Within the scope of Retail Banking activities, above and beyond the coal policy applied to all Groupe BPCE companies (see Chapter 2, Strategy section 3-1), environmental criteria have been systematically integrated into sectoral policies since 2018. The Non-Financial Risks Committee (comité des risques extra-financier, or CoREFi), comprising the Climate Risk and Credit Analysis teams and the CSR departments, has been reviewing all sectoral policies since March 2020 with a view to incorporating these issues.
Within the framework of these reviews, each business sector is assessed on the basis of criteria related to physical climate risks, transition risks, and biodiversity. A sectoral classification is derived from this assessment and identifies specific areas for attention. The purpose of these sectoral policies is to provide input for discussions, notably when granting loans. The primary objective is to provide additional analytical elements with regard to changes in the regulatory and market environments, to be able to better advise our clients but, above all, to be aware of environmentally friendly behavior with a view to supporting and promoting exemplary activities.
Since 2020, a non-financial note about the customer is, in some cases, added to the analysis sheets in order to enrich the credit granting process. The reminder of climate-related and environmental issues is derived from the CoREFi sectoral policy analyses mentioned above.
These details will increasingly be used for the credit and counterparty committees of the entities and Groupe BPCE. Finally, thanks to the adoption of the Green Weighting Factor in the Corporate & Investment Banking division, the process whereby customers are granted financing is being complemented by an in-depth analysis of the environmental impacts of each transaction.
The Green Weighting Factor is an internal capital allocation mechanism linking the amount of internal capital allocated to each transaction (credit risk RWA analytics) to its positive or negative impact on the climate and environment.
It is based on a detailed approach for each sector. Each transaction is assigned a score based on an assessment of the climate impact of the financing solution that also takes account of its main non-climate-related environmental impacts.
All ‘green’ financing is assigned a reduction in its analytical risk-weighted assets of up to 50% for the greenest, while this metric is increased by up to 24% for financing that has a negative impact on the climate. By adjusting the expected return on each loan according to its environmental and climate impact, teams are encouraged to favor green financing solutions (for an equivalent level of credit risk).
For Retail Banking activities, account managers use a questionnaire designed to appraise how customers take account of environmental issues in their business models with a view to gathering information about how well their customers understand, take action about, and express their commitment to climate- and environment-related issues.
The initial details gathered will make it possible to rate the customer and their maturity in terms of mastering the climate-related and environmental challenges of their sector of activity. The pilot phase will continue in 2021, with a view to integrating it into customer rating systems in the years to come once the necessary historical perspective has been obtained.
The main goal is to integrate this data into the credit granting process and to use it for risk monitoring purposes. The operational implementation is currently being developed with the Commitments and Risk departments along with the Sales and Marketing departments. This questionnaire also serves as a tool for heightening awareness about climate and environmental issues among all Groupe BPCE stakeholders.
