Eric Campos : Non-financial information affecting significantly the climate change should be mandatory, public and verifiable
In the wake of the European elections in spring 2019, EU citizens have witnessed a flowering of statements marking an important step in the development of a much-needed common and transparent language for mainstreaming sustainability in the financial sector. Within a few days, the European Commission adopted new guidelines on companies’ climate-related information reporting consistent with the TCFD’s recommendations, and 3 new key reports has been published by the EU Technical Expert Group on sustainable finance (on Taxonomy, Green Bond Standard, Climate benchmarks).
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Much has been done over the last years at the national, European and international level to improve the quality of the disclosure of non-financial information (France’s article 173, the European NRFD, the TCFD’s work). However, much still remains to be done in order to combat two of the main threats posed to the goal of decarbonizing our economies effectively: the lack of consistency (confusion) and transparency (greenwashing) of climate-related information. If a meta-framework is needed to improve the robustness and comparability of companies’ non-financial performance, the financial actors themselves – as enablers of the real economy – should also play a significant role in order to meet their stakeholders’ rising expectations for transparency and accountability.
As a leading provider of funding to the French economy with an international reach, Credit Agricole is being committed in terms of its societal responsibility. Over the last decade, the Group has been a pioneer in climate finance: disclosing the carbon footprint of its portfolios since 2011, being a world’s leader in Green Bonds since 2012… Mindful of the climate emergency, Crédit Agricole adopted in June 2019 a new Climate Strategy whose ambition is to make green finance a growth driver for the Group, in line with the Paris Agreement. To live up to this complex ambition, the Group has defined the main conditions for the success of this strategy. The first one is a commitment to greater transparency, entrenched at the highest governance levels. Steered by an innovative governance based on scientific expertise and operational assessment, the climate strategy’s implementation will be audited and certified by an independent third party body, and its reporting requirement will be published in full accordance with the TCFD’s recommendations by 2020.
The second lies in the Group’s ability to assess its corporate clients’ level of alignment with a below 2°C scenario (to be defined by its Scientific Committee) and to reallocate its own portfolios in accordance with this scenario. This reallocation meaning a global increase in its energy transition and a gradual decrease in its fossil fuel financing (starting with a total phase-out from thermal coal in accordance with a Paris aligned timetable until 2050, and the publication of our coal exposure on an annual basis as of 2019).
To meet it, the Group decided to build-up two central tools: a “transition scoring” that will measure the clients’ capacity to adapt their business models to the pressures of energy transition; and an information system that will be able to capture financing and non-financing data through a relevant reading grid. Creating these instruments, and thus securing the Group’s own transparency, face two difficulties:
- An “internal” one concerning the criteria the Group will choose for building this relevant reading grid in an adequate information system. Here, the EU Taxonomy is likely to be of valuable help.
- An “external” one in order to ensure the quality of the non-financial data and its accessibility. Here, the Group will be dependent on the data its clients share.
Therefore, more than ever, Credit Agricole supports the efforts of the European Commission to make corporate disclosure of non-financial information affecting significantly the climate change mandatory, public and verifiable.
Eric Campos . Aurelia Smotriez
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