ADEME (the French Ecological Transition Agency) and the 2° Investing Initiative devised the initial blueprint for the project, in close collaboration with the supporting partners.
Running from 2019-2024, Finance ClimAct has a total budget of €18 million, including €10 million co-financed by the European Commission. ADEME is leading the project in collaboration with the Ministry of the Environment’s Commissioner General for Sustainable Development (CGDD), the French financial market authority (AMF), the French prudential authority (ACPR), 2DII, as well as other private sector partners (GreenFlex, Finance for Tomorrow, and the Institute for Climate Economics (I4CE)).
2° Investing Initiative’s role in the project
2DII is focused on leveraging its expertise in climate scenario analysis, sustainable retail investing, and long-term risk supervision. As the European Commission High-Level Expert Group (HLEG) member that helped design recommendations on climate disclosures and financial advice, 2DII will also help turn France into a pilot market on these topics.
More specifically, 2DII’s role in the project spans three main axes:
- Capacity-building with national stakeholders and supervisors on topics including climate scenario analysis, stress testing, and climate-related disclosures. This program notably builds on the EC-funded research and stress tests that 2DII co-developed with the Bank of England, European Insurance & Occupational Pensions Authority (EIOPA), and other regulators.
- 2DII and ADEME are supporting French financial institutions in adopting climate targets and decarbonization plans as laid out under Article 173. This program will build on the deployment of 2DII’s Paris Agreement Capital Transition Assessment (PACTA) climate scenario analysis methodology, which has already been used by an array of leading French banks and investors, in addition to more than 1,500 financial institutions worldwide.
- 2DII and partners will help integrate sustainability considerations into financial advice and product information. This program will involve research on consumers’ non-financial investment objectives, the design of a ‘template’ suitability questionnaire, the launch of a free online financial advisory tool, and the development of a framework for assessing the accuracy of product manufacturers’ environmental impact claims.
The latter will notably build on 2DII’s pioneering work in studying retail investors’ sustainability preferences. As part of the project, 2DII and the partners will carry out 500+ mystery shopping visits to assess how financial advisors take consumers’ non-financial investment objectives into account. Indeed, according to initial studies that 2DII carried out in 2019, the majority of French retail investors want to integrate social and environmental objectives into their investments; however, there is a major gap between their preferences and the ability of banks to offer them compatible products.
Find out more about Finance ClimAct: https://finance-climact.eu/
Note on the funders: Finance ClimAct has received funding from the European Union’s Life IP programme under grant agreement No LIFE18/IPC/FR/000010 A.F.F.A.P. This webpage reflects the authors’ view only, and the funder and other consortium members are not responsible for any use that may be made of the information it contains.