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The Tibi Initiative : Phase-2 and Perspectives

2024-05-15T00:00:00+02:00

1 - Phase 2 of the Tibi initiative: Amplifying the notable success of Phase 1

Phase 1 of the Tibi Initiative

Launched in 2019, the "Tibi" initiative positioned France as the leading technology investment ecosystem within the European Union. It aimed to increase the financing capacity of technology companies by mobilizing the savings of institutional investors (LPs). In 2019, 21 French institutional partner investors committed to invest €6 billion between 2020 and 2022 in late-stage private equity funds and in publicly traded tech funds established in France (Global Tech). The French State acted as a "facilitator" of this French finance marketplace initiative, through political support and coordination orchestrated by the French Treasury.

The partner investors of the initiative exceeded their promise to invest €6 billion in "Tibi 1", with a total of €6.4 billion invested in approved funds. The commitment of the LPs from Phase 1 is also measured by the investment pace of the approved funds (9 investments over 3 years on average by the LPs).

The initiative was a catalyst for the tech ecosystem, with nearly €30 billion injected, of which about two-thirds went into “Tibi” labeled late-stage private equity funds and one-third into approved publicly traded funds. This acceleration has contributed, in addition to other initiatives carried by the French State, making France the EU country that raised the most funds since 2022. In 2023, French technology companies raised €8.3 billion, compared to €6.6 billion in Germany.

Phase 2 of the Initiative

"Tibi 2" aims to consolidate this achievement with a commitment of €7 billion from LPs. This new phase covers a broader scope: in addition to late-stage and publicly traded tech segments, an early-stage segment continues to feed the primary pool of technology startups and the financing of breakthrough innovation projects.

Beyond merely financial flows, Phase 2 aims to strengthen France's competitive advantages: density, diversity, and depth of the ecosystem; size of the managed capitals; support for the most ambitious startups; and the dynamic of the human ecosystem. It also aims to better target market segments that are less well covered: financing of deep tech and industrial and ecological transitions; financing of breakthrough innovation in established companies; enhancing of the primary financing capacities of the stock market ecosystem.

The base of partner investors in the initiative has significantly expanded during Phase 2. It increased from 21 investors initially, then to 30 at the launch of Phase 2 in June 2023, and to 35 investors in May 2024. This demonstrates the attractiveness of this national project, which now involves not only institutional investors but also large corporations and Family Offices.

In this context, the mission continued its work of persuading investors who wish to commit to medium-term technology financing. In May 2024, five new partner investors joined the Tibi initiative: Groupe ADP, La Française des Jeux, MACSF, Mérieux Développement, and Pfizer.

The mission notes a significant enhancement of the ecosystem's ambitions. As of the end of April 2024, the mission had received nearly 130 applications for approval for Phase 2, with 54 funds approved by the end of April 2024 (50 in the non-listed segment and 4 in the listed segment). More than 15 venture capital fund candidates intend to manage more than one billion euros each. According to the mission, this ambition appears credible for the vast majority of them.

2 - The Tibi initiative benefits both the fund ecosystem (listed and unlisted) and French startups

(i) A diversified and large unlisted ecosystem

Since the launch of the initiative, 92 venture capital and growth capital funds have received the “Tibi” label in the unlisted segment, managing €22 billion to date and targeting a portfolio of €35 to €40 billion. Partner investors have contributed to more than a quarter of the funds raised. The dry powder of the approved funds is estimated at €13 billion. Given the upcoming fund applications (new or successors to those already approved), it is estimated that the technology funds of the French financial marketplace will manage between €40 and €50 billion by 2026, with the potential to have around fifteen late-stage funds managing more than €1 billion each.

The 92 approved funds reflect the diversity and quality of the French financial marketplace: 53 late-stage funds (including 15 first-time), 37 early-stage funds (including 7 first-time), and 2 secondary funds (including 1 first-time). The mission counts 43 generalist funds, 34 deeptech funds (including 16 health funds), 13 ecological/energy transition funds, including 3 impact funds, and 2 secondary funds. A quarter of the approved funds are "first timers," demonstrating the entrepreneurial dynamism of the marketplace. Numerous recruitments at all levels of seniority followed the development of the funds. Effectively, the unlisted funds have recruited 348 people (including 174 seniors) since their labeling, a 40% increase in workforce for the French finance marketplace, according to the inititaive.

