France

Frances 2015 Stratie Nationale bas carbone (SNBC) is a world leader in effective climate law. The SNBC establishes ambitious and legally binding carbon budgets, a carbon pricing trajectory to 2030, and clear processes to develop and monitor the low-carbon transition. Integration of ambitious targets with economic policies is credible, however the complexity and lack of parliamentary accountability are weak points.

A strong commitment on paper to gender-sensitive consultation and participation is driving improvements in civil society and citizen involvement in public policy, but starting from a low base on gender. Corporate governance is in the process of reform, with adoption of Loi PACTE in 2019 strengthening corporate social and environmental responsibility, employees' representation and gender equality requirements for listed companies.

Some efforts to integrate the SDGs into corporate social responsibility (CSR) protocols; most companies listed on the French stock market report on their engagement with the SDGs; and businesses and trade unions are consulted on Frances SDG Roadmap. However, a crosscutting reporting strategy is lacking, and business engagement is purely voluntary.

Some long-running work on moving France beyond GDP from the influential Stiglitz-Sen-Fitoussi Commission, but no specific wealth accounting processes underway. Natural capital accounts and pilot schemes are relatively developed, and the most advanced component of wealth accounts - other than economic accounts.

Strong, public political commitment to sustainable finance, including the implementation of recommendations from the Task Force on Climate-related Financial Disclosures (TFCD). National and EU-level measures on disclosure and labelling; France also a global leader in green bond issuance.

Some green fiscal policies, but with some important setbacks (e.g. planned carbon tax abandoned after 2018 Gilets Jaunes protests). Monetary reform is constrained by the European Central Bank (ECB), but ministers have committed to implementing recommendations of the Network for Greening the Financial System (NGFS). No cross-cutting review of green fiscal and monetary reform is yet envisioned.

The Banque de France, together with its supervisory arm (the ACPR), have played a pioneering role in the development of climate stress testing. Establishing the Network for Greening the Financial System and hosting its international secretariat since 2017, the bank led early research into climate risk exposure and had completed two innovative climate pilot exercises on French financial institutions by late 2020. One of these exercises was as landmark bottom-up test, using both static and dynamic balance sheets spanning a 30-year time horizon, which paved the way for tests undertaken by the EU and UK. Since the pilot exercise, the ACPR has committed to conducting voluntary climate stress tests every 2-3 years. Meanwhile, French financial institutions are required to participate in annual stress tests conducted within the European Union under the auspices of the European Banking Authority. In 2022, the European Central Bank ran its first climate risk stress test on European banks in place of usual annual financial stress testing.

In further progressive research on environmental risk, the Banque de France has put forward "the transformational perspective of double materiality, which acknowledges both the impact of environmental breakdown on financial institutions, and financial institutions' own impact on the environment. This perspective proposes that financial practices should be reshaped to prevent conflicting mandates and enable institutions to proactively support the ecological transition - though the concept has not yet been adopted into policy.

France participates in the EU Emission Trading System (ETS),but low carbon prices remain a problem. A domestic carbon price floor has been considered, but the French government is cautious on green taxes following Gilets Jaunes opposition. Further policy measures are anticipated soon.

France has undertaken some green transition planning, overseen by the Office of the Commissioner General for Sustainable Development (CGDD) and the National Council for Ecological Transition (CNTE). But current strategy lacks detail at the sectoral level, with weak targets in several key sectors like housing energy consumption, agriculture and renewables.

A pioneer in the development of the social economy concept under the 2014 Loi Economie sociale et solidaire (ESS), France has strong SME and social enterprise legislation, with government support schemes for both training and financing of SMEs. Government ambitions to provide specific support to the SME and green sectors are limited by EU competition rules.

Carbon budgets have been adopted with some legally binding elements, but enforcement and judicial review are slightly weaker than with some peers (e.g. UK), with limited parliamentary oversight or involvement.

Frances renewable energy targets are adequate, but the 23% RE by 2020 target is on course to be missed and the 2030 target is also in doubt. A lack of a clear pathway to 2050 indicates only half-hearted political support for non-nuclear renewable energy. The role of nuclear itself in Frances future low-carbon energy mix remains a contentious issue.

Frances 2017 Ecological Transition Plan mentions the circular economy, social fairness and tackling inequality, but lacks clear targets or a specific green jobs plan.

Some exploratory work has been done on integrating sustainability and poverty reduction strategies, especially in the area of energy poverty. But environmental sustainability is largely absent from existing social protection legislation. Following the Gilets Jaunes protests of late 2018, avoiding regressive green policies and addressing Frances growing income inequality has emerged as a priority for government.

Public investments and policies are systematically reviewed regarding their socio-environmental impact, with a mandatory public consultation process. However, the impact of policies on specific vulnerable social groups is under-studied, and comparatively little attention is given to gender issues. Compliance and enforcement is also questionable.

Frances commitment to classical 20th century forms of welfare has restricted innovation, and the current system is marginally less redistributive than the OECD average. Small-scale pilot schemes for Universal Basic Income and local job creation projects have had little impact.

France has a comprehensiveimpact assessment framework for the SDGs, with voluntary measures for businesses to integrate SDGs into CSR reporting. However, the targets are not legally binding and lack compliance procedures.

A basic plan to implement natural capital accounting exists, and some basic environmental reporting on energy, land and material consumption has started, but both the 2016 and 2018 biodiversity protection plans do not include any valuation measures.

Frances independent biodiversity committee (CNB), created in 2016, lacks enough weight in regulatory matters to be effective, with no mandate for natural capital research or policy input.

Taxation on environmentally harmful activities is average for the EU and falls mostly on the energy sector, although taxes on transport, pollution, and resource use are relatively low. Significant fossil fuel subsidies remain, estimated at 8 billion p.a. despite a G7 commitment to phase them out.