THE GROUPE BPCE CLIMATE REPORT OCTOBER 2021

1 - Calculating the climate trajectory of the companies financed by the Group

1.1 - The PACTA for Banks methodology

The PACTA (Paris Agreement Capital Transition Assessment) methodology is presented here within the framework of BPCE’s participation in the work of the wider banking industry. This information is provided for the sake of transparency and illustrates the testing of different methodological scenarios performed in Groupe BPCE. The PACTA methodology is not, however, the reference framework used by Groupe BPCE to manage the alignment of its portfolios.

Groupe BPCE is one of the sixteen pilot banks participating in the assessment of its financial portfolios using the PACTA methodology.

This banking-sector methodology, developed by the 2 Degrees Investing Initiative (2DII) think tank in partnership with the Principles for Responsible Investment (PRI) sets out to measure the alignment of lending portfolios with the Paris Agreement in the most carbon-intensive sectors: fossil fuel extraction, power generation, transportation, steel & cement production, which are responsible, according to the International Energy Agency (IEA), for three quarters of the world’s direct energy-related CO2 emissions.

The PACTA methodology is based on two main analytical approaches to financial portfolios:

• Analysis of the technology mix of the companies in the portfolio,
• Analysis of the anticipated change in the production volumes of the companies and projects financed.

Based on a 5-year time horizon, the methodology measures the positive or negative gap per sector or per technology between the temperature trajectory associated with the activities of the companies financed by Groupe BPCE and a scenario aligned with the Paris Agreement (in this case, the Sustainable Development Scenario - OECD SDS - developed by IEA for OCDE countries). This scenario describes the steps to be taken to achieve the defined sustainable development objectives and, in particular, the objectives laid down in the Paris Agreement ¹ .