What
The French Government utilising policy instruments and financing mechanism has created reporting obligations under Article 28 of Energy and Climate Law for the private sector within France. Article 29 of the Energy-Climate Law of 2019 (article 29 LEC) introduces mandatory disclosures for financial entities on their impacts, risks, opportunities and dependencies related to climate and biodiversity.

Goal
This reporting regulation was adopted in order to strengthen the French sustainability disclosure system. Complementing the European reporting framework (Sustainable Finance Disclosure Regulation), article 29 LEC reporting requires additional information on climate change and biodiversity risks and impacts. It notably requires disclosures on financial entity’s policies to align with the Paris agreement and international objectives of the Convention on biological diversity. Article 29 LEC requires clarifications on the integration of ESG factors in risk management systems. The reporting provided for by article 29 LEC is articulated around a clear distinction of information, for each type of policy, relating to governance, strategy, risk management and metrics/targets adopted (in line with TNFD and TCFD recommendations).

Recent activities
Article 29 LEC reporting is progressively leading financial institutions to: set targets related to climate and biodiversity and measure and assess their impacts, risks, opportunities and dependencies related to biodiversity. This regulatory framework is conducive to the development of methods and tools to assess the impact of economic activities on biodiversity such as biodiversity footprint methods. In addition, financial entities with more than 500M EUR of asset under management shall publish the strategy for alignment with international biodiversity conservation targets, with quantified targets, and associated methodological details. Finally, this regulation is looking to introduce a mandatory disclosure framework for asset managers on their policies and alignment strategies related to climate and biodiversity.

Benefits
The Article 29 of the Energy and Climate Law takes over and clarifies the provisions of the French system under Article 173-VI of the energy transition law of 2015.

Lessons learned
Article 29 is a result of 5 years of French experience on sustainability disclosures for financial institutions.

Relevant links and resources
Article 29 of the law on Energy and Climate: Article 29 - LOI n° 2019-1147 du 8 novembre 2019 relative à l'énergie et au climat (1) - Légifrance (legifrance.gouv.fr)