Chapitre 1 Réussir la climate transition…

SUMMARY

Summary
This report provides Paris financial center operators with guidelines on how to bring their
actions into line with the targets set by the Paris Agreement and forms part of the task
entrusted by Minister Bruno Le Maire to Yves Perrier, the CEO of Amundi and Vice President
of Paris Europlace.

A. Successful climate transition will depend on a global

industrial revolution and a new political economy

General background to climate change and political

commitments
The fight against climate change is today a priority shared by most countries and its success
depends on the deployment of new economic and political paradigms. The major
international commitments already given have now been reiterated at European and
national levels. By signing the Paris Agreement at the UN in April 2016, 183 countries have
committed to keeping average global warming well below 2°C (and if possible below 1.5°C)
compared with pre-industrial levels. The target was lowered to 1.5°C at COP 26 in
November 2021, which also raised the fundamental question of how these ambitions are to
be achieved and provided a number of tools for monitoring signatories' compliance with their
commitments. The European Union's European Green Deal and European Climate Law have
set a collective target of reducing EU greenhouse gas emissions by at least 55% of their 1990
levels by 2030 and of net zero emissions by 2050. The “Fit for 55” package sets out the
methods that must be used to achieve Green Deal targets. The National Low Carbon
Strategy is France's main carbon management tool, setting a series of shrinking carbon
budgets for each sector.

A global industrial revolution that will require major

investment
To make these commitments a reality, countries are faced with a real industrial and
technological revolution that will transform a significant proportion of their economies
over the next two to three decades. Energy transition is an industrial revolution because
it does not only transform the energy we use but also products and services, manufacturing
methods and value chains. At the heart of the change, evolution of the energy mix and
the efficient use of energy raise a key challenge. In 30 years we will have to replace fossil
energy, which today accounts for 80% of the world's primary energy1 and has provided the
basis for economic development over the last 150 years, with low carbon energy. The change
also affects almost all sectors of activity, which will have to adapt their products,
infrastructures and industrial processes. It is only by adopting a holistic approach that we
can move from brown to green, particularly in sectors with the highest emissions (transport,
heavy industry, construction and agriculture).

The revolution will require major investments in R&D, in the transformation of industrial
processes and in new infrastructure. Globally, the cost will be an additional $3-$5 trillion a

1 Source IEA

2
PERRIER REPORT
 SUMMARY

year globally until 20502 (6 to 8 times above current levels), most of it in the first decade.
If Europe is to achieve its environmental targets, it will have to invest an additional €480
bn3 a year. For France, meeting carbon budget targets will mean doubling 4 annual
investment from 2018 levels before 2030. Industrial change will also require the significant
write-off of existing assets, which will become legacy assets. This will apply not only to
industry but also to the real estate sector as a result of energy efficiency requirements.

The primary aim of this industrial revolution will be to decarbonize the economy. The
geopolitical and social consequences of the revolution also have to be dealt with to ensure
secure supplies, sovereignty, the competitivity of our economy, the participation of
emerging countries in decarbonization and the social acceptability of the transformations.
We must also expect challenges in the form of changes in jobs and qualifications, the need
to manage short and medium-term inflationary effects and inter-generational fairness.

A new political economy

An energy transition in line with the previously defined objectives will require a new
political economy that brings the key players into line on the medium and long-term
policies and strategies: States including the European Union – (particularly industrial)
corporations –finance (banks, investors, asset managers).

States have a major role to play in defining public policy (energy, transport, housing,
territorial planning) and the associated industrial policies. They must also set fiscal policy,
and in particular must introduce an appropriate price signal for carbon pricing in the
European Union and a border carbon adjustment mechanism.

While CO2 externality must be managed by businesses and financial institutions, it will be
more effective and efficient if clear signals are given to consumers and producers. We
therefore believe that a European carbon tax is needed, supplementing or replacing the
European carbon market (ETS5). To make the tax acceptable, its proceeds should be used to
finance public investment and to provide social support to those most disadvantaged and
impacted by the transition and the resulting price increases. A carbon adjustment
mechanism at EU borders is also essential. This must prevent carbon leakage, climate
dumping and keep our economies competitive in the face of countries that retain high-
carbon products and have adopted slower transition times6 than Europe.

