The financial sector has a major role to play in the energy and climate transition. This transition will mean revising traditional financing decisions to shift support to sectors that will “decarbonize” the economy and to accompany energy-intensive sectors as they reduce their greenhouse gas (GHG) emissions.
Organizations in finance are increasingly aware of the urgency of the transition, and of the risks attached to failure to respond to this imperative, and climate change criteria are progressively being taken into account in this sector. Carbone 4, with close to 10 years of experience as an expert in this field, accompanies the financial sector in this transition process, developing measurement and management tools, and helping clients devise their 2°C strategy or carry out more focused strategic studies, particularly before making a specific investment.
The climate impact of investment portfolios
Carbone 4 has devised methodologies that are specifically designed for the financial industry. Using indicators such as carbon footprint scopes 1+2+3 and avoided emissions, financial and investment companies can measure the impact of their portfolios and build 2°C investment strategies.
- Asset classes covered: listed assets (Carbon Impact Analytics), private equity, infrastructure assets, green bonds
- Key references: Caisse des Dépôts et de Consignations, PAI Partners, CNP Assurances, Euronext, Mirova
- For more information on Carbon Impact Analytics download our methodological guidelines and our report on low carbon indicators.
Climate Risks Impact Screening
Climate Risks Impact Screening is a methodology for evaluating the financial risk associated with physical risks due to climate change (flooding, heatwaves, etc.) in portfolios of listed assets (stocks and bonds). This approach cross-factors the impacts of climate change with business activity sector and the geographic location of companies,
- to highlight the most vulnerable assets
- to consolidate risk ratings for a portfolio.
2°C investment strategy
Firmly convinced that carbon impact assessment (induced and avoided emissions) is an indispensable tool for decarbonizing investment portfolios, Carbone 4 works with its clients to advance implementation of 2°C strategies, with the following approach:
- Custom indicators are tailored to the portfolio, to ascertain the pertinence of component assets.
- Relevant 2°C and other scenarios are analysed to explore options for constructing a 2°C strategy.
- Key reference: Caisse des Dépôts et des Consignations (CDC), support for drawing up a 2°C strategy for the bank’s infrastructure assets portfolio.
Carbone 4 regularly carries out strategic studies for organizations in the finance sector.
- Prior to investment in assets strongly linked to energy or carbon emissions, Carbone 4 reviews business opportunities for clients, and provides second opinions on business plans.
- Key references:
* Second opinion: Meridiam, Alter Equity
* Carbon assessment: Meridiam, CDC
- Carbone 4 has also conducted studies for bank clients of indicators to monitor climate risks and transition factors pertaining to financing decisions.
- Key reference: BNP Paribas.
Seminars and training sessions
Carbone 4 offers training for financial companies and institutions designed to enable all staff in a given unit to develop competencies in energy and climate topics and related methodologies, and share the objectives of a carbon assessment approach.
- Carbone 4 regularly leads strategic seminars on the energy transition. One such assignment was carried out for CDC, comprising a half-day awareness session followed by 10 collaborative thinking workshops. (Read more).
Green Bonds Issuer Services
Carbone 4 accompanies the issuers of green bond in all of the aspects of their approach:
- Ex-ante carbon impact analyzes (induced emissions and avoided emissions) and support for the choice of projects to be financed by a green bond
- Calculation of the ex-post carbon impact of financing (definition of a dedicated method if necessary)
- Drafting the impact report and annual update
Key references: Carbone 4 has defined a method for the SNCF (French National Rail Network) to calculate the emissions avoided using Green Bonds and drafted the AFT allocation and performance report.