The approved funds invest in highly diversified sectors, with deeptech leading (27% of the total investments made by the approved funds), followed by software (23%), platforms (22%), and fintech (6%). Across the board, the health sector accounts for nearly 20% of investments, and ecological and energy transitions over 10%. The deeptech sector includes primarily companies in the health sector (medtech and biotech) and to a lesser extent, energy (5% of the total investments of the funds), cybersecurity (4%), mobility (2%), and AI (1%). The expansion of the initiative to include early stage and funds focusing on energy, ecological, or digital transitions contributes significantly to increasing investments in deeptech and transitions and correspondingly decreases the proportion of investments in platforms.

(ii) A growing nascent listed ecosystem, capable of significantly participating in the IPOs of French tech companies

Since the launch of the initiative, 29 Global Tech funds have been approved within the listed segment. As of December 2023, they manage €15 billion. LPs have contributed to nearly 20% of the assets under management. The largest fund manages €4 billion, the second €2 billion, and three others have assets exceeding €650 million (compared to none in 2022). A point of attention is the increase in the size of other players which have, for most of them, been created very recently. Critical size of a fund is often considered a necessary condition to be considered for investment by institutional investors. Therefore, the action of Global Tech funds must be accompanied by a greater participation of generalist funds in IPOs.

The investments of listed Global Tech funds cover a very diversified set of sectors (health, cleantech, fintech, cloud, AI, robotics, semiconductors, industry 4.0, particularly), which mainly focuses on large cap (80%) and to a lesser extent, on small and mid-cap (20%). Among these 29 Global Tech funds, 20 are generalists, 5 are dedicated to ecological and energy transitions, 3 funds cover AI, 1 fund covers the silver economy (or seniors' economy), and specifically targets the IPOs of French companies.

The development of the funds has been accompanied by numerous recruitments at all levels of seniority. The listed Global Tech funds have recruited 55 people (including 32 senior level) since their approval.

(iii) A very substantial contribution to the financing of the most ambitious French startups

The Tibi-approved VC funds invest primarily in France, due to domestic bias, while being geographically diversified. They thus see a very large part of the international deal flow and testify of the international influence and reputation of France. The approved late-stage funds have invested nearly 50% of their portfolio in French startups and scale-ups, 30% in the rest of the EU, and 20% in the rest of the world (mainly in the USA and the UK). It comes to no surprise that early-stage funds are proportionaly more allocated in France than are late-stage funds (54% vs 47%, respectively) and less allocared in the rest of the world (14% vs 20%, respectively). The proportion of investment in the EU, excluding France, is similar between these two asset classes, at 33%.

Approved funds are present in almost all major fundraisings in 2023 and more than half of fundraisings over €50 million. They contributed to 90% of the fundraisings exceeding €100 million and 56% of the fundraisings exceeding €50 million. Additionally, since the beginning of the initiative, the approved funds have invested in 14 French unicorns and nearly 50 startups from the Next40/FT120.

On the stock markets, the approved Global Tech "listed" funds have invested 10% of their portfolio in France, 11% in the rest of the EU, and 79% in the rest of the world (mainly in the United-States). This allocation reflects the reality of the technological investment universe, albeit with a European bias. These proportions are expected to improve positively with the emergence of major European listed values, still in growth stage in the VC portfolios. The mission can be perceived as a reminder that supporting Global Tech funds leads to the strengthening of the ecosystem of qualified managers capable of taking structural positions in the future IPOs of French companies.

Consequently, the Global Tech funds from the listed segment have been systematically active during the IPOs of French companies by participating in the price setting exercice. These funds thus constituted 25% of the order books for OVH and Believe. They were also at the forefront of the recent IPO of Planisware (April 2024), which was heavily oversubscribed.

(iv) In 2023, despite adverse economic conditions, LPs’ investments have been overally satisfactory

The investments of the partner investors continued in 2023, despite a challenging interest rate market environment. The dynamics were very heterogeneous in 2023, but overall, the investments exceeded the expectations set that year for the initiative. The partner investors indeed invested €2.5 billion since the launch of Phase 2, of which about two-thirds were in the approved unlisted late stage and early stage funds, and one-third in the approved listed equity funds. In the unlisted segment, €1.3 billion were invested in “Tibi” labeled funds.

