In the financial sector, the Paris Agreement marked a turning point. It corresponds to the beginning of an awareness: “The banks have started to put themselves in battle order to prepare for the transition: they have all created directorates responsible for sustainable finance. And they started to sort through their wallets between what is brown and green ”, testifies Gwenhaël Le Boulay, associate director of the Boston consulting group (BCG) in charge of the financial sector.
However, this is not what non-governmental organizations see. The Friends of the Earth denounce instead “Five years lost for climate finance”. With 17 other NGOs, they published, Thursday, December 10, a report which describes the involvement of large banks in twelve mega projects of fossil energy extraction.
“If these projects were to see the light of day, they alone would consume 75% of the carbon budget available to stay under the limit of +1.5 ° C “, calculate the NGOs. And among the 20 largest banks that finance these projects, we find BNP (7e), the General Society (13e) and Crédit Agricole (16e).
Banks are gradually pulling out coal
The facts are there. But they don’t tell the whole story. Because at the same time as they remain involved in these projects, these same banks are gradually committing to phasing out coal. Crédit Agricole intends, for example, to do so by 2030 for developed countries, and 2040 for China.
→ MAINTENANCE. Is finance the enemy of the climate?
In addition, they are turning more and more to the financing of projects that serve the energy transition: “At the end of 2019, the commitment of French banks to financing the renewable sector reached more than 41 billion euros, an increase of 57% in the space of three years”, notes the Sustainable Finance Observatory, created by the major French banks and asset managers.
This shows a gradual greening of finance, even if it is not enough to put the planet on a trajectory compatible with the Paris agreement. “Today, green finance represents 600 billion dollars a year. It is important. But it would take 3,000 to 5,000 billion a year to finance the greening of the economy, according to our estimate. That’s five to eight times more… ”, indicates Gwenhaël Le Boulay.
The lever to accelerate: the carbon tax
He is the co-author of a report from the Boston consulting group which details these calculations, and shows that green finance now represents 3 to 5% of all investments made each year in the world. This share should be increased to 25% to ensure the financing of the transition.
In terms of green finance, European banks play a leading role. “European banks are the most advanced, confirms Gwenhaël Le Boulay. The American banks are a little less so but get started very quickly. And in Asia, the financial sector is still acting timid, but it is coming. This is where the greatest needs are ”.
For banks, the transition takes time. Too many, some would say. And this is the case for the whole economy. To accelerate, the main lever would be to give a higher universal price per tonne of CO2. It should be multiplied by five, or by ten, to make profitable green investment projects which are not profitable today. It remains to be seen whether we are ready for it.
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