Businesses must design the technological and industrial solutions needed for the change.
They must therefore build CO2 externality into their strategies, in addition to traditional
financial criteria. Managing their CO2 footprint will become an essential part of business
management, of product, service and industrial process specifications and also of capital
allocation.

The role of the financial system (banks and investors) is to support businesses in their
transformation by - as shareholders or lenders - providing them with the capital they
require and influencing their strategies through the capital cost and through dialogue. To
do this, the financial system, like businesses, must build in CO2 externality at a number
of levels. Strategically, banks must manage the CO2 in their loan portfolios just as they

2 Source: Autonomous report, Global Banks, Climate Risk: The Green Growth Opportunity (September
2021)
3 Source European Commission, new Sustainable Finance Strategy, 6 July 2021
4 Source SNBC – National low carbon strategy
5 European Union Emission Trading Scheme, set up by the European Union in 2005 within the
framework of the Kyoto Protocol
6 Especially China, the USA and India, which together generated 50% of global emissions in 2017
according to the IEA.

3
PERRIER REPORT
 SUMMARY

manage capital allocation. In their credit and portfolio management processes, banks and
investors must include CO2 impact in their decision-making criteria, alongside their usual
risk-return criteria.

The size of the investment required, its duration and the low level of value in use will
force investors to rethink the return on investment criteria (15% return on equity and
IRR) set in the 2000s since these now seem incompatible with the transformations
required. New financial solutions must also be developed with the State to release
sufficient resources.

B. A new legal framework for a new political economy

The legal framework for this new political economy is being developed but is still far from
being fixed. A silo approach continues to apply and many basics need to be in place.

European taxonomy - a dictionary for sustainability

We need tools for measuring and analyzing business greenhouse gas emissions to give us a
clear view of which economic activities are meeting climate targets and also to direct our
strategic decisions. European taxonomy fulfils this need by providing a common benchmark
based on the classification of the environmental impact of various economic activities and
on sector targets. This 'dictionary' for sustainability will be a reference for monitoring the
decarbonization of activities.

However, the taxonomy itself is not however understood by business or the financial sector,
giving rise to different interpretations of its use. There are two interpretation approaches:
a static approach which consists in directing finance towards green activities (which are
currently estimated to account for less than 10% of the European economy); and a dynamic
approach which consists in allocating finance to businesses whose plans to reduce their CO2
emissions are both sufficiently ambitious and credible. We believe that the latter approach
should prevail. The challenge is to transform activities with the highest emission levels that,
by definition, are not yet green. The static approach would simply accentuate the bubble
effect we now find in some sectors (renewable energies in particular).

Non-financial reporting
Climate externality must be reflected in non-financial reporting. If carbon emission is
treated as a rare resource that is reported in the same way as cashflow, then the
importance of climate for businesses will automatically increase. Many businesses have
already risen to the challenge by introducing carbon accounting and internal carbon pricing.
But these are individual initiatives and the different accounting methodologies have not
been harmonized, making the results hard to understand and use.

The race is on towards the standardization of non-financial reporting, meaning that

European (CSRD) and international (IFRS) standards will eventually produce an accounting
framework that provides the information we need to analyze companies' transition plans
and actions and which is also simple, easy to read, pragmatic and efficient. In addition to
the consistency of the IFRS and European standards, and given the wide range of Scope 3
interpretations, non-financial reporting will have to be supplemented by individual charts
of accounts designed for each industry. This also applies to financial institutions (banks and
investors) whose methods for incorporating CO2 into their portfolios have yet to be defined.
In each sector, non-financial company reports will provide the financial system (banks and
investors) with the information it needs (information provided by companies could replace
the data produced by specialized providers whose reliability is limited today to:

4
PERRIER REPORT
 SUMMARY

 measure the CO2 in their portfolios. At market level, this information could be
consolidated by supervisors (ACPR and AMF) to provide a snapshot of the positions of
market institutions; and
 to feed into credit ratings and counterparty and portfolio analyses.
Methodologies must be harmonized as they are very disparate at present. Financial
institutions must also adapt their IT systems to manage this data, like financial data, at the
industrial level.

