While the purpose of traditional finance is to direct savings towards cost-effective projects, without necessarily considering the ecological aspects of investments,
. Finance has partly adapted to these issues with the development of green finance, which can be defined as all financial operations that support ecological objectives such as energy transition and fighting against global warming.
The responsible investment market is growing
Among the means of action implemented as part of green finance are Socially Responsible Investments (SRI), which combine the financial objectives of investors with their concerns regarding
environmental, social, and corporate governance (ESG) issues. While the European market for responsible investment funds has experienced
substantial growth in the past few years, France has
one of the largest market shares, with more than 20 billion euros of assets invested in the responsible investment market in 2017. However,
awareness of responsible investment remains limited among the French. Nevertheless, many of them seem to want better information about, among other things, how this form of investment works, its advantages and disadvantages, and its real impact on the environment.
Green OAT: the first sovereign green bond
The main instrument of green finance, however, are
green bonds, which are bonds issued on financial markets by companies or public institutions, in order to finance projects specifically dedicated to the environment and ecological transition. The difference between a green bond and a conventional bond is that the issuer must present an investment report (certifying that these projects are related to the environment), and that they must also publish an annual report on the project progress for investors. The French government stood out in 2017 with the issue of a
large sovereign green bond. Its initial issuance volume was worth seven billion euros, making France the first country to issue a benchmark sovereign green bond. The
outstanding amount of the green OAT (Obligation assimilable du Trésor) at the end of July 2020 was 27.38 billion euros, making it the largest green bond in the world.
French banks
However, the government is not the only player in the
green bonds market. French banks have an important role in the issuance of green bonds. In 2019,
Credit Agricole and BNP Paribas were among European bank leaders in green bond underwriting, at approximately 21 billion U.S. dollars. Nevertheless, although banks seem to be
involved in the ecological transition, given their place in the green bond and responsible investment markets, they
continue to invest in fossil fuels on a large scale. In 2019, Société Générale was the world's second largest bank in terms of financing liquefied natural gas import and export companies.
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