PROJECT DESCRIPTION
BACKGROUND
An orderly transition to a low carbon and climate resilient economy requires a rapid shift in the capital allocation in the EU. The integration of climate mitigation and adaptation considerations in the financial system is critical to achieve this objective, as reflected in the EC Sustainable Finance Action Plan adopted in March 2018, and the related regulatory package. France has been a pioneer in this field, notably by initiating a collaboration between the Environmental Ministry and the Treasury in 2012, by introducing the Energy Transition Law in 2015, and the Energy Transition Label for funds. The Energy Transition law, in its Article 173, requires investors to disclose the alignment of their portfolios with climate goals and to set climate targets, and specific companies to strengthen their climate information reporting about significant indirect emissions and climate risks management. However, sustainable finance is still an emerging topic, where agreed metrics, standards and labels are nearly absent, and with significant knowledge gaps (experts in finance have limited knowledge on environmental issues and experts in environment often have limited abilities in finance). In this context, the mobilisation of investors on climate remains difficult. This situation creates a risk for the dynamic of sustainable finance in Europe that can be addressed by the French authorities and key stakeholders, as leaders in this field. This need will become even more intense post-Brexit, with increased competition between London, Paris, Frankfurt and other EU financial centers to become the greenest and host the emerging activities related to sustainable finance.
OBJECTIVES
The main objectives of the A.F.F.A.P. project are threefold: 1) Full compliance: Upgrading the capacity of supervisors and regulated entities to fully implement existing and forthcoming mandatory requirements related to sustainable finance (e.g. climate related- risk analysis, disclosure, product information and integration into financial advice). Sustainable finance quickly needs to become a normal regulatory topic, an area where the rule of law applies, with no excuse related to the lack of capacity, uncertainty on metrics, etc. 2) Level-up the playing field: Increasing the standards regarding the relevance of climate risk metrics and assessment frameworks, the comparability of information disclosed, the evidence provided to back green marketing claims, in order to reach a level that makes those practices solid enough to actually inform investment decisions; and 3) Go mainstream: Combining regulatory reforms, innovative tools and mass communication to get green products out of their niche and into the mass market.
In addition to the IP budget itself the project will facilitate the coordinated use of 19 516 000 EUR of complementary funding from French Ministry of the Environment and ADEME, AFD, NKI, IKI Germany, Swiss government (FOEN), Finance for Tomorrow, Climate Works Foundation, Rockfeller Brother Fund, BPI France, Hewlett Foundattion and CDP funds.
RESULTS
Expected results: In 5 years time, the expected results are the following: