The Banque de France and the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority) share a common aim of incorporating sustainability issues – notably climate, environmental and social issues – into their strategy, missions and operations. In this first Sustainability report, we aim to set out a global approach by integrating the full spectrum of activities performed by the Banque de France and the ACPR, including financial stability, the work of the branch network, our own account investment strategy and our commitment to corporate social responsibility (CSR).

Since the publication of the Banque de France’s first annual report on responsible investment in 2019, followed by the publication of the Banque de France and ACPR’s Climate Action Report in 2022 in response to the commitment we made at COP26 in Glasgow, our approach has been based around transparency vis‑à‑vis the public and our peer institutions, amidst heightened expectations regarding corporate extra‑financial reporting, particularly within the European Union.

The Sustainability Report of the Banque de France and the ACPR includes several new features when compared with previous formats. First, it expands the scope of our publication, which is aligned with the recommendations of the Task Force on Climate‑related Financial Disclosures (TCFD), beyond climate risks, to focus more broadly on our action in terms of sustainability. This change is not merely one of semantics; it reflects the growing action of the Banque de France and the ACPR in terms, for example, of factoring in the major economic risks associated with the degradation of nature and biodiversity loss. Helping to assess, mitigate and manage the impact not only of climate risks but, more generally, of nature‑related risks on the real economy and the financial system, now forms part and parcel of our mandates as central bank and supervisor. This is what I stated back in September 2022, and reiterated the following year at the launch of the conceptual framework for nature‑related financial risks by the Central Banks and Supervisors Network for Greening the Financial System (NGFS). Secondly, with a view to consolidating all of the institution’s financial and non‑financial reporting in a single publication, this document also reports on the strategy and actions undertaken by the Banque de France in terms of responsible investment. For the second year running, this responsible investment section includes the metrics calculated as part of the climate reporting exercise common to all Eurosystem central banks. This approach was previously limited to euro‑denominated own‑portfolio management, but this year it has been extended to foreign exchange reserves, in other words, foreign currency‑denominated asset portfolios.

The Banque de France was among the first to act in encouraging the community of central banks and supervisors to factor in sustainability issues. In the international arena, in 2017 the Bank was one of the founding members and has acted since then as secretariat for the NGFS, which now covers over one hundred countries. From an internal governance perspective, the Banque de France has set up an Executive Committee for Climate Change, which brings together all the Bank’s departments and is entirely focused on climate issues, helping us to act even more effectively by nurturing new skills and unlocking synergies between business areas and activities. The pilot climate exercise conducted by the ACPR in 2020‑2021, followed by a new climate stress test focused exclusively on insurers in 2023, is another example of our determination to act. Since 2022, the ACPR has been monitoring compliance with the provisions set out in Article 29 of France’s Energy and Climate Act, by checking that the information reported by life insurance and supplementary occupational retirement providers on their sustainability risk policy is clear, accurate and not misleading. In particular, the Banque de France is working on incorporating climate risks into company ratings and assigning a ’climate indicator’ to companies. Lastly, to maintain its leadership in responsible investing, this year the Banque de France achieved its target of aligning its equity portfolios with a trajectory that limits global warming to 1.5°C, two years ahead of schedule.

Our ambition is reflected in all our missions and lies at the heart of our corporate strategy. A number of concrete objectives have been set for 2025, which we have either already achieved or are in the process of achieving. Thanks to all these actions and commitments, in November 2022, the Banque de France was ranked as the leading G20 central bank in terms of climate action by Green Central Banking magazine, on the basis of an assessment performed by a group of international non‑governmental organisations.

In accordance with international climate and environmental risk reporting standards, the first section of this report presents the governance framework established to manage sustainability issues, as well as the related strategy developed by the Banque de France and the ACPR. It then details how the Banque de France manages the sustainability risks identified within the framework of the missions entrusted to it. It concludes by describing a series of metrics and targets to track the climate risk connected with our activity and, more broadly, the development of our sustainability initiatives. As per NGFS recommendations for reporting by central banks, this report takes a broad view by considering the impact of climate and nature‑related risks on our balance sheet as well as on our missions. The second section of this report continues our transparent approach to reporting the results of our responsible investment policy.

This report will be published every year with the aim of gradually expanding its scope and enhancing its accuracy in light of the new European extra‑financial reporting standards, based on the learning‑by‑doing approach that we have adopted since our early initiatives in this area. The preparation of this report is an invaluable resource for catalysing ongoing efforts and anchoring a shared culture of climate and environmental awareness in all our activities. The past year has seen a growing awareness that urgent action is required: I am pleased to be able to use this report to reiterate our firm support for achieving the objectives of the Paris and Kunming‑Montreal climate agreements and promoting sustainable finance.

François Villeroy de Galhau

Financial stability

Services provided to the economy and society

Sustainable performance

Improving our understanding of climate issues

Responsible investment