Our Climate transition plan : a bridge to the future.

Crédit Agricole’s climate transition plan is already having a positive impact on our own carbon footprint. But above all, it enables us to support our customers in their own transition plans. It is based on three complementary focuses:

1. The wide-scale implementation of financing and investments in renewable energies and low-carbon infrastructures

2. Support for all our customers in their own initiatives to reduce energy consumption

3. The swift and planned withdrawal from fossil fuels

Regarding the wide-ranging implementation of financing and investments, Crédit Agricole is the leading private financier and institutional investor in France in the renewable energy sector. Between 1997 and 2023, we enabled the construction of an installed capacity of 108.6 GW of renewable energy, equal to nearly twice the current renewable energy production capacity in France and roughly 50% of the renewable energy production capacity that needs to be installed in France by 2050. The Crédit Agricole S.A. Group has accelerated this momentum in the last few years, increasing renewable and low-carbon energy financing outstandings by 80% between 2020 and 2023, from €9.5 billion to €17.2 billion. And to further strengthen this momentum, we have created a new business line as an energy producer and supplier: Crédit Agricole Transitions & Energies.

With nearly €5 billion invested, Crédit Agricole Assurances also contributes to an installed renewable energy capacity of 13.5 GW, equivalent to the electricity consumption of five million French households. Amundi Transition Energétique’s portfolio of RE projects, built or under construction, amounts to 1.4 GW.

Crédit Agricole Transitions & Energies has structured nearly €650 million in financing for local and regional renewable energy projects and will have 2 GW of renewable energy production capacity by 2027.

Analysis shows that it is at the local level that renewable energies will develop. The regions do not merely play a passive role in global energy policies; they are proactive players, essential to the success of the energy transition. For example, among the numerous initiatives of the Group's entities, the Centre Loire Regional Bank, which hosted the Crédit Agricole S.A. Annual General Meeting, created an energy transition advisory agency in 2022 that quickly demonstrated its effectiveness by supporting 1,560 photovoltaic projects and numerous anaerobic digestion projects in three French departments for a total of nearly €240 million.

?Regarding support for customers, at the Crédit Agricole S.A. Annual General Meeting in May 2022, we committed to implementing trajectories and action plans in ten major business sectors and to decarbonising our financing portfolios and thus contributing to carbon neutrality by 2050. And we have fully followed through on this initiative.

Between 2020 and 2023, our efforts have produced results that are either equal or superior to our ambitions for six sectors. For example, in power generation we have already reduced our emissions by 17% for a 2030 reduction target of 58%. In the automotive sector, we have reduced emissions by 13% for a 2030 reduction target of 50%.

Two sectors are proving “resistant”: cement, because our portfolio is limited to fewer than ten customers, generating strong volatility in our trajectory, and commercial real estate, which is beset by inertia but our action plan is under way and we are confident in our ability to achieve our objectives.

Two other sectors deserve our attention here.

In residential real estate, Crédit Agricole will fully play its role as an advisor and facilitator with real estate owners and thus contribute to achieving the French target of 12.4 kgCO2e/m2/year by 2030. As the leading financier of home ownership access in France and the leading distributor of the ecological interest-free loan,? we launched a large number of initiatives in 2023, including a digital platform designed to help homeowners initiate energy renovation work. However, we are convinced that the decarbonisation of this sector will be possible only if all stakeholders, public and private, commit to the effort, accompanied by incentives to encourage and empower all homeowners to undertake energy renovation work. Because, lest we forget, it is homeowners who decide on implementing renovation work.

The farming sector, in which we have accomplished substantial work, is today required to strike a balance between productivity and sustainability, in particular by reducing the use of phytosanitary products and adopting agroecological practices to safeguard biodiversity. The sector also needs to up the ante on food security and competitiveness in international markets, while at the same time preserving the rural fabric and jobs. Lastly, adapting to climate change and the transition to more resilient agriculture are key challenges on which the sustainability of the sector hinges.

As the bank of eight out of ten French farmers, our role is not to set a trajectory on a unilateral basis but to combine our efforts and support solutions with those of all stakeholders. As such, we have committed to supporting the agricultural world by contributing to the roadmaps set by the profession and sectors, for French farming and for operations.

Regarding the planned withdrawal from fossil fuels, our results are highly encouraging, with a 63% decrease in emissions financed in absolute terms in the oil and gas sector between 2020 and 2023. Our objective for 2030 is to progress twice as fast as the recommendations of the International Energy Agency and we recently confirmed that we will no longer be financing any new fossil energy extraction projects. Between 2020 and 2023, we decreased fossil fuel extraction financing by 20% from €9.4 billion to €7.5 billion. At the same time, we increased renewable energy financing by 80%.

