Related Research: Indexing capital requirements on climate
I4CE published a report on indexing capital requirements on climate. This report is not part of the 4i-TRACTION project but is related to the topics of our research.
As the main financier of the French and European economies, banks play a key role in financing the transition. Their current contribution in France is in the order of 8 billion euros per year, but this will need to more than double according to estimates by I4CE. To accelerate this shift for banking institutions and to prevent their increasing exposures to climate risks, the debate has tended to revolve around whether or not there is a need to reform prudential requirements. The purpose of these requirements is to safeguard financial stability and to protect banks in crisis situations, by obliging them to hold reserves against different risks.
For some, prudential requirements must be increased when banks finance activities that are harmful to the climate. For others, they should be reduced for so-called "green" activities. While the debate continues between supporters of a Green Supporting Factor and a Penalising Factor, and while this debate remains too often theoretical, I4CE has launched a study to quantify the concrete impacts of these proposals on the financing of the low-carbon transition and the economy in general.