The Risk Department has set up a governance structure dedicated to the management of climate risks along with a function to handle these issues in all Groupe BPCE companies. In addition:
- Processes and analytical tools have been adopted to enhance the management of climate risks (physical and transition) to make them more fully integrated into the Group’s risk appetite system,
- Their materiality is appraised in terms of the major traditional risk categories, namely: credit risk, financial risk (market and liquidity) and operational risk,
- Climate risks are included in Groupe BPCE’s usual risk management framework (home loan, consumer credit or equipment loan policy). Their inclusion is updated whenever the Group’s sectoral policies are reviewed,
- These risks are also paid special attention in the investment and commitment processes of the asset management and insurance businesses.
1 - Identification of climate risks
Climate change is a systemic issue for Groupe BPCE. Physical and transition risks are subject to specific management procedures and considered to be non-negligible risk factors liable to directly or indirectly modify or increase exposure to existing risks.
1.1 - Transition risks
According to the terminology of the Task Force on Climate-Related Financial Disclosures (TCFD), the economic and financial consequences resulting from effects induced by the adoption of a low-carbon economic model are described as ‘transition risk.’ For instance, the impossibility of further exploiting oil reserves, the diversion of consumers away from high-carbon-content goods, a sharp rise in production costs following the introduction of carbon pricing or an energy tax, or technological breakthroughs favorable to the fight against climate change… are all examples of transition risks. Groupe BPCE has developed a methodology for classifying risks per industrial sector using climate and environmental criteria. Analyses based on scientific research carried out by French institutions (Haut conseil pour le climat, Ademe, etc.) along with European and international bodies (IPCC, IEA, etc.) have made it possible to define the exposure of the Groupe BPCE’s portfolio to sectors identified as ‘sensitive’ or ‘of interest’ (reference scenario of the ACPR climate pilot exercise).
Breakdown of the corporate portfolio by sector groups
█ Sensitive sectors (7 sectors or sector groups in the NACE classification)
█ Sectors of interest (13 sectors in the NACE classification)
█ Other sectors (residual sectors in the NACE classification)
█ Exposures not allocated to a given sector
TOTAL FRENCH BANKS
This diagram shows the breakdown of the corporate portfolio by sector groups.
Total French Banks
Sensitive sectors (7 sectors or sector groups in the NACE classification): 9.7%
Sectors of interest (13 sectors in the NACE classification): 31.5%
Other sectors (residual sectors in the NACE classification): 43.6%
Exposures not allocated to a given sector: 15.2%
GROUPE BPCE
Groupe BPCE
Sensitive sectors (7 sectors or sector groups in the NACE classification): 8 %
Sectors of interest (13 sectors in the NACE classification): 27.5%
Other sectors (residual sectors in the NACE classification): 46.5%
Exposures not allocated to a given sector: 18%