Analysis and assessment tools

Once we have non-financial reporting, we will also need consistent and transparent
analysis that will enable rating to cut the cost of capital and finance. The financial
accounting and analysis methods we use today are based on standards and rules set at the
start of the 1980s as the market economy began to develop. Following the example of
financial analysis, the challenge today is to build, based on clear principles, rules and
standards for non-financial analysis. It is essential to harmonize the approaches of the
financial players, the ecosystem that contributes to market discipline (especially rating
agencies such as Moody’s, S&P etc.) and the providers of the climate indexes used in passive
asset management (MSCI, Russel etc.) to ensure that they are able to exercise effective
influence. Although we already have some standards that can be used to direct investment
(green bonds, TCFD, SBTi, PACTA, ACT etc.), these are multiple, unfixed and in competition
with each other. All the players we have met agree that analysis standards must be
harmonized before they can be credible and fulfil their role in capital allocation.

The same range of approaches applies to savings product labels (French ISR, EU Ecolabel,
classification under articles 8 and 9 of the EU SFDR etc.). These labels are an advance but
do not have clear markers for assessing CO2 impact and understanding how different savings
solutions relate to climate transition challenges. We therefore believe that ESG labels,
which provide a view of how businesses serve all their stakeholders and not just their
shareholders, should be distinct from climate impact labels in the strictest sense.

C. Action taken by the Paris financial center

Action taken by the financial institutions in Paris

Financial operators in Paris have taken the lead in responding to the challenges presented
by climate change. All Paris banks, institutional investors, asset managers, insurers,
syndicates, rating agencies and regulators have developed strategies for reducing and
offsetting emissions and have given clear commitments. To accompany the transition and
place the climate challenge at the heart of corporate strategies, new measurement,
reporting tools and governance methods have been introduced. French financial
institutions have an international reputation for their commitment and many have
engaged in international coalitions in their own sectors.

However, the proliferation of different initiatives has come up against the plethora of
analysis methodologies and tools we have mentioned above and also against erratic data
quality, leading to uneven rating. Resolute individual action cannot make up for the
insufficiency of the collective.

Where does Paris stand in comparison with other financial

centers?
Other financial centers have smartened up and are now shortening Paris's lead on climate
matters. Net zero strategies are already the norm for global financial institutions in

5
PERRIER REPORT
 SUMMARY

international sector (Net Zero Banking Alliance, Net Zero Asset Owners Alliance, Net Zero
Asset Managers Initiative, Net Zero Insurance Alliance) and financial center agreements.
Publications on sector targets have seen the light in London, Singapore and New-York in the
last two years, translating into policies that restrict and/or exclude certain fossil energies.
Finally, while Paris tops the European charts in terms of the value of loan and green bond
issues, all the other financial centers have set themselves ambitious targets.

Organization of the Paris financial center

Initiatives have been introduced to support financial operators in their transition to
sustainability involving research and innovation bodies, such as Institut Louis Bachelier (ILB),
Finance for Tomorrow, Observatoire de la finance durable and Institut de l’économie pour
le climat (I4CE), and also partnerships with universities. Certification systems are actively
growing, including the two leading French green finance labels, Greenfin (€20 bn AuM) and
ISR (€688 bn AuM). However, no key projects in CO2 accounting, analysis standards or
finance policies have begun yet. Finally, coordination within the financial sector and
between the financial sector and business remains weak.

Given this situation, current methods for supporting green finance would benefit from
greater cooperation, or even integration, based on the model of the federations set up in
other European financial centers, such as London's Green Finance Institute (GFI) and
Frankfurt's Green and Sustainable Finance Cluster Germany. If Paris is to become a real
center for sustainable finance innovation and competitivity, all the players (financial
system, business and public authorities) need to work together to create a common
roadmap. Direction will need to be at the highest level over the next 2-3 years and to be
coordinated with the direction of changes in public policy and industrial strategy.

