For the last five years, the Banque de France has implemented a responsible investment policy. This fifth report details our commitments and achievements and presents an opportunity to consider how far we have come since the policy was launched back in 2018 and to measure the progress made in our efforts to integrate questions of sustainability into all of our activities.

The Banque de France initially built and expanded its responsible investment strategy around the critical goal of fighting climate change. After aligning the equity components of our own funds and pension liabilities portfolios with a global warming trajectory of well below 2°C, we have now set ourselves the goal of aligning the portfolios with a trajectory of 1.5°C between 2023 and  2025. The success of the Ambition Net Zéro symposium held at the Banque de France on 30 January 2023 speaks to the role that we can play in raising awareness and encouraging financial sector participants to meet carbon neutrality goals. Also, in late 2022, in keeping with the recommendations of the Task Force on Climate‑related Financial Disclosures (TCFD), the Banque de France and the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority) published their first climate action report, which provided comprehensive details on how climate challenges are now being integrated into all of our activities. In recognition of our efforts to fight climate change, in November 2022 the Banque de France was awarded the top spot in The Green Central Banking Scorecard drawn up by a group of 21 international non‑governmental organisations.

Climate challenges are also a key concern for the Eurosystem, as reflected by the initiatives being taken forward under the climate agenda adopted by the European Central Bank (ECB) in 2021 under its new monetary policy strategy. For example, in 2022, the ECB decided to include climate impact criteria in its corporate sector purchase programmes, collateral system, reporting requirements and risk management. A major new step forward is also being taken this year as the Eurosystem stages its first‑ever coordinated reporting exercise. The exercise will cover euro‑denominated non‑monetary policy portfolios and corporate sector purchase programmes, with the disclosure of climate impact indicators covering the constituent assets of these portfolios. Accordingly, this report provides the same indicators as those that will be produced by all euro area central banks as part of this exercise, which covers an extended scope including all of our euro‑denominated non‑monetary policy portfolios. The idea is for this exercise to be repeated and expanded each year, helping to improve our understanding of the climate impact of central banking activities.

The Banque de France also wants to contribute to efforts undertaken outside the community of central banks and regulators. In November 2022, we became a signatory to the Principles for Responsible Investment (PRI), a United Nations‑backed initiative involving thousands of institutional investors and asset managers around the world and aimed at promoting sustainable investment practices. By signing up, we committed ourselves to abiding by recognised standards for the integration of environmental, social and governance (ESG) criteria in our responsible investment strategy. In this way, we are signalling our commitment to join in the global effort and to get central banks playing their part.

Based on the experience that we have gained in recent years in recognising climate issues more effectively, we are convinced that our commitments need to extend to a number of other major challenges, and particularly that of biodiversity loss. The Fifteenth Meeting of the Conference of the Parties to the United Nations Convention on Biological Diversity (COP15), which was held in Montreal in December 2022, paved the way to reach an initial agreement on a global framework to preserve biodiversity. Keenly aware of the critical challenges posed by a “silent spring”, the Banque de France is supporting work by the Task Force on Nature‑related Financial Disclosures, which seeks to establish a globally harmonised financial reporting framework for biodiversity impacts. It is also taking part in the working group set up by the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) on recognising the financial risks linked to environmental damage and biodiversity loss, in the conduct of monetary policy and financial stability mandates. Furthermore, and as part of our responsible investor approach, this year’s report provides, for the very first time, a detailed estimate of the biodiversity impact of our portfolios, using methodologies developed by a specialist provider. An initial investment was made in 2022 to contribute to financing solutions to preserve marine biodiversity. We will build on these initiatives over the coming years with the aim of aligning ourselves with the recommendations of recognised standard‑setting bodies.

As part of steps to widen the scope of our action, in 2022 we strengthened the social component of our responsible investment policy. The sustainable bond purchase programme thus concentrated on social bonds whose purpose is to fund projects that generate social benefits. At the same time, several new investments were approved and will contribute to affordable housing development and financing for companies operating in the social and solidarity sector. Last but not least, the Banque de France continues to develop its shareholder engagement approach to keep step with society’s expectations, particularly on good governance and recognition of sustainability issues in the corporate sector. We pay special attention to the resolutions put forward by certain companies on their climate action plans.

This document reports, for the fifth consecutive year, on the execution by the Banque de France of its responsible investment strategy. The report is also being shared on the Climate Transparency Hub launched in 2021 by the French Environment and Energy Management Agency (ADEME – Agence de la transition écologique) and the General Commissariat for Sustainable Development (CGDD – Commissariat général au développement durable).