The French Agency for Ecological Transition (ADEME) 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 General Commissariat for Sustainable Development (CGDD), the French financial market authority (AMF), the French prudential authority (ACPR), 2DII, GreenFlex, Finance for Tomorrow, and the Institute for Climate Economics.
The mission of Finance ClimAct is to develop tools, methodologies, and insights to help the financial system put climate considerations at the heart of its operations. It aims to achieve this by (1) supporting investments in energy-efficient and low-carbon industroies; (2) taking into account the double materiality of climate change in financial management and supervision; and (3) integrating environmental goals into retail investors’ decisionmaking processes.
2° Investing Initiative’s role in the project
2DII is working on a wide range of topics as part of the Finance ClimAct consortium, including climate scenario analysis, sustainable retail investing, and long-term risk supervision. As the European Commission High-Level Expert Group 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 work notably builds on the European Commission-funded research and stress tests that 2DII co-developed with the Bank of England, European Insurance & Occupational Pensions Authority (EIOPA), and other regulators.
- Supporting French financial institutions in adopting climate targets and decarbonization plans as laid out under Article 173. This workstream, in partnership with ADEME, 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.
- Working to integrate sustainability considerations into financial advice and fund information. This 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 financial institutions’ environmental impact claims.
This last initiative will notably build on 2DII’s pioneering work in studying retail investors’ sustainability preferences. As part of Finance ClimAct, 2DII and its partners will carry out 500+ mystery shopping visits to assess how financial advisors take consumers’ non-financial investment objectives into account. According to initial research carried out by 2DII, 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 financial institutions’ ability to offer them compatible products.
Find out more about Finance ClimAct here.
Funder information: 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 content reflects 2DII’s view only, and the funder and other consortium members are not responsible for any use that may be made of the information it contains.