D. Action plan and recommendations for the Paris financial

center

Paris financial center aims and ambitions

We currently have an incomplete and unfixed legal framework. Yet we need to move forward
and start putting our internal transition management tools into use. At the same time we
need to be involved in the completion of European (directed by EFRAG) and international
(directed by IFRS and its new ISSB) standards and in the work by alliances (under the GFANZ
umbrella) on carbon accounting, analysis, company and financial product rating, the
management and governance of carbon externality by companies and financial institutions,
the standardization of transition-focused savings products, the formalization of
commitments concerning the fossil energy sector and financial innovation in support of
carbon transition. The following recommendations apply to the entire financial sector and
to all its players, product and asset types, including private equity.

Paris financial center must collectively set itself a target of becoming the leading
European financial center for climate-related action, of being recognized as such by its
European and English-speaking partners, and of being a member of the key working groups,
alliances and international organizations in this area, through its own operators or
collectively. Paris can also become a key center for Asia (China, South Korea, Japan, India
etc.) with which we could share our work and methods.

6
PERRIER REPORT
 SUMMARY

Projects:

CO2 accounting
Climate transition must be based on the management of tight carbon budgets by companies
and financial institutions, based on the current measurement of emissions, carbon targets
for 2025, 2030 and 2050 and annual reporting.

Companies must account for their Scope 1, 2 and 3 carbon emissions and report these to the
financial players, which will then integrate them into their loan and investment portfolio
profiles. The supervisory authorities (AMF for asset managers and ACPR for banks and
insurers) must then consolidate these reports.

The reporting framework will be European, particularly CSRD, taxonomy, supplemented by

the work currently being undertaken by EFRAG, and will take account of ISSB
recommendations. All information reported by companies and financial institutions may be
audited.

A CO2 accounting project therefore needs to be created in Paris with four objectives:

1) Contribute to completion of the standard, relying on the work done by EFRAG and
ISSB, which will be submitted for consultation by the end of the first half of 2022
with a view to adoption by the end of the year. We believe that the climate module
resulting from the work done by EFRAG and ISSB proposals on climate alone should
converge as much as possible;
2) Decide how companies should implement taxonomy and carbon reporting:
- Interpretation of taxonomy and methods of use for each sector;
- Decision on Scope 3 measurement conventions for each sector.
The working group should comprise ANC/EFRAG, within the context of the existing ANC
working group, alongside professional business associations (MEDEF, Afep, France Industrie
etc.) and financial associations (FBF, AFG, France Assureurs);

3) Decide how taxonomy should be used and CO2 included in the loan/investment
portfolios of banks and investors and adjust IT systems accordingly. The working
group should be made up of professional financial players and associations;
4) Decide how companies and financial institutions should send CO2 data to the Bank
of France, AMF and ACPR. Supervisors must be responsible for the consolidation and
quality of reported data. A separate project will be needed to cover carbon
reporting by supervisors.

Analysis methodologies
Standards for the analysis and rating of companies' past, present and forecast carbon
performance is vital to the financial system - both investors and lenders. Only robust and
shared standards can ensure the efficient allocation of resources at fair capital cost.

Interviews have revealed a wide range of analysis and rating methods. All the actors
involved, especially investors (asset owners and asset managers, including the international
alliances to which they belong), rating agencies and index providers believe that
standardization is essential, as it was for financial analysis in the 1980s, to give credibility
to climate rating and make it work.

The aim is to create collective analysis methods and ratios that will allow the assessment
and then rating of companies' decarbonization strategies and implementation year after
year. The strategies must include targets and scenarios in keeping with the challenges, a
transition program with milestones, appropriate dedicated financial resources - particularly

7
PERRIER REPORT
 SUMMARY

in the case of investments in new decarbonization technologies, and suitable governance

methods.

Four working groups will be needed to develop a common body of methodologies for
analyzing and rating companies' carbon performance, based on shared sector targets, for
creating climate indexes and to engage shareholders. The four groups must of course share
their analyses with the big international coalitions to which the financial institutions
operating in Paris belong.

1) One investor working group working on analysis standards, made up of investment

professionals (managers, analysts), rating agencies such as Moody’s and S&P and
fund and financial product raters such as Morningstar.
2) One similar working group made up of banks and rating agencies to standardize
credit analysis. The group could use current FBF work on method convergence.
3) One working group made up of asset managers and climate index providers, such as
MSCI, defining standards for the climate indexes used in passive asset management.
4) One investor group working specifically on commitment policies to produce a formal
and automatic say on climate requirement, the monitoring and sharing of best
practice and commitment coalitions. The requirements for filing climate resolutions
at shareholder meetings must be clarified with the public authorities and made more
flexible.

