What kind of finance for a world in crisis and under constraints?

Faced with the challenges of climate change and the environment, finance now needs a new look. The training of the various actors in the finance sector is becoming a major and decisive issue.

As a think tank, The Shift Project proposes concrete ways to integrate environmental issues into finance training, developed with teachers and professionals in the sector.

Dans une démarche prospective, « The Shift Project » présente l’un de ses derniers rapport « ClimatSup Finance – Former pour une finance au service de la transition » (rapport complet) qui passe en revue 12 évolutions potentielles de la finance à anticiper sous l’effet des crises engendrées par l’urgence écologique.

A change in certain economic-financial practices and reinforced regulations should be taken into consideration, namely

1. The use of public investments and public guarantees to finance the ecological transition either by coordinating the actions of central banks and public investment banks, or by monetizing public debt, or by cancelling part of the public debt ;

2. An evolution of the missions of central banks in favor of financing the ecological transition, for example by integrating the principle of double materiality into their doctrine (revision of the collateral policy, reorientation of quantitative easing, change in its macro and micro prudential policy...) ;

3. The injection of free money into the economy, via the repurchase of bank bonds by the Central Bank without demand for repayment ;

4. The end of the focus on the GDP growth target and the changes in practices caused by the risk of repeated recessions ;

5. An evolution of exchange rate and inflation regimes due to an increasingly volatile world with physical flows that are de-globalizing and slowing down ;

6. The development of a brown taxonomy, with a European standard prohibiting investment in sectors considered harmful to the environment ;

7. The evolution of the "Bâle III" prudential regulations to introduce quantitative and qualitative constraints on the portfolios and capital of banks, so that they limit climate or biodiversity risks ;

8. The implementation of a policy to manage the stranding of carbon assets in order to redirect the flows towards sustainable activities ;

9. The generalization of methods that take into account ecological impacts, such as triple bottom line accounting (financial, human, environmental) as a result of normative developments ;

10. The integration of ecological risks at the heart of banking and insurance practices in order to best protect against physical risks and overcome pockets of uninsurability ;

11. Consideration of physical climate, transition and liability risks in fiduciary duty, allowing the asset manager to prioritize environmental issues over short-term investment profitability ;

12. Directing individual savings towards financing the energy and ecological transition ;

For each recommendation, you will find details, examples and resources in the report by referring to the dedicated chapter.

This remarkable work offers new perspectives, in order to prepare the actors of finance to better understand the challenges of our world.

The PHÉBÉ team

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