1 October 2019

Climate impact ratings in the financial sector

Carbon4 Finance helped to elaborate a new rating method for the French corporate and investment bank Natixis.

Natixis just became the first bank to integrate corporate climate impact ratings into capital allocation decisions with a new tool called the “green weighting factor”. Financing deals provided by the bank will now undergo an assessment in order to calculate their potential environmental impacts on the climate.

“It is based on a highly detailed sector-based methodology whereby each financing transaction is assigned an environmental rating on a seven-level color scale ranging from dark brown to dark green. This rating is derived from an assessment of the deal’s climate impact and factors in any significant non-climate-related environmental externalities including water, pollution, waste and biodiversity. The rating applies to either the asset or project being financed, or to the borrower for general purpose financings, whether a corporate or public sector client. Each color corresponds to an adjustment factor that is applied to the risk-weighted assets of each transaction and is used to assess its expected profitability.”

This over a year long project aims to align Natixis’ financing deals with the objectives of the Paris Agreement.

Read the article here