Carbon externality governance and management

Work must be done on the governance and management of carbon externality by financial
institutions. Like company governance of decarbonization strategies, this is a key condition
for efficient, quality implementation of climate transition as a whole. The project should
involve all the federations (AFG, FBF and France Assureurs) and the financial institutions
that belong to them and should have 4 pillars:

1) Governance: boards and executive committees must be involved in carbon strategy

approval, the associated tradeoffs and implementation monitoring.
2) Carbon externality management:
- CO2 must form part of the investment and lending process. Investment policies
must be based on green investment, green/brown transformation investments,
disinvestment in brown if transformation is impossible.
- Comprehensive introduction of carbon budgets per activity and per
counterparty.
- Introduction of capital costing per activity and based on counterparty carbon
intensity. There has already been significant introduction of a green weighting
factor to fund allocation, with no change to capital cost where possible.
3) Remuneration must take account of the financial institution's carbon performance
(including Scope 3):
- Remuneration of executives and senior executives
- Remuneration of professional staff (managers and bankers in particular).

The changes could be supported by the prudential and monetary authorities: a green
weighting factor could eventually be included by the ECB and supervisors, based on fixed
carbon accounting. It could potentially be combined with a brown penalizing factor and, if
possible, it would have no impact on general equity requirements.

8
PERRIER REPORT
 SUMMARY

Training
The rollout of climate actions by business and financial institutions will require an enormous
amount of training in all sectors and over the long term. The financial sector will have to
train accountants, analysts, managers and account managers. For financial institutions, like
all other businesses, general board training will be required.

In the banking sector, the FBF banking training center will have to be involved, as will the
SFAF for asset management. International training bodies will have to be brought in. A
climate module could be developed together with IFA for boards.

Training will also have to be provided for financial product distribution networks it will be
crucial to raise personal and customer awareness.

Financial products and labels

Interviews and analysis of actions in Paris have revealed a plethora of approaches, concepts
and positions that make differentiation between products and the giving of advice to
customers even more difficult.

A separate climate transition label is needed to stand alongside the French ISR label (a
general ESG label). To do so, a climate transition label working group should be created,
made up of asset managers, the AMF and the French Treasury, to outline a separate climate
label for carbon transition that has a clear scoring system for assessing investments in carbon
transition and not just in assets that are already treated as green. The new label should be
promoted throughout Europe.

Adjustment of Paris's approach to fossil energy

In addition to existing coal and alternative oil and gas commitments, we now have the
question of oil and gas financing in general.

Oil and gas are the subject of questions and debates because although the latest IEA
simulations of the countdown show that current oil and gas production must not be increased
if we are to fulfil our carbon neutral commitments by 2050, no analysis has yet demonstrated
that this is feasible or how low carbon energy can replace fossil energy.

A working group is needed, made up of banks, investors, energy companies, ADEME,

Observatoire de la finance durable, HCC and the energy, economy and finance ministries to
produce benchmark scenarios for 2025, 2030 and 2050. Financial institutions will then be
able to develop transparent and comparable scenarios for their abandonment of fossil
energy7.

Financial innovation
Energy transition success will require significant investments, mainly in the next 10-15 years,
offering uncertain returns. The question of financing remains open and will need innovative
solutions to:

 Combine public and private financing for the reallocation of long-term household saving.
Such solutions could be based on full or partial government guarantees to meet savers'
need for security;
 Create special types of soft finance, as some banks have already done at the personal
banking level for home energy efficiency improvements;

7 They could use the Global Coal Exit List, which covers all companies along the world's entire thermal
coal value chain and is published by Urgewald and 30 other NGOs, and the Global Oil and Gas List,
which covers most oil and gas companies worldwide and is published by Urgewald.

9
PERRIER REPORT
 SUMMARY

 Create European funds, as certain international financial institutions have already done,
to finance energy transition investment in developing countries with particularly high
emission levels.

