Collective data of Paris financial centre

To limit global warming, it is recommended to achieve carbon neutrality by 2050. This means achieving a balance between greenhouse gas emissions and their absorption by carbon sinks. The goal of carbon neutrality only really makes sense on a global scale, so we talk about ‘contributing’ to carbon neutrality at the level of governments, financial institutions and businesses in general (March 2021 note).

In order to contribute to carbon neutrality, the role of financial institutions can be broken down into three main objectives:

• Reduce their financing of activities with high greenhouse gas emissions;
• Support companies in their transition through engagement and dialogue;
• Increase investment in activities considered to be low-carbon, and in those that enable the decarbonization of other activities.

The financial sector has developed several strategies:

• Identify the main sectors that emit greenhouse gases;
• Implement a strategy of shareholder engagement through dialogue and voting policies with the issuers concerned, in order to encourage the transition from fossil fuels to low-carbon energies;
• Implement a divestment and exclusion strategy, which consists of divesting from companies that emit or consume high-carbon energies in cases where shareholder engagement is not applicable or does not lead to change.

ESG stands for Environmental, Social and Governance criteria.

• Environmental: reduction of greenhouse gas emissions, prevention of environmental risks, biodiversity, waste management, etc;
• Social: accident prevention, staff training, respect for employee rights, supply chain and social dialogue;
• Governance: independence of the board of directors, management structure and presence of an audit committee.