At COP28, the review of the implementation of the Paris Agreement showed a significant lag relative to the initial roadmap. In response, on 14 December we updated our climate transition plan by reserving our financial capacity to speed the development of renewable and low-carbon energy projects:

? We no longer fund new fossil energy exploration and production projects.

? We review our financing on a case-by-case basis according to a regularly updated assessment, taking into account the commitments of energy players to the climate transition.

? We promote the development of energy players in renewable energies through financing or green bonds.

These efforts have extremely concrete consequences:

? We no longer finance specialised independent energy companies, as their sole business activities are in fossil fuels.

? In the oil and gas sector bonds, we participate solely though green bonds or sustainability-linked bonds.

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Climate change adaptation

We are actively contributing to the fight against the causes of climate change. But the effects of this change are already present and will intensify whether global greenhouse gas emissions are significantly reduced or continue to increase at their current pace. We will thus be faced with an inevitable increase in extreme and chronic climate events, at least in the first half of the 21st century.

Due to its geographical location, France is one of the world’s fastest-warming countries. Average warming in France is currently 1.7°C but will rise to 2.7°C by 2050 and in all likelihood reach 4°C by 2100.

A year ago, the government adopted a 4°C increase in temperature as a national benchmark for adaptation. Naturally, this increase is not the desired outcome, which remains 1.5°C by 2100; rather, it stands as a warning signal necessary for sound risk management.

Each tenth of an additional degree will, in varying but inevitable ways, affect property, infrastructure, working and living conditions, health, and the standard of living. Each such rise will weigh on our companies and financial stability with an erosion in the value of certain assets. The drought in the Pyrenees Orientales and the repeated floods in Nord-Pas-de-Calais and Gard are just two dramatic examples of the mounting disasters occurring across our country.

It is now and not later that we need to prepare our regions to absorb this climate “shock”, which is set to worsen. At the same time, we need to tirelessly pursue our efforts to limit greenhouse gas emissions because, if temperatures rise beyond a certain threshold, adapting will no longer be possible. We need to simultaneously avoid the unmanageable and manage the unavoidable. The resilience of our economies and our model of society based on social justice is at stake.

And solutions exist. In all French regions. Unlike carbon neutrality, which makes sense only at the global level, adaptation is a local effort undertaken by each region. Adaptation is not simply about risk. It can also be a source of opportunities and growth, through investments in local solutions, be they technological or nature-based. These solutions have an immediate and concrete reach that are particularly consistent with our raison d’être. Climate change adaptation is now part of our climate transition plan and we have launched initial work in this area.

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We are working on interactions between the financial sector and nature.

Our in-depth work on integrating climate-related aspects into our business activities is now accompanied by efforts concerning nature itself. Preserving and restoring nature are as crucial as climate mitigation and adaptation in our response to today’s dual climate and environmental challenges. We forget all too often that biodiversity – the beating heart of our planet – provides fundamental ecosystem services that support life and drive our economy.

With unprecedented species losses and the deterioration of natural habits, the alarming state of biodiversity is a warning signal that cannot be ignored. Seventy per cent of the world’s wild animal species has disappeared since 1970, leaving us dangling on the precipice of a sixth mass extinction.

Nature is much more than a backdrop to our existence; it is the backbone of our economy. More than half of global GDP depends on ecosystem services provided by nature. Forests, oceans and wetlands play a crucial role in climate regulation, water and air purification, soil fertility and crop pollination, all of which are essential to our food sovereignty.

Nature is often perceived as being in opposition to food sovereignty. However, these two aspects form a complementary fit because, though free of charge, these ecosystem services are invaluable to our society and our economy.

The benefits of nature go beyond economic considerations, deeply affecting our collective well-being. Mountains, forests and oceans are not just resources for us to exploit; they are spaces that inspire, heal and connect us to something bigger than ourselves. Preserving these natural spaces contributes to a healthier, more balanced and more resilient society.

At Crédit Agricole, we have already implemented concrete actions in favour of nature through financing and responsible investment policies to protect biodiversity, together with our first roadmap on nature, and we have also launched specific initiatives.

But we still have much to do.

The urgency of the situation has prompted us to step up our initiatives on nature and work more closely with numerous stakeholders in France and internationally. By co-chairing the “Nature Target Setting Working Group” of the Principles for Responsible Banking of the United Nations Environment Programme Finance with a view to developing an initial guide on recommended objectives for banks, aligned with the Kunming-Montréal Agreement (Global Biodiversity Framework), we have initiated wide-ranging efforts that we consider to be as strategic as our work on addressing climate urgency.

We will be reporting on this initiative as we do on our Climate Transition Plan.