Organization of the Paris Financial Center

The success of climate transition will depend on business, the financial system and the State
coming into line with each other. Transition will be a long-term process that combines a
carbon target with industrial and social policy and sovereignty challenges. Co-construction
and co-management are essential if it is to succeed. Two coordinating bodies could be set
up for the purpose:

1) Political: a strategic management committee to approve ambitions, priorities and decide

standardization and interpretation matters. This would have to be chaired by the Finance
Minister, meet once a quarter and be administered by the Treasury. Members would have
to be competent persons representing business and financial institutions (banks, insurers,
asset managers), the Governor of the Bank of France, the President of AMF, the President
of Paris-Europlace and the chair of the operations coordination committee (see below).
2) Operations: within the framework of the policies set by the policy management
committee, this committee would coordinate the various projects, represent Paris on
technical European and international committees and organize a network of experts
(auditors, economists, scientists etc.). The committee would have its own budget
provided by the Paris center and the public authorities of around €6-8 million, similar to
that of London's committee. The committee, which would report to Paris-Europlace,
would have to work synergically with existing Paris bodies, including ADEME and I4CE,
and with Paris Europlace bodies (Institut Louis Bachelier, Finance for Tomorrow and
Observatoire de la finance durable) as this is essential to its effectiveness. The body
would have to have a board made up of competent directors from the industry and
financial sectors and representatives from the Ministries of Finance (Treasury, Business
Department) and the Environment (Energy). The board would have to be chaired by a
distinguished director.

Recommendations:
seven projects for the Paris financial center
Project 1: Introduce CO2 accounting
Recommendation no.
1 Contribute to completion of the non-financial reporting standard, relying on the work
done by EFRAG and ISSB, promoting the convergence and the co-construction of these two
sets of standards.

2 Decide how European taxonomy should be interpreted and used in each economic sector,
working together with business, sector organizations, financial institutions and ANC/EFRAG.

3 Decide Scope 3 measurement standards sector by sector to ensure consistent accounting

policies, working together with business, sector organizations, financial institutions and
ANC/EFRAG.

4 Decide how CO2 data should be integrated into the loan and investment portfolios of
banks and investors, requiring IT systems to be adjusted accordingly.

10
PERRIER REPORT
 SUMMARY

5 Decide how companies and financial institutions should send CO2 data to the Bank of
France, AMF and ACPR. Supervisors must be responsible for the consolidation and quality of
reported data.

Project 2: Review and consolidation of analysis methodologies

Set up four working groups to develop a common body of methodologies for analyzing and
rating companies' carbon performance, based on shared sector targets. The groups must share
their analyses with the big international coalitions to which the financial institutions belong.

An investor group could be created for the purpose. The requirements for filing climate resolutions
at shareholder meetings must also be clarified with the public authorities and made more flexible

Recommendation no.
6 Set analysis standards via an investor working group made up of investment professionals
(managers, analysts), rating agencies, such as Moody’s and S&P, and fund and financial
product raters, such as Morningstar.

7 Standardize credit analysis via a working group made up of banks and rating agencies. The
group could use current FBF work on method convergence.

8 Set standards for the climate indexes used in passive asset management via a working
group made up of asset managers and climate index providers, such as MSCI.

9 Formalize an automatic say on climate requirement, the monitoring and sharing of best
practice and commitment coalitions.

Project 3: Promote new carbon externality governance and management

practices by financial institutions

The project should involve all the federations (AFG, FBF and France Assureurs) and the financial
institutions that belong to them.

Recommendation no.
10 All financial institutions: boards and executive committees must be involved in carbon
strategy approval, the associated tradeoffs and implementation monitoring.

11 All financial institutions: CO2 must form part of the investment and lending process.
Investment policies must be based on green investment, green/brown transformation
investments, disinvestment in brown if transformation is impossible,

12 All financial institutions: comprehensive introduction of carbon budgets per activity and
per counterparty.

13 All financial institutions: introduction of capital costing per activity and based on
counterparty carbon intensity, with no change to capital cost where possible. There has
already been significant introduction of a green weighting factor to fund allocation.

