Case study: How Crédit Mutuel works with its clients and customers to encourage sustainable practices

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

The Crédit Mutuel group engages in open dialogue with all its stakeholders, including members, NGOs, professional organizations, trade unions, competitors, and customers.

ACTIVE PARTICIPATION IN FINANCIAL SECTOR INITIATIVES IN EUROPE AND FRANCE

Crédit Mutuel actively participates in financial sector initiatives across Europe and France.

At the European level, it is a member of various industry associations and contributes to working groups established by European banking organizations to advance the European Sustainable Finance strategy. This includes collaboration with the European Banking Federation (EBF) and the European Association of Cooperative Banks (EACB).

Since the introduction of the Green Deal in 2019 and the 2021 sustainable finance action plan, numerous regulations have been enacted, with initial texts regularly giving rise to new delegated acts and revisions. As a result, legislative monitoring now represents a significant portion of banking industry projects. This process begins with the European Commission’s initial legislative proposal and continues until the text is adopted in the Official Journal of the European Union. The group closely monitors over a dozen regulations, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CS3D), the Sustainable Finance Reporting Directive (SFDR), the Green Taxonomy, the EU Green Bonds Regulation, and the regulation for ESG rating agencies. For each regulation, working groups are formed to provide detailed analysis and facilitate discussions aimed at developing a shared positioning. Additionally, Crédit Mutuel participates in industry-wide responses to numerous ESG consultations at the European level.

Cross-functional projects are also included in the annual roadmap, focusing on topics such as biodiversity, greenwashing, transition financing, engagement with the European Platform on Sustainable Finance, and the implementation of the taxonomy. These initiatives involve discussions among members, external presentations, and industry-wide recommendations.

At the national level, Crédit Mutuel plays an active role in the French Banking Federation (FBF) regarding climate risk prevention through several means:

• Monthly meetings of the Climate and Biodiversity Committee, which gathers representatives from the risk and CSR departments of all French banking groups, occasionally addressing this topic in committee sessions;
• Participation in various working groups organized by the FBF that tackle issues such as the integration of ESG risks into Pillar III reports, green taxonomy, the Corporate Sustainability Reporting Directive (CSRD), biodiversity, the Observatoire de la Finance Durable, and the implementation of ECB guidelines.

CREATION OF TWO MISSION COMMITTEES

In January 2022, following its adoption of benefit corporation status, Crédit Mutuel Alliance Fédérale established a Mission Committee to ensure the organization has the resources needed to meet its objectives. This committee is composed of nine members, with one-third being experts, one-third directors, and one-third employees.

Subsequent to adopting benefit corporation status in May 2022, Crédit Mutuel Arkéa formed its Mission Committee in late June 2022, also comprising nine members, most of whom are from outside the organization, and 45% of whom are women.

CUSTOMER RELATIONSHIP QUALITY

As a testament to the quality of its commitments, Crédit Mutuel has been recognized as the preferred bank of the French public and received first place at the 2023 Podium de la Relation Client®, which honours major brands that stand out in terms of their day-to-day commitment.

How did Crédit Mutuel work with its clients and customers to encourage sustainable practices and enable sustainable economic activities?

In its 2024 PRB Reporting and Self-Assessment Template Crédit Mutuel reports that it works with its clients and customers to encourage sustainable practices and enable sustainable economic activities as follows:

Due to its cooperative nature and regional influence, the Crédit Mutuel group is attentive to societal transitions.

A GROUP COMMITTED TO SUSTAINABLE FINANCE

ESG criteria in loan decisions

This commitment is evident through several initiatives implemented by Crédit Mutuel’s regional groups, which include:

• Creating sector-specific policies for sensitive industries;
• Providing ESG questionnaires to customers;
• Complying with EBA guidelines regarding loan approvals and monitoring.

Additionally, two strategies are employed to integrate climate-related risks into pricing within the Crédit Mutuel group:

• Energy Performance Certificates (EPCs) are taken into account in home loan pricing;
• The ESG score is considered when assessing the cost of credit risk for large corporations.

While the underlying principles remain consistent, the execution of these initiatives and the adjustments—both upward and downward—are determined by each regional group within its respective scope.

These measures aim to incorporate climate-related risks into the cost of credit, potentially motivating customers to mitigate their exposure to these risks and/or seek assistance with their transition.

ESG criteria in investment decisions

For more than 15 years, Crédit Mutuel’s regional groups have been developing responsible investment products and reinforcing their commitments through their asset management subsidiaries (such as Crédit Mutuel Asset Management, Federal Finance Gestion, and La Française).

Integrating ESG factors is a key component of the investment processes at these subsidiaries, which employ dedicated research teams to evaluate the ESG performance of issuers. Their investment strategies are formulated to ensure that decisions are based on both financial and non-financial performance criteria, particularly ESG criteria.

Since 2021, in accordance with Regulation (EU) 2019/2088, known as the SFDR, the primary asset management subsidiaries of the regional groups identified products that promote environmental and/or social characteristics (Article 8 of the Regulation) and those focused on sustainable investment (Article 9 of the Regulation) in their fund offerings.

This new regulation provided an opportunity for the Group’s asset management firms to reaffirm their commitment to responsible finance.

Voting policy of the regional groups’ asset management companies

The asset management firms of the regional groups provide a variety of responsible and/or solidarity-focused products, striving to be active investors in the companies in which they hold shares on behalf of their clients.

These efforts are outlined in reports detailing the voting policy established by the asset management companies of the regional groups, as described in the CSR publications of the respective entities.

FINANCING OF THE REAL ECONOMY

Supporting customers in the green and energy transition

The regional groups of Crédit Mutuel are driving the energy and green transition through targeted loan offerings.

The Crédit Mutuel group has pledged €34.665 billion in loans to the cause, demonstrating its commitment to work directly in the regions to support professionals, farmers and individuals in the green and energy transition, both through structured financing and through its long-standing energy transition financing business as a retail bank.

European taxonomy: identification of green assets

In accordance with Regulation (EU) 2020/852 of the European Commission, the Crédit Mutuel group discloses its balance sheet exposures to taxonomy-compliant sectors.

The EU taxonomy is a set of sustainable development criteria for companies, investors and governments. It identifies economic activities that can be seen as sustainable or environmentally responsible. This framework enables finance players and companies to have a common language and facilitates sustainable investments and financing with the aim of promoting the green economy transition.

As of December 31, 2023, the Green Asset Ratio (GAR) for financial companies was 2.2%, equating to €762 million. This figure represents only companies subject to non-financial reporting requirements, which account for 3.4% of the Crédit Mutuel group’s total assets.

For non-financial companies, the GAR was 5.6%, representing €1.017 billion in aligned assets. The calculation only includes non-financial companies subject to non-financial reporting requirements, based on their disclosures in universal registration documents in 2023. These companies account for 1.8% of total assets.

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

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References:

This case study is based on published information by Crédit Mutuel, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://www.creditmutuel.com/partage/fr/CNCM/telechargements/presse-et-publications/publications/2024/2023-principles-for-responsible-banking-PRB.pdf

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