After Morocco/climate change: what risks for French banks and insurance companies?


The Prudential Control and Resolution Authority (ACPR) publishes two issues of Analyzes and Syntheses devoted to how French banks and insurance companies, in particular, take into account and respectively manage the risks associated with climate change.

The challenges linked to this climate change are considerable and the role of the financial sector in financing the transition to a low-carbon economy is decisive.

In this context, this joint publication has two main objectives, which are part of a global strategy and commitment by the Banque de France and the ACPR.

The first is to put in place favorable conditions for financing an orderly transition towards a balanced and sustainable economy in order to effectively combat global warming. This involves, in particular, greater transparency on the part of financial institutions regarding their exposures, which aims to enable informed and optimal allocation of financing and capital.

The second is to protect financial institutions from the risks linked to climate change by ensuring that they have clearly identified them and that they have put in place an appropriate structure and modalities for managing these risks from a financial stability perspective. .

In doing so, this publication first takes stock of the implementation of the provisions of the law on energy transition for green growth. A first inventory was published under the aegis of the General Directorate of the Treasury in March 2017, based on data collected from banking establishments in 2015.

In order to increase transparency towards customers and investors, listed companies and financial institutions must specify their exposure to climate risk and share their analysis of financial risks linked to climate change, as well as measures taken to reduce them.

As for companies concerned by the publication of a report on Social and Environmental Responsibility (CSR), the text provides for publications relating to waste management, the sustainable use of resources and significant sources of gas emissions. Greenhouse. Institutional investors and asset managers must communicate, in their annual report and to subscribers, on the climate risk of their portfolios, evaluate the green part of their investments and define their low-carbon strategy since 2016. More specifically for banks , the law adds to the explicit list of risks subject to prudential control, those associated with climate change which would be “highlighted in the context of regularly implemented stress tests”.

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