Methodology

Concerning the calculation of exposure to fossil fuels :

The FBF has published the aggregated version of the calculation transmitted to the ACPR for its annual report. You will find the methodology below:

"Following the lessons learned from the two previous exercises, discussions continued with the Marketplace in 2022 in order to adopt a common calculation method aimed at converging towards greater homogeneity and thus allowing greater comparability of declarations.

Regarding the definition of commercial activities used for the calculation, and in line with what was agreed in the previous report, institutions were required not to exclude any segment of the fossil fuel value chain from their own accounting and to include upstream, midstream, downstream 1 and trading activities; With regard to the scope of financial activities, and given the diversity of understandings and approaches observed at the end of the 2021 report, a spreadsheet containing the required on- and off-balance sheet lines, with the corresponding FINREP codes, was sent to the institutions in order to converge, once again, on the uniformity of the data collected. In addition, in the absence of a single public list that can be used to assess a company's actual exposure to coal, oil or gas, or at least the most accurate one possible, the ACPR asked that the Global Coal Exit List (GCEL) be used to calculate coal exposure, and that the URGEWALD Global Oil and Gas Exit List (GOGEL) be used to calculate oil and gas exposure2 .

The ACPR is aware of the methodological bias induced by the use of these two lists.

• The main limitation lies in the approach proposed by URGEWALD, which consists in providing a range and not an exact figure, unlike other data providers: this choice may, in some cases, lead to a high degree of overexposure. For example, GCEL indicates a share of revenue from coal of less than 20% for the company Électricité de France (EDF) or ENEL. Following the recommended methodology, this figure of 20% (i.e. the upper limit) is used to weight exposure, thus adopting a conservative measure of exposure, whereas the actual share of income due to coal is less than 1% for EDF and, according to the banks, around 2% for ENEL. Similar findings could also be made in the GOGEL list, the first version of which was published in November 2021.
• Furthermore, the definition of the share of revenue from fossil fuels in the GOGEL list, which also includes the share of revenue from coal, leads to double counting of coal exposures. Finally, the GOGEL list remains largely incomplete: many subsidiaries are not currently taken into account.
• As a result, the estimate resulting from the cross-referencing of data from the establishments concerned and the list provided by URGEWALD leads to an a priori significantly lower exposure than the reality.

Nevertheless, in the absence of any common, public reference list, this approach now makes it possible to arrive at a more homogeneous, if not more accurate, measure, and thus to aggregate the data provided without fear of heterogeneity in order to identify a more coherent trend.

Furthermore, in order to allow for a comparison between the assessment resulting from this "homogenous" method and that derived from the institutions' internal data, the banking groups were invited to produce their own calculations, provided that they stated their methodology and explained it. The ACPR regrets that only two institutions made use of this possibility. Such an assessment would make it possible to better measure the gap between an internal assessment and the one resulting from the use of still imperfect databases such as GCEL and GOGEL and to improve the measurement of exposures on a consistent basis.

Notes :

2 The value chain of the fossil energy sector (coal, oil, conventional and non-conventional gases) can be divided into three main types of activities: (i) upstream, which refers to production, extraction, exploration and drilling activities, (ii) midstream, which groups together transport by all means, storage and export activities, and (iii) downstream, which essentially refers to refining (in the case of oil), distribution and sales activities.

3 As the GCEL list is an exclusion list and currently only provides a range of exposure, usually expressed as a percentage, e.g. of turnover, it has been proposed that in the case of a percentage, the upper figure of the range should be used and in the case of no data, 100% of exposure. "