“We no longer fund actors who are not involved in the transition” – vert.eco

In an interview in greenIskandar Sahiti Manzoni, of the Postal Bank’s Citizen Engagement Department, explains the origins of this ambitious situation, the strategies implemented to reduce the impact of banking activities and the obstacles encountered in the process.

What prompted Banque Postale to position itself so aggressively in the decarbonization position?

Historically, we carry citizenship issues in our DNA. The State has entrusted the Post Office, via Postal Bank, which is responsible for the public service mission of easy access to banking services [qui permet à chacun·e d’avoir accès aux services bancaires, NDLR]. Compared to other banks, this commitment has certainly had the effect of reinforcing the internal appetite for ESG issues. [les enjeux environnementaux, sociaux et de gouvernance]. La Poste is also a transport and logistics business with clear environmental impacts, which means we’ve been very proactive on these issues from the start.

Part of the decarbonization story began with the Paris Agreement in 2015, with early targets to reduce carbon emissions. In 2017, the Post Bank committed to adopting a science-validated decarbonization pathway through SBTi [«Science based targets initiative», un organisme indépendant piloté par des organisations internationales, dont le Pacte mondial des Nations unies, NDLR]. In April 2021, La Banque Postale joined the “Net Zero Banking Alliance” under the auspices of the United Nations. With four other banks, he represents European banks within the Operational Committee in order to identify paths compatible with the scenario net zero [soit la neutralité carbone, c’est-à-dire la réduction des gaz à effet de serre et la compensation des émissions résiduelles, NDLR].

In October 2021, the Postal Bank became the first European bank and one of the first in the world to have a decarbonisation pathway validated from a scientific point of view by SBTi. This milestone is very important. Besides phasing out oil, coal and gas by 2030, the group is committed to achieving “net zero emissions” by 2040. Provided, of course, that countries and companies take measures in this direction, because banks are only a reflection of the economy.

What has changed significantly in Postal Bank practices?

We no longer allow ourselves to fund players if they are not committed to transitioning with a decarbonization plan that has been created in a credible, scientific way. Today, in the big oil and gas companies, no company has a plan that seems credible to us. Our position on this issue is very clear: no transitional plan, no funding, no investment. Historically, the Postal Bank has preferred financing the development of renewable energies over financing fossil fuels. This obviously denied us opportunities, but we are following a logic aimed at enhancing the flexibility of our balance sheet and accelerating the transformation of the economy.

What obstacles did you encounter?

There is a lack of methodology for certain asset classes: we don’t always know how to measure their carbon footprint and allocate a path to decarbonization. There is also the issue of data access which is absolutely essential. It is very easy to get data from large companies that have been publishing it for several years, but there will sometimes be a lack of information for small companies or the public sector.

For example, the postal bank may have to fund the local baker, but isn’t sure that it measures its carbon dioxide emissions or that it has developed a strategy to reduce its emissions. It’s a bit cartoonish, but this example underscores the fact that we don’t have data yet and that we can’t always chart an exact path for an entire section of the economy. If we take the example of financing a hospital, which is a public structure, we will not necessarily have data on emissions related to the operation of the hospital then. However, this information is crucial.

What must be borne in mind is that the decarbonization commitments made by 2040 or 2050 are largely ambitious. Because we have a course, but we don’t know exactly how to access it because of this missing data and lack of methodology. Today, these difficulties are the same for all financial players. This is why it is necessary to be transparent and rely on scientific scenarios.

What are the points that the Postal Bank still needs to develop in the coming years?

We will focus more on virtuous actors. We will develop policies to redirect our investment flows towards players we consider to be in transition. At the Bank level, we are also developing an internal tool called the Global Impact Index, which will measure the impacts generated by Bank financing and investments. We try to apply it to all our activities with standards that adapt to it, because the effects of mortgage loans to individuals differ from loans granted to companies, for example. It is still in the research and development stage. [recherche et développement]But we hope to be able to gradually roll it out from 2023.

Our commitments are very ambitious for a financial institution, but we must distinguish between what depends on us and what does not depend on us. Banks play an essential role, but they are not sufficient on their own to shift the whole of society towards a low carbon world.