisory consequences for banks failing to meet their climate responsibilities, including enforcement actions if necessary.

Question 30

How are transition plans useful for micro-prudential authorities?

Question 31

Why is a coordinated regulatory approach needed for transition plans?

Answer 31

A coordinated regulatory approach is needed because the role of micro-prudential authorities should be contextualized within the broader regulatory landscape, requiring coordination across different financial and non-financial regulatory agencies and standard setters, both domestically and internationally.

Question 32

What are the next steps planned by the NGFS?

Answer 32

The NGFS plans to engage with international bodies like the FSB, BCBS, IAIS, and IOSCO for coordinated advancement in transition plans and planning, and will continue to explore the relevance of transition plans to micro-prudential authorities.

Question 33

What does the NGFS report underscore about the nature of transition plans in the financial sector?

Answer 33

The report underscores the evolving nature of transition plans in the financial sector and the necessity for coordinated global action to effectively integrate these plans into the broader framework of financial stability and climate risk management.

Question 34

What inconsistencies in transition plans are highlighted by Dr. Mauderer?

Answer 34

There is a global lack of consistency and a common definition for what a transition plan should entail, with good data often lacking.

Question 35

What are the NGFS’s focus areas in harmonizing transition plans?

Answer 35

The NGFS focuses on harmonizing transition plans, updating climate scenarios to reflect increasing physical risks, distinguishing between regions and sectors, and developing long-term and 5-year scenarios for bank stress testing.

Question 36

What are the challenges and developments in financial instruments for the low-carbon transition?

Answer 36

The market for sustainable finance has grown, but its overall share remains small. There are increases in green bond sales and attention towards sustainability-linked bonds, but concerns about greenwashing and insufficient verification persist.

Question 37

What role does the Basel Committee play in addressing climate change?

Answer 37

The Basel Committee acknowledges the physical and transition risks posed by climate change to banks and the broader financial system, being a global standard setter for prudential regulation of banks.

Question 38

What are the components of the Basel Committee’s comprehensive programme?

Answer 38

The programme includes stocktaking of members’ initiatives, analytical reports on risk transmission channels, and assessment of global measures needed for supervision, regulation, and disclosure of banks’ climate-related financial risks.

Question 39

What is the main objective of introducing prudential transition plans for banks in the European regulatory framework?

Answer 39

The main objective is to strengthen the commitment of banks to carbon neutrality and ensure the effective implementation of their climate commitments. These plans are expected to be integrated into the prudential regulation framework, particularly in Pillar 2, which concerns bank supervision and risk management.

Question 40

How would prudential transition plans help banks overcome internal challenges?

Answer 40

The plans would assist banks in overcoming structural blockages and internal objective conflicts by encouraging them to integrate climate issues into their organization and financial decision-making processes. They would also encourage better recognition of risks associated with green assets and better anticipation of profit declines related to fossil fuel activities.

Question 41

What impact would these plans have on key sectors of the real economy?

Answer 41

In the fossil fuel sector, the plans would accelerate an orderly exit, strengthening exclusion policies for new projects. In energy renovation, it’s crucial to choose relevant indicators that don’t exclude low-income households from renovation credits. In the automotive sector, the plans would support a comprehensive financing strategy, including not only electric vehicles but also the entire production chain and various automotive industry professions.

Question 42

What are the current contexts and prospects for these prudential transition plans?

Answer 42

Current negotiations at the European Parliament will determine the applicable standards for prudential transition plans. The implementation of these regulations by supervisors is a crucial step in changing banking practices. The Banque de France emphasizes the importance of aligning these initiatives internationally, especially through the Basel Committee. The Financial Stability Board has recently shown openness to integrating these plans into prudential regulation.

Question 43

What is the main objective of the EU’s proposal for mandatory climate transition plans for banks?

Answer 43

The objective is to improve the management of environmental, social, and governance (ESG) risks and guide banks towards a low-carbon economy, encouraging them to limit climate-harming activities and adjust their business models.

Question 44

What are the three key parameters that need clarification in the proposal?

Answer 44

The three key parameters are the nature of the obligation (whether it’s limited to transparency requirements or includes supervisory control), the scope of the transition plans (whether they cover a limited field or encompass all bank activities), and the focus of the plans (whether to concentrate only on financial risks related to climate or also on their impact on greenhouse gas emissions).

Question 45

How important is the interpretation and implementation of the guidelines?

Answer 45

Technical details and the interpretation of guidelines from the European Banking Authority will be crucial for the effectiveness of the transition plans.

Question 46

What is the stance of EU member states on including the financial sector in the scope of sustainability due diligence requirements?

Answer 46

EU member states have found a common position making the inclusion of the financial sector in the scope of sustainability due diligence requirements optional.

Question 47

What is the main objective of the European Commission’s transition finance framework?

Answer 47

The framework is designed to support sectors and activities currently not environmentally sustainable but in transition or needing to transition, aiming to align with EU environmental objectives.

Question 48

What role does third-party verification play in the framework?

Answer 48

Banks should rely on third-party verification to ensure that a company’s transition plan is credible and aligns with relevant sectoral transition pathways.

Question 49

What is the main objective of the “Fit for 55” package of the European Union?

Answer 49

The “Fit for 55” package aims to align EU legislation with the climate goal of reducing net greenhouse gas emissions by at least 55% by 2030 and facilitate the EU’s transition to climate neutrality by 2050.

Question 50

How has the EU’s Emission Trading System (ETS) been revised under the “Fit for 55” package?

Answer 50

The EU ETS has been reformed to increase its level of ambition, including extending the system to maritime emissions, accelerating the reduction of emission allowances, phasing out free allowances for certain sectors, integrating the global carbon offset and reduction scheme for international aviation (CORSIA) into the EU ETS, and increasing funding for the Modernisation Fund and the Innovation Fund.

Question 51

What key agreements and decisions have been made regarding the EU ETS?

Answer 51

Important agreements include the adoption of a general orientation on the revision of the EU ETS by the Environment Council in June 2022, a provisional agreement in December 2022 to increase emission reduction ambition to 62% by 2030 in sectors covered by the EU ETS, and a political provisional agreement on the EU ETS rules for the aviation sector in December 2022. The revised EU ETS was formally adopted in April 2023.

Question 52

What are the key elements of the “Fit for 55” package related to emission reductions and sustainability in various sectors?

Answer 52

The package includes revised emission reduction targets for EU member states, new rules for land use, land-use change, and forestry (LULUCF), CO2 emission standards for cars and vans, measures to reduce methane emissions in the energy sector, proposals for sustainable aviation fuels (RefuelEU Aviation), and initiatives for renewable and low-carbon fuels in maritime transport (FuelEU Maritime).

Question 53

What is the goal of the renewable energy target revision in the “Fit for 55” package? What are the aims of the revised energy efficiency target?

Answer 53

• The goal is to increase the share of energy produced from renewable sources to at least 40% in the EU by 2030, with intensified integration of renewables in sectors like transport, building, and industry.
• The aim is to reduce final energy consumption by 11.7% in 2030 compared to 2020 projections, with measures including strengthening annual energy-saving obligations and new rules to reduce energy consumption in public buildings.