Bank of France to Cut Coal From Direct Investments by 2024

(Bloomberg) -- The Bank of France is taking a big step toward reducing the carbon footprint of its portfolio.

France’s central bank said it will cease investments in companies for which coal accounts for more than 2% of turnover this year. That’s a tightening of the current policy, which doesn’t allow for businesses making more than 20% of their money from coal.

“This is a very ambitious horizon compared to the global consensus” of 2040 to phase out the greenhouse gas-emitting fuel, the Bank of France said.

However, the change in investment rules applies only to the central bank’s portfolio of around 22 billion euros ($30 billion), and not its monetary policy operations.

The central bank said it would also pare back investments in non-conventional hydrocarbon activities like shale gas, oil sands and arctic and deep water exploration. From 2021, it will exclude all companies for which such activities account for more than 10% of sales.

Altogether the changes will impact about 20 companies.

Central banks have been coming under growing pressure during the pandemic to align with global efforts to tackle climate change. The Paris Agreement sets a target to limit global warming to well below 2 degrees Celsius, which would require net zero emissions by mid-century. Yet many governments have offered bailouts to polluting companies with no environmental conditions attached.

The action from the Bank of France will put pressure on the Bank of England and the European Central Bank to adopt similar positions, said Clemence Dubois, an environmental campaigner with 350.org. But she said the ban still doesn’t go far enough.

“This decision is not strong enough because it doesn’t apply to the vast bulk of assets managed by the bank. As a consequence, billions of euros are still going to be available to the world’s most dangerous polluters,” she said in a statement.

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