In accordance with the announcement made on December 11, 2017 at the Climate Finance Day staged in Paris, Natixis is developing the methodology of its Green Weighting Factor by building on the wealth of its well-established sector expertise. The bank, anticipating future changes in the regulations, will apply this factor to the risk-weighted outstandings derived from its financing operations. The Green Weighting Factor leads to a favorable adjustment of these risk-weighted assets for transactions having a positive impact on the climate and environment and, conversely, an unfavorable adjustment for those with a negative impact. This innovative mechanism brings Natixis' financing operations more closely in line with the goals of the Paris Agreement.
The Green Weighting Factor is an internal capital allocation mechanism designed to promote the most environmentally and climate-friendly financing operations. Thanks to this factor, the break-even point anticipated from different financing operations is adjusted according to their impact on climate change.
Four pilot sectors have been identified to test the Green Weighting Factor: the automotive, real estate, electrical, and mining industries. For each sector, Natixis has defined criteria to classify each financing operation in terms of its environmental and climate impact. This methodology will be open-ended and adaptable; it will notably include the criteria of the European classification – or taxonomy – system as and when the group of experts appointed by the European Commission makes progress in this area.
This taxonomy exercise on four pilot sectors has resulted in an operational tool that is now ready to be tested on 31% of Natixis' portfolio of relevant financing operations.
The Green Weighting Factor will be implemented by the end of 2018 and will gradually apply to new asset, project and corporate financing solutions granted by Natixis in its sectors of activity and throughout the world.
Our Green Weighting Factor enables us to support our customers even more effectively in achieving their sustainable growth objectives and extends the European Commission's reflections on the green supporting factor. Its purpose is to measure the extent to which our balance sheet is gradually being shifted in favor of the fight against climate change,” explains François Riahi, Chief Executive Officer of Natixis.