Logo Eurofi

Home > Speakers' views

Climate change and the financial sector - New trends in the financial sector

Consequences of the COP21 agreement for the financial sector

By Bavagnoli Corso - Directeur du Service du Financement de l'Economie, Ministry of Economy and Finance, France


The Paris Agreement has clearly reaffirmed the determination of the 196 UNFCCC participating parties to tackle climate change. It lays robust foundations to deliver the global coordination needed for a transition toward a low carbon and climate resilient economy. It provides a clear strategic orientation that should make it easier to engage in low carbon financing and was rightly identified as a key milestone by the financial sector and prompted a number of significant initiatives (green bonds, green infrastructure finance, portfolio decarbonisation, etc.) demonstrating a growing business appropriation of the issues.

It is important that climate related issues become ever more “mainstream”: the low carbon transition is one of the determining trends of our times. In the same way the COP21 built on previous decisions (for example, in Europe, the EU climate and energy package and its implementation), financial actors should learn from first movers’ initiatives to recognise opportunities and assess risks. Indirectly, financial policymakers have a catalytic role to play in this mainstreaming through signalling their views, raising questions, fostering new initiatives and contributing to the dissemination of innovations and knowledge. In France, article 173 of the Energy Transition Act follows this very approach: regulation is used to foster the appropriation of climate-related issues (and more generally, ESG considerations) and provide a dissemination framework in the sector.

Regarding risks, it should be stressed that, rather than new unknown risks, climate-related risks are often well understood risks (e.g. risks arising from energy market gyrations, technology risks magnified by a long term perspective, etc.) that are linked through the unfolding of a late and abrupt transition. As such, the focus should be on understanding and assessing these risks rather than trying to develop new regulations.