2024 Sustainability Report – Report on the Banque de France and ACPR’s Sustainable Action

2024 was a pivotal year for climate and nature‑related action. Significant headway was achieved, including a major agreement at the COP16 gathering that paves the way for full implementation of the Global Biodiversity Framework agreed on in Montreal in 2022. Yet as we celebrate the tenth anniversary of the Paris Agreement on climate change, the United States’ withdrawal from the accord – for a second time – and the uncertain international environment pose new challenges for the climate transition. 

Against this backdrop, the Banque de France and the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority) reiterate their resolve to incorporate sustainability issues, including those relating to climate change and the degradation of nature, into their strategy, missions and operations.
 
This second annual Sustainability Report summarises the extensive work done in 2024 across all of our activities. Since the Banque de France published its first annual report on responsible investment in 2019, followed by the publication of the Banque de France and ACPR’s Climate Action Report in 2022, we have based our approach around transparency vis‑a‑vis the public and our peer institutions. We want to report on the commitments we have made, while also sharing our experience with a view to helping the public and our peers to measure and manage climate and nature‑related risks more effectively.

We have reorganised this year’s report to structure it around our institution’s three core missions – monetary strategy, financial stability, and the provision of services to the economy and society – while following the recommendations of the Financial Stability Board’s Task Force on Climate‑related Financial Disclosures (TCFD). We have also expanded the information about the climate and nature impact of our operational activities. These modifications are intended to better explain the ways in which we are addressing sustainability issues in each of our activities and to reflect how the Banque de France and the ACPR are stepping up their work in this area. As in 2024, the report also covers the Banque de France’s strategy and actions in terms of responsible investment. The responsible investment section includes, for the third year running, metrics calculated as part of the climate reporting exercise undertaken by all Eurosystem central banks.

In 2024, we reaffirmed our determination to integrate nature and the climate throughout all our activities. Our efforts were recognised for the third time in a row as the Banque de France again topped the G20 Green Central Banking Scorecard drawn up by a group of international non‑governmental organisations (NGOs). We expanded our strategic plan to formally include nature‑related economic and financial risks, reflecting the fact that being involved in assessing these risks forms part of our mandate as central bank and supervisor. 
 
We enhanced our monetary strategy toolbox in 2024. Acting under the European Central Bank’s (ECB) climate action programme and consistent with its status as a Eurosystem In‑house Credit Assessment System (ICAS), the Banque de France will begin incorporating climate‑change‑related risks in its company rating system in 2025. These ratings are used, among other things, when assessing the quality of collateral accepted by the Eurosystem for monetary policy operations.

In financial stability and supervision, in 2024 we published the findings of the second climate stress test conducted by the ACPR in the insurance sector. We also took part in efforts to standardise expectations for the identification, measurement, management and monitoring of environmental, social and governance (ESG) risks by supervised institutions, guided at all times by the need for simplicity, proportionality and effectiveness. 
 
To provide more effective support for the transformation of our economy and society, the Banque de France is working to deploy a corporate “climate indicator”, which measures firms’ exposures to climate risks and enables them to position themselves with respect to their industry’s target decarbonisation trajectory. Rolled out across three emitting sectors in 2024 (power generation, real estate and transportation), it is being extended to the construction and cement sectors in 2025. 
 
In addition to carrying out work under our mandate as central bank and supervisor, we pursued efforts in our operational activities. In 2024, we cut our greenhouse gas emissions by 32% relative to 2019, comfortably beating the 25% reduction that we had targeted. Leveraging the expertise that we have built up, we are also publishing, for the first time, information about the impact of these activities on nature. Keen to maintain its leading‑edge position in responsible investment, in 2024 the Banque de France implemented “Paris aligned” fossil‑fuel exclusion thresholds for oil and gas, and totally excluded coal and unconventional hydrocarbons from its portfolios. Having already aligned our equity portfolios with a 1.5°C warming trajectory by the end of 2023, we pledged to extend this temperature target to the corporate bond component by end‑2026. The scope of the metrics reported as part of the Eurosystem‑wide exercise is changing this year to include indirect, or “Scope 3”, emissions, as well as the proportion of social and sustainability bonds. The Banque de France also launched and invested in a biodiversity fund in partnership with BDF Gestion and Groupe Caisse des Dépôts. 

Finally, in the new geopolitical environment, our multilateral and international engagement through the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) is more vital than ever. We co‑founded the NGFS in 2017 and host the network’s global secretariat in Paris. Its work benefits from the vigorous efforts and involvement of some 145 central banks and supervisory authorities from around the world. In today’s international setting, this coalition of the willing is more critical than ever before, as is the role of central banks in understanding and managing climate change and nature‑related risks.

We at the Banque de France and the ACPR are building a central bank that stands up for sustainability, as we work to serve of the people of France. With this report, I reiterate our unwavering support for achieving the goals of the Paris and Kunming‑Montreal Agreements and for promoting sustainable finance.

François Villeroy de Galhau

Financial stability

Services provided to the economy and society

Sustainable performance

Improving our understanding of climate and nature issues

Responsible investment