BdF pledges to align investment portfolio with 1.5°C trajectory

April 19, 2023|Written by |Banque de France

The Banque de France (BdF) has pledged to align its non-monetary policy investment portfolio of €22bn with a 1.5°C trajectory.

In a statement at the end of March, the central bank noted that it had reached the goal of aligning its equity holdings with a climate trajectory of “well below 2°C” at the end of 2021. It now has pledged to achieve alignment with a 1.5°C trajectory by the end of 2024.

Alexandre Gautier, the deputy secretary general for finance at the BdF said: “The work that we are doing, including adopting a new temperature alignment target for our portfolios in 2022 and stepping up our action on social and biodiversity issues, is designed to build a credible commitment and show the way forward to other central banks.”

In addition, the BdF has strengthened its fossil fuel exclusion policy. In 2021, it announced that it will exclude all companies with any coal-related activity from its own €22bn investment and pension portfolio by the end of 2025, and exclude all companies for which oil accounts for more than 10% of their turnover and gas more than 50% by 2024. In this new announcement, the BdF has decided to exclude any company working on new fossil fuel extraction projects by the same date.

The moves were applauded by climate campaigners. Paul Schreiber, regulation campaigner at Reclaim Finance, said that “many investors oppose sectoral exclusions with financing the transition and aligning their portfolios, but the Banque de France’s new investment policy shows a synthesis is possible.”

The BdF also released its Responsible Investment Report for 2022, in which it noted that its non-monetary policy investment portfolio has €1.95bn invested in green bonds and funds supporting the environmental and energy transition and €160mn invested in social and sustainable bonds. The report also says that the BdF voted on 18 “Say on Climate” resolutions in 2022. “Say on Climate” are shareholder resolutions recommending firms increase their climate-related efforts. The BdF voted against one resolution because “the climate action plan put forward by the company was insufficiently ambitious and credible.”

This page was last updated April 19, 2023

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