There is a growing trend towards mandatory sustainability reporting and France is leading the way by introducing obligatory carbon reporting for financial institutions. This means that pension funds, insurance companies and other institutional investors in France will have to disclose environmental, social and governance (ESG) issues.
These ESG issues, including risks associated with climate change, are of increasing interest to investors as the world transitions to a low carbon economy. Under the new rules investors will need to set targets and measure progress. They will also be held accountable if these targets are not met.
The announcement was made by finance minister Michel Spapin on May 22nd at the Climate Finance Day conference in Paris. The rule is contained in draft legislation known as Article 48 of the French Energy Transition Law which was recently passed by the French parliament.
France is establishing itself as a climate leader with a host of initiatives from national emissions reductions pledges, to reducing food waste. The UK already requires companies to disclose the risks of climate change and mitigation efforts. Sweden may very well be next. The mandatory sustainability reporting will put pressure on other nations to follow suit.
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