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French banks underline their climate protection efforts

Published on October 26, 2022 by Pierre Belhache - 6 mins reading time
Banks French Banking Federation Environment

In the run-up to Climate Finance Day, the Paris financial center's climate event scheduled for October 27, the French Banking Federation has issued a press release highlighting banks' efforts in favor of the ecological transition. The NGO Reclaim Finance, however, sees this as a "misleading interpretation" of banks' financial support for renewable energies and fossil fuels.

 

 

Banks say they are stepping up financing for the ecological transition

According to a press release from the French Banking Federation (FBF), French banks are now investing more in renewable energies and green activities than in fossil fuels.

" When banks finance 1 euro in fossil fuels, 4 euros are invested in renewable energies and green, sustainable activities," says the press release.

According to FBF estimates, green and sustainable credit financing will total over 100 billion euros by the end of 2021, compared with 25 billion euros in loans to fossil fuels. In detail, these loans are estimated at 23 billion euros for hydrocarbons, and 2 billion for coal, or 0.27% of the total balance sheet of French banks.

" French banks are also leaders in the issuance of green and sustainable bonds," says the FBF, which puts forward the figure of 225 billion euros in arrangements last year.

The FBF also highlights the efforts made within the framework of the Net Zero Banking Alliance (NZBA), with the implementation of a " common methodological approach " by the major French banking groups.

This method pursues a dual ambition: on the one hand, "to measure the carbon footprint of a banking portfolio ", and on the other, "to set sectoral targets for its alignment with a net carbon neutrality trajectory " aligned with the Paris Agreement. "It would be wrong to believe that French banks are dependent on hydrocarbon financing," asserts Laurent Mignon, Chairman of the Climate Commission and the FBF, in the press release. According to him, French banks are " accelerating the financing of the transition " and are even " pioneers in this area ".

 

In the run-up to Climate Finance Day and COP 27, French banks seem determined to get ahead of the critics.

At the previous Climate Finance Day, in addition to protests from NGOs denouncing the increase in financing for fossil fuels, the banks were criticized by French Finance Minister Bruno Le Maire, who felt that efforts in favor of the climate were not sufficient.

NGO Reclaim Finance denounces the scale of support for fossil fuels

However, the arguments put forward by the FBF do not seem to convince the NGO Reclaim Finance, which in turn has issued a press release aimed at deciphering " the truth from the falsehood ". First of all, the NGO contests the calculation method used to quantify the amount of fossil fuel loans, pointing out that it was based "on the Global Oil and Gas Exit list (GOGEL), which only covers part of the oil and gas sector ". Nor, according to Reclaim Finance, does the FBF provide any information on the calculation method used to quantify coal financing.

Reclaim Finance also deplores the fact that the FBF has only taken loans into account, leaving out equity and bond issues. " Moreover, what counts is not so much outstandings as flows, since these are what will shape the world of tomorrow ", the press release states.

According to the NGO, $130 billion in financing has been granted by French banks " to the 100 companies developing the most new coal and oil & gas production and transport projects " since the Paris Agreement was signed.

Reclaim Finance also attacks the claim that for every €1 invested in fossil fuels, €4 is invested in renewables. The FBF bases this argument on the €225 billion arrangement for green bonds in 2021, compared with €51 billion in off-balance-sheet financing for hydrocarbons.

However, according to the NGO, " the comparison is once again manipulative, since green bonds are not dedicated to the energy sector ".

And in its press release, the FBF does not detail the proportion of green bonds reserved for renewable energies.

 

Reclaim Finance is once again calling on French banks to stop financing " oil and gas expansion ", and hopes that Bruno Le Maire will take advantage of Climate Finance Day to announce " regulatory measures " aimed at " forcing " financial players to comply with the Paris Agreement.