11
PERRIER REPORT
 SUMMARY

14 Eventual inclusion by the ECB and supervisors, based on fixed carbon accounting, of a
green weighting factor, possibly combined with a brown penalizing factor, that if possible
has no impact on general equity requirements.

15 All financial institutions: integration of carbon performance (including Scope 3) in the

remuneration methods for:

- Executives and senior executives

- Professional staff (managers and bankers in particular).

Project 4: Stakeholder training in climate challenges

Recommendation no.
16 All financial institutions and companies: give boards training in climate challenges. A
climate module could be developed together with IFA for boards.

17 All financial institutions: train accountants, analysts, managers and account managers
in climate challenges. In the banking sector, the FBF banking training center will have to
be involved, as will the SFAF for management. International training bodies will have to
be brought in.

18 Provide training for financial product distribution networks and to raise personal and
institutional customer awareness.

Project 5: Set standards for products and rating methods for labels
Recommendation no.
19 Create a separate climate transition label to stand alongside the French ISR label (a
general ESG label). To do so, a climate transition label working group should be created,
made up of asset managers, the AMF and the French Treasury, to outline a climate label
that assesses investments in carbon transition and not just in assets that are already
treated as green. The new label should be promoted throughout Europe.

Project 6: Plot the way out of fossil energy

Recommendation no.
20 Create a benchmark scenario for the abandonment of fossil energy with 2025, 2030
and 2050 milestones via a working group made up of banks, investors, energy companies,
ADEME, Observatoire de la finance durable, HCC and the energy, economy and finance
ministries.

21 All financial institutions: based on the benchmark scenario produced through

recommendation 20, decide transparent and comparable strategies to abandon fossil

12
PERRIER REPORT
 SUMMARY

energy (GCEL8 and GOGEL9 lists can be used to identify and monitor fossil energy exposure).
Strategy implementation to be subject to public annual reporting.

Project 7: Encourage financial innovation

Recommendation no.
22 Create a working group of finance professionals and public authorities to find financial
solutions in the following areas:

- Combine public and private financing to reallocate long-term household saving. Such
solutions could be based on full or partial government guarantees to meet savers' need
for security.
- Create special types of soft finance, as some banks have already done at the personal
banking level for home energy efficiency improvements.
- Create European funds, as certain international financial institutions have already
done, to finance energy transition investments in developing countries with
particularly high emission levels.

Center organization
The success of climate transition will depend on the alignment of companies, the financial
system and the state. Transition will be a long-term process that combines a carbon target
with industrial and social policy and sovereignty challenges. Co-construction and co-
management are essential if it is to succeed. Two coordinating bodies could be set up for
the purpose:

A political body

Recommendation no.

23 Create a strategic management committee to approve ambitions, priorities and decide

standardization and interpretation matters. This would have to be chaired by the Finance
Minister, administered by the Treasury, and members would have to meet once a quarter.
Members would have to be competent persons representing business and financial
institutions (banks, insurers, asset managers), the Governor of the Bank of France, the
President of AMF, the President of Paris-Europlace and the chair of the operations
coordination committee (see below).

8 Global Coal Exit List: this covers all companies along the world's entire thermal coal value chain and
is published by Urgewald and 30 other NGOs.
9 Global Oil and Gas List: this covers most oil and gas companies worldwide and is published by
Urgewald.

13
PERRIER REPORT
 SUMMARY

An operations body

Recommendation no.

24 Create an operations body within the framework of the policies set by the policy
management committee to coordinate the various projects, represent Paris on technical
European and international committees and organize a network of experts (auditors,
economists, scientists etc.). The committee would have its own budget provided by the
Paris financial center and the public authorities of around €6-8 million, similar to that of
London's committee. The committee, which would report to Paris-Europlace, would have
to work synergically with existing Paris bodies, including ADEME and I4CE, and with Paris
Europlace bodies (Institut Louis Bachelier, Finance for Tomorrow and Observatoire de la
finance durable) as this is essential to its effectiveness. The body would have to have a
board made up of competent directors from the industry and financial sectors and
representatives from the Ministries of Finance (Treasury, Business Department) and the
Environment (Energy). The board would have to be chaired by a distinguished director.

14
PERRIER REPORT