The rise in interest rates is reviving the attraction of the French for savings books like the Livret A. Banks are engaged in fierce competition by multiplying the boosted rates for their bank books. While the European Central Bank reprimands banks on their carbon risks, the display of the carbon footprint of bank books must become the rule, said in a forum Vincent Auriac, president of Axylia, a firm specializing in responsible finance.
Vincent Auriac
Vincent Auriac, president of Axylia, a firm specializing in responsible finance
The Livret A rate has recovered markedly: another 0.5% in January 2022, it rose to 2% last August and even 3% at the start of February. It is again becoming the star investment of the French ahead of life insurance with an average revaluation rate of 1.28% last year and probably limited to 2% this year.
Considerable outstandings
The French have long favored booklets with or without tax. The amount of regulated savings (Livret A, Bleu, LDDS, LEP, PEL, PEP, CEL, Livret Jeunes) exceeded 850 billion euros. Ordinary passbooks and term accounts combine 335 billion euros. That is a total close to 1200 billion euros. This is compared to the 1,500 billion euros invested in euro life insurance funds and the 450 billion euros in units of account out of a total of 5700billion household financial assetsaccording to the Banque de France’s assessment.
The booklet remains a formidable loss leader
A communication issue
2022 was very complicated with a decline of -10% for bonds and for CAC 40 shares. In such a context, savings accounts remain a formidable loss leader combining positive returns and high liquidity. Many players such as Distingo, Cashbee or other Monabaq are also multiplying the boosted rates to attract deposits from individuals.
Carbon footprint of passbooks and monetary funds
But these products embed CO2 through the use made of the deposits. Surprisingly, no carbon numbers are available for the rulebooks. For bank books, we can consider that their carbon footprint is that of the banks’ balance sheets. According to Oxfam, it would amount on average 480 kilos for 1000euros placed which is equivalent to the daily use of a car for three months. The biggest footprint would be that of a booklet from the Socit Generale (650 kilos), the weakest is offered by the Crdit Coopratif and the NEF (120 kilos). We very often do not have figures for new players like Orange Bank or the ethical new entrants, the closest to climate requirements.
Imposing standardized, clear and transparent information that allows the carbon comparability of savings accounts
The challenge of climate change
The European Central Bank (ECB) has carried out an in-depth review of the climate-related risk management of 186 banks in 21 countries with total assets of 25,000 billion euros. Observation: 60% of banks do not have an adequate system to identify and manage the climatic and environmental risks of their investments. The ECB has set deadlines for each bank to come into compliance by the end of 2024.
In this context, financial actors must use financial and climate education. In line with the ECB’s timetable and the SFDR/MIFID regulations (which provide for better non-financial information for savers and taking into account their expectations in this area), regulators must impose standardized, clear and transparent information that allows the carbon comparability of savings accounts with the other investments, in the interest of the French people and the climate.