Climate change is now a reality that can no longer be ignored, and the banking sector is particularly concerned, not only by physical risks such as current climatic events, but also by transitory risks such as the uncertainty linked to the transition to a low-carbon economy.
In fact, banks are at the heart of the global economy, through their investments and financing of businesses, and are therefore one of the main players in this global issue.
To regulate this sector, the ECB has set up a “thematic review” which consists of monitoring and supervising activities related to the ecological involvement of banks. The aim is to measure the risks they face, and the strategies established to avoid them.
Banks should strive to reduce their negative impact on the environment by offering greener products and services to their customers by the end of 2024.
Can Finance indeed be Green?
Green finance is defined by banking programs and economic activities involving financial regulations in favor of the environmental cause.
In France, there are currently 3 green finance labels:
The Greenfin label (formerly Energy and Ecological Transition for Climate) allows investment in fund projects that take into consideration the ecological and energy transition mainly.
The participatory finance label, it highlights the transparency of information related to projects and the resulting environmental and social effects through the establishment of a space dedicated to questions from Internet users via platforms. This label encourages people to participate financially in the realization of projects in favor of the ecology.
The Socially Responsible Investment (SRI) label, which guarantees responsible investment in projects that take into account sustainable development, social and environmental criteria as well as financial criteria.
Although these responsible measures are put in place to facilitate the ecological transition and encourage sustainable development, it remains difficult for banks to close projects still linked to fossil fuels for example. However, the majority are now moving towards clearer and more thoughtful ecological approaches involving the financing of projects in the renewable energy sector, sustainable agriculture or the reduction of the carbon footprint.