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The Sustainable Finance Observatory was founded following the July 2, 2019 financial marketplace agreement reached under the impetus of the French Ministry of the Economy and Finance, where the main professional organizations and federations representing the Paris financial marketplace made new commitments to combat climate change, to accompany them with monitoring and transparency procedures.

The Sustainable Finance Observatory is part of the Finance ClimAct project, an EU project with an unprecedented budget of €18m aimed at putting finance at the heart of the fight against climate change.

For 4 years, the Sustainable Finance Observatory (SFO) has been publishing open access data for stakeholders around the marketplace. This dynamic data web platform presents two types of data: a monitoring and analysis of the individual ESG commitments of financial players, based on voluntary declarations by each player on the one hand, and sector data collected by industry federations on the other.

The SFO has also published a compliance guide to commitments to highlight the criteria necessary for their validity. This allowed us in 2021 and 2022 to decipher more accurately in the format of detailed grids that we use today for our analyses of the Net-Zero alignment of financial players.

The SFO also presents aggregated data according to 5 sectors of activity: portfolio management companies, specialized financing institutions, insurance, private equity and banks. This transparency endeavor is done in collaboration with the 5 major French federations (AFG, ASF, FA, France Invest, FBF). It especially allowed us to publish the exposure to fossil fuels of the Place de Paris by applying the Urgewald methodology.

We have set up a triple governance between public actors, private actors and a scientific committee guaranteeing the scientific rigor of the data published with the aim of distributing the weight of decision-making bodies and bringing all the necessary business and methodological skills to the project.

The Scientific and Expertise Committee is responsible for five recommendations on various themes: coal-related financing, climate indicators, alignment strategy, financing of unconventional hydrocarbons, transparency on the energy sector, etc.

Finally, the SFO is at the origin of the impetus that gave birth to the One Planet Data Hub, announced on the sidelines of the COP26 by the French President, and which allowed France to strategically position itself within the international platform Net-Zero Data Public Utility.

In short, the SFO has contributed to changing the practices of the financial world and to raising the level of transparency of actors, particularly on facilitated issues, through its publications and the organization of several French and international events.

The Sustainable Finance Observatory’s governance was founded in 2019 on a tripartite basis:

• The Observatory Steering Committee: oversees the smooth running of the project, decides on the indicators and data published, and supplies and processes the data. It is made up of the federations (FBF, FA, ASF, France Invest, AFG), Paris EUROPLACE and the Institut de la Finance Durable.
• The Finance Climact Steering Committee: defines the Observatory's overall strategy and ensures that the objectives set with the European Union are met. It is coordinated by ADEME, and includes I4CE, CGDD, 2Dii, AMF, ACPR, Institut de la Finance Durable and Greenflex.
• The Scientific and Expertise Committee: ensures the rigor and relevance of the data published. This Committee is made up of 4 colleges: NGOs, Public Authorities, Academics and Experts.

However, in a regulatory framework that has evolved significantly since its creation in 2019 (with the appearance of Article 29 of the LEC-29 climate energy law, the SFDR, the CSRD, etc.), the Observatory must adapt its strategy, and this translates, among other things, to a new governance.

The new governance structure will comprise several colleges, each represented by a mixed pair elected for 2 years. The COPIL will therefore comprise:

• The Scientific Committee College, which liaises with the PARC Foundation's Scientific Committee.
• The College of Public Authorities, which ensures compliance with the project's regulatory missions and consistency with national plans.
• The Financial College, which provides the business vision of banks, asset owners and asset managers.
• The Corporate College, which brings the vision of companies as issuers and players in the real economy.
• The Financial Services College, which represents players offering services to financial players, such as consulting and data providers.
• The Civil Society College, which expresses the demands and expectations of civil society via NGOs, associations and political parties.
• The Stakeholder College, which enables associations representing stakeholders and interests to express their work and positions.
• The Think-tank and other data platforms College, which provides links with the work of other national and international players in the field.

With in addition:

• ADEME, permanent founding member.
• The PARC Foundation, permanent founding member represented by the project's General Manager.

Participation in colleges and COPIL is not conditional on financial participation but the entities represented must have legitimacy in relation to the project.

*The various colleges represented in the COPIL can still be modified.

The aim of this new governance structure is to enable the entire sustainable finance ecosystem to be represented. With this new COPIL, a global vision and a needed dialogue platform are created.

In this context, the Scientific and Expertise Committee of the SFO will be dissolved. Members will be invited to join the PARC Foundation's Scientific Committee, which will continue to have a working group dedicated to the Observatory, and whose governance will include a seat on the board. Future publications will be published in English, in order to extend the objective of transformation to the international level and will focus on the work of the PARC Foundation. Its organization and operation are currently being defined but calls for applications are open.

The PARC Foundation (Paris Accord Research Commons) of the Institut Louis Bachelier is a public property initiative launched by the Institut Louis Bachelier in coordination with the Direction Générale du Trésor and under the aegis of one of its research foundations: the Risk Foundation. PARC replaces the ILB’s Green and Sustainable Finance Programme, which has existed for 4 years, with the objective of raising the profile and stimulating the research and data ecosystem on green finance, and this in complete independence thanks to its neutral governance.

The foundation also promotes a goal of excellence by providing significant added value to the quality, reliability, frequency and digitization of so-called «non-financial» tools and models used by practitioners to improve the sustainability of the global financial system on three major pillars:

1. Accelerate research related to the financial materiality of ESG issues and sustainability risk management.
2. Strengthen tools for assessing the contribution of sustainable finance to the Sustainable Development Goals.
3. Create a “smart hub” on ESG data to optimize its access, interoperability, and exploitation by different stakeholders in sustainable finance, including researchers. PARC builds on the ILB’s foundations, network, and chairs to facilitate new research programs beyond the legal scope of the ILB, in coordination with the major initiatives and players of the market and the various European and international initiatives in sustainable finance.

Within the foundation, the new platform, comprising the SFO and the Climate Transparency Hub, will work more closely with the academic world to develop methodological tools for global monitoring of finance's contribution to the transition to a low-carbon economy that respects planetary limits. The aim is also to find new international partners to pursue the development of a methodology for monitoring Net-Zero commitments. This initiative will enable French data to be put into perspective with other geographical areas. In detail, the new platform formed by the CTH and the Observatory will have 4 main areas of work with high added value:

• Publish regulatory data, either from 29LEC reporting via the CTH or collected, in open data with an analysis layer to enhance the readability and comparability of reportings.
• Track the Net Zero commitments of financial players with the Net Zero Donut.
• Continue, at least by 2024, to monitor commitments in line with the principles agreed with the ACPR as part of the European LIFE program.
• Monitor the alignment of the economy, with a particular focus on the European, and even international, scale, to put the progress of the Paris marketplace into perspective.

Other options are currently being considered, such as monitoring companies in transition and their financing or monitoring state indicators.

All data will be freely available and will be automatically collected by an AI or obtained through platforms such as ESAP or NZDPU.

As the Colleges of Governance are being set up, we are therefore opening the call for expressions of interest and you can reach us by writing to us at raphael.tran@sustainablefinanceobservatory.org or by filling out this typeform . Thank you!