106 billion euros: this is the amount of annual investments that must be made in France to achieve our climate objectives by 2030 according to Ademe. Globally, recent studies estimate that cumulative investments in the range of $109-275 trillion are needed to achieve carbon neutrality by 2050!
Like the European taxonomy, all initiatives aimed at accelerating the financing of the low carbon transition are going in the right direction. However, we still lack indicators that are easy to use for companies and capable of making the craftsmen of carbon neutrality visible.
Today, an investor who supports activities that we need to collectively achieve carbon neutrality has no way to be rewarded and value these investments. Only the negative impact of the investments, ie the emissions financed, must be reported in its carbon footprint.
When a company is profitable, it can distribute financial dividends to its shareholders. Why doesn’t the equivalent exist for a company whose activity is beneficial for the climate? How can investors be encouraged to move towards decarbonization activities if they are not rewarded and valued for it? To address this shortcoming, we have created the “Climate Dividends” that we are championing at the Summit for a New Global Financial Pact, currently taking place in Paris.
A “climate dividend” is an extra-financial indicator claimed by the shareholders of a company whose activity has a positive effect on the climate. The idea is simple: instead of looking only at the negative impact of a company on the climate (measured by its carbon footprint), we seek to value the positive contribution of the company to the decarbonization of the economy.
This impact is measured in the form of avoided or sequestered emissions. In the case of avoided emissions, these are emissions reduced by the company’s customers through the use of the products or services it sells to them. The development of these companies providing these solutions must be encouraged. Even if it means increasing their carbon footprints in the short term.
For example, a company that sells heat pumps to replace fuel tanks contributes to achieving our French objective of carbon neutrality. Or, a company that promotes recycling and second life makes it possible to produce without virgin material and therefore also avoids emissions.
Thanks to climate dividends, those companies that market essential solutions for the low-carbon transition can measure their positive impact and distribute “climate dividends” to their shareholders. A climate dividend is one tonne of CO2 equivalent avoided or removed from the atmosphere.
On the investor side, climate dividends make it possible to assess the performance of a portfolio in terms of contribution to global carbon neutrality, in a standardized and therefore comparable way. They also make it possible to increase the financial value of an action and therefore increase the potential return on investment.
Indeed, the value of a share may be based on its ability to distribute financial dividends and climate dividends, respectively proof of the economic and climate value created by the company. By taking on capitalism at its own game, climate dividends promote the creation of climate value and not just economic value.
To support and disseminate this innovation, an association has been created. Its objective is to promote the international adoption of this new indicator of the climate contribution of companies and thus encourage massive investment in the transition.
Finance has a major role to play in the ecological transition, in particular by driving a new paradigm for defining value and by redirecting its flows towards companies with a positive contribution whose solutions must be massively deployed. Climate dividends will play a key role in this race against global warming.
By Brune Poirson, President of the association Dividendes Climat, Sustainable Development Director of Accor and former Secretary of State for Ecological Transition.
This platform is also signed by the founding members of the association Dividendes climat: Baptiste Perrissin Fabert (director of expertise and programs at Ademe); Renaud Bettin (vice-president climate at Sweep); Marie-Anne Vincent (VP Finance at Sweep); Manuel Coeslier (“lead climate and environment expert” at Mirova); Mehdi Coly (co-founder of Team For The Planet); Philippe Benquet (president of Acorus and representative of the Kanopée Partage foundation) and Laura Beaulier (general manager of the Dividendes climat association).
