The bank for a changing world

BNP Paribas and l'Opinion : « The rules of the finance game are changing », Pascal Canfin

  • 04.12.2018

In anticipation of the COP24, which is taking place in Poland from 3 to 14 December, the French daily newspaper l’Opinion, published an exclusive dossier: “Climate and biodiversity: why is the financial sector scaling up?” Pascal Canfin, Chief Executive Officer of WWF France is interviewed by Raphaël Proust for l'Opinion.

Pascal Canfin has been the CEO of WWF France since 2016. He was formerly a Member of the European Parliament and France’s Minister for Development during the presidency of François Hollande.

Why does finance have a special role to play in the decarbonisation of the economy?

The economy cannot operate without the life-blood of finance. If finance continues to invest in a world that is heading for a global warming of three, four, or five degrees, this is the world we are ultimately going to have. This is why, at the WWF, we are fighting on two major fronts. First, we are fighting for a better understanding of the risks associated with growing climatic hazards, be they tangible risks, such as the risk to infrastructure, or the risks associated with transitions to new technologies or risks associated with changes in public policy. These are growing systemic risks for the financial sector. Second, for the redirection of financing. Once the risks are properly understood, it is necessary to encourage and sometimes even oblige actors in the financial sector to divest their holdings in certain sectors, such as coal, for example, in order to move towards green technologies.

One of the challenges is dividing the effort between the public and private sector. Where are we in this regard?

The lion’s share of the redirection of financing has to be the responsibility of the private sector. Publicly owned banks constitute a minority in the sector, so insurance companies, asset managers, and private bankers have an absolutely crucial role to play. If they do not change their investment structures, we are going to be living in a world that is three, four, or five degrees warmer. So today we are midstream. 

The increase in awareness is genuine in the case of many private actors: commitments to divest from coal, an incremental increase in investment in renewable energies and even commitments to align all investments with a strategy that is compatible with the Paris Agreement. This was inconceivable three or four years ago. Discussions are currently taking place in the boardrooms of leading banks and insurance companies. 

insurance companies, asset managers, and private bankers have an absolutely crucial role to play

This is good news. However the financial sector has not yet sufficiently acted on its words for it to be possible to say that, three years after the COP21, a vast majority of the relevant actors are on the right path.

“I would like to point out that 2018 was very useful. Until this year, central bankers remained relatively in the background. They have created a network of central banks, led by the Banque de France, and are now ready to make commitments. ”

Psacal Canfin 

Directeur général de WWF France 

Given that the increase in awareness is genuine, what is the next step?

The work being done is methodological. What does it mean for a bank or insurance company to be aligned with the Paris Agreement? We are currently working on this at the WWF and with all the leading French banks for example, but also within a global context, in order to produce next year a methodological framework. In the meantime, we welcome the initiatives taken by certain players, in particular in the insurance sector, that enable us to determine whether or not all the asset management activities of this or that insurer are aligned with the two degree level. This thermometer is interesting as it allows us to determine the ground we still have to cover. We are encouraging this work, because it at least enables us to assess non-alignment, and then to progressively take action.

Is the creation of a Green Climate Fund of 100 billion dollars in annual climate finance still possible by 2020?

This money corresponds to public commitments given in the context of the Copenhagen Agreement of 2009. This has nothing to do with the massive volumes of financing required to transform the financing of the global economy. We are talking about trillions of dollars! States clearly have to keep their promises and, in line with current calculations, approximately $80 billion has already been pledged. There is therefore a possibility, which I believe to be credible, that the target will be reached by 2020. Nonetheless, this is not the core issue. 

The real issue is how we change the rules of the finance game in order to go much further.

The real issue is how we change the rules of the finance game in order to go much further. This is the job of central bankers and the European Commission, etc. I would like to point out that 2018 was veryuseful from this perspective. Until this year, central bankers remained relatively in the background. They have created a network of central banks, led by the Banque de France, and are now ready to make commitments. 

In particular a commitment to compel bankers under their supervision in the context of banking regulations to take the risk of climate change into account. A discussion is going on in Europe, and it is evident that the rules ofthe game are changing.

Interview by Raphaël Proust for l'Opinion 

Photos credits: header ©Danila Shtantsov //  ©joeycheung

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