What major climate commitments or events stand out for you from 2021?
In addition to COP 26, which was at the heart of the debates in 2021, I would highlight the launch of two very significant initiatives: The Net Zero BankingAlliance, or NZBA, and the Taskforce on Nature-related Financial Disclosures, or TNFD. Launched in April, under the umbrella of the ‘Glasgow Financial Alliance for Net Zero’ (GFANZ), the first aims to mobilise the entire financial sector around a clear goal: A carbon neutral economy by 2050. Adapted for investors and asset managers, GFANZ also has two Group subsidiaries among its members: BNP Paribas Cardif and BNP Paribas Asset Management.
For the latter, the TNFD was launched in October, after a year of preparatory work in which BNP Paribas played a leading role. The goal of this task force is to create a common reporting framework to protect our natural capital and limit risks from biodiversity loss. BNP Paribas is represented by Sébastien Soleille, Head of Energy Transition and Environment. For the Group, the NZBA and TFND are two major initiatives that fully resonate with our raison d'être and our willingness to act very concretely in favor of a more sustainable economy. In both cases, BNP Paribas is one of the founding members of these initiatives.
AT THE HEART OF 2021 : THE "NET-ZERO BANKING ALLIANCE" AND THE "TASKFORCE ON NATURE-RELATED FINANCIAL DISCLOSURES"
What are the next key steps regarding these two initiatives?
For the NZBA - which now has around a hundred members, twice as many as at its initial launch - the next step for these various financial institutions will be the publication of intermediate targets for reducing financed CO2 emissions, with a priority focus on the most polluting sectors.
Biodiversity protection will really be a central concern this year, especially at the COP dedicated to this key issue and expected to take place in China. Expectations are very high for this event, which has already been postponed once, and it may be again due to the ongoing health crisis.
For the TNFD, one of the major challenges is to produce, by the end of the year, the reporting framework I had just mentioned! Specifically, TNFD members are working on a beta version of this framework, which will be published in the coming months. The aim is that it can be widely tested by companies so that appropriate adjustments can then be made.
"TNFD members are working on a beta version of the framework, which will be published in the coming months."
We increasingly hear the term ‘just transition’. What exactly does that mean?
The just transition is an absolutely crucial issue, which goes beyond the financial sector! Climate change and the policies implemented to address it have multiple social implications for health, employment, productivity, wealth distribution, and more. However, it is clear to everyone involved that the energy transition will only be successul if it is carried out fairly and inclusively. To give just one very concrete example, there can be no green growth without retraining the many people currently working in sectors that are bound to disappear. We must also remain conscious of fostering a necessary North/South solidarity, which will be a decisive factor in us all moving forward together. That issue will be one of the major issues addressed at the COP27 scheduled to take place in Egypt this November.
MULTIPLE SOCIAL IMPLICATIONS FOR HEALTH, EMPLOYMENT, PRODUCTIVITY, WEALTH DISTRIBUTION, AND MORE
What climate challenges are financial institutions facing this year?
I think they will be mainly regulatory challenges, especially at European level! To succeed in its transition to a greener Europe that is less dependent on fossil fuels and delivering sustainable growth, the EU must mobilise 1 trillion euros over the next decade.
This is the purpose of the “European Green Deal.” Once brought to an end, it should concern more than 50 different regulations. 2021 was of course marked by the entry into force of the first obligations of the SFDR (‘sustainable finance disclosure regulation’) concerning transparency on sustainability for investors. In addition, as of this summer, the ESG integration planned by MiFID2 and IDD should apply, which will have a very concrete impact: Financial advisers and portfolio managers will now have to inquire about the impact their clients are seeking through their investments, in order to offer them suitable financial products.
Another important regulation to follow in 2022 is the standardisation of extra financial reporting. Both the G20 and the European Commission have mandated organisations to set new standards of ‘sustainability’ or corporate responsibility. In the case of Europe, EFRAG has been mandated by the European Commission to work on this mechanism through the Corporate Sustainability Reporting Directive (CSRD). All of these rules will lead to greater robustness and comparability of data reported by companies.
Photo ©Damien Grenon