3 - Perspectives of the Tibi Initiative

i) Regarding LPs’ commitments:

"Tibi 2" retains the goal of reaching €10 billion for three main reasons: (i) the commitment of new investors, (ii) the anticipated improvement in the financial environment which will enable an increase in the investments from partner investors; (iii) the quality of the offering from funds and financing projects (performance, teams, and investment thesis in particular), which is likely to stimulate investor demand.

ii) Regarding financial instruments:

Financing breakthrough innovation projects constitutes a second pillar of "Tibi 2". This involves financing high-risk industrial projects with a proven technological component, via Special Purpose Vehicles (SPV), Joint Ventures (JV), or spin-offs from listed or unlisted French companies. These projects may offer interesting risk-return profiles, particularly after initial technological de-risking. Several projects have already been brought to the attention of the initiative.

iii) Regarding IPOs:

IPOs are a strategic objective of the initiative, primarily because they represent the preferred exit strategy for venture capital investments. This is largely due to IPOs providing substantial comfort regarding the ongoing independent development of successful French startups. However, it has been noted that across Europe, including the United Kingdom, IPOs are hindered by the limited engagement of institutional investors. This challenge stems from both cyclical and structural issues, with a notably insufficient proportion of capital invested in conviction strategies. Promoting the initiative's Global Tech funds is a preliminary measure to address this issue. The mission will continue to explore and implement strategies both in France and internationally to enhance the efficacy and appeal of IPOs.

iv) Regarding investors:

Internationalization of the initiative will continue to be developed, in a context where several European projects are being established to achieve similar results. The mission will seek reciprocal relationships to increase the number of LPs of the initiative and foreign investment funds operating in France, particularly with the support of Experts en Financement des Entreprises Technologiques (EFET). The EFET comprises about fifteen investment banks and placement agents who support the mission pro bono to raise awareness among international investors and funds about the attractiveness of the French ecosystem.

The robustness, density, and depth of the French technology financing ecosystem are not only objectives but also prerequisites for the mission's success. Since the initiative’s validation, the funds involved have made a total of 403 hires, with 90% of these positions located in France and more than half at a senior level.

v) Regarding training:

The mission will persist in its efforts to scale up the ecosystem by co-organizing a variety of conference and training sessions. Since 2019, it has provided LPs with events that cover a broad spectrum of technological themes, including IPOs, semiconductors, artificial intelligence, energy transition, and quantum technologies. These events are led by experts from accredited funds, startups financed by these funds, and the EFET. Additionally, a diploma-awarding training cycle focused on HealthTech, offered through the École Polytechnique Executive Education, was made available to the initiative’s partner investors and the funds. This program aims to enhance the engagement of investors with this strategic asset class vital to France and was collaboratively designed by France Biotech, the Health Innovation Agency, and the initiative itself. Plans to introduce future training cycles focused on other deep tech verticals are underway.

Brèves économiques des Pays nordiques n°67

2024-01-29T00:00:00+01:00

Second Meeting of the Creditor Committee for Zambia under the Common Framework for Debt Treatments beyond the DSSI

2022-08-01T00:00:00+02:00

The creditor committee examined the macroeconomic and financial situation of Zambia, including its long-term debt sustainability, and its formal request for a debt treatment under the “Common Framework for Debt Treatments beyond the DSSI” endorsed under the Saudi G20 Presidency in November 2020, which was also endorsed by the Paris Club.

The creditor committee supports Zambia’s envisaged IMF upper credit tranche (UCT) program and its swift adoption by the IMF Executive Board to address Zambia’s urgent financing needs. The creditor committee encourages Multilateral Development Banks (MDBs) to maximize their support for Zambia to meet its long-term financial needs.

Consistent with their national laws and internal procedures, creditor committee members are committed to negotiate with the Republic of Zambia terms of a restructuring of their claims to be finalized in a Memorandum of Understanding (MoU), in accordance with the “Common Framework for Debt Treatments beyond the DSSI”.

The creditor committee stresses that the Zambian authorities are expected to seek from all private creditors and other official bilateral creditors debt treatments on terms at least as favorable as those being considered by the creditor committee, in line with the comparability of treatment principle. Consequently, the creditor committee urges private creditors and other official bilateral creditors to commit without delay to negotiate with Zambia such debt treatments that are crucial to ensure the full effectiveness of the debt treatment for Zambia under the Common Framework.

Background notes

1. The creditor committee for Zambia was formed on June 16, 2022, in application of “Common Framework for Debt Treatments beyond the DSSI” endorsed by the G20 and the Paris Club in November 2020.

2. The members of the creditor committee are representatives of countries with eligible claims on Zambia. China and France co-chair the creditor committee while South Africa acts as a vice-chair.

3. Observers at the meeting were representatives of the International Monetary Fund and the World Bank Group.

+ More informations on the Paris Club website >>

Council agrees on the Carbon Border Adjustment Mechanism (CBAM)

2022-03-21T00:00:00+01:00

For that purpose, CBAM targets imports of carbon-intensive products, in full compliance with international trade rules, to prevent offsetting the EU’s greenhouse gas emissions reduction efforts through imports of products manufactured in non-EU countries, where climate change policies are less ambitious than in the European Union. It will also help prevent the relocation of the production or the import of carbon-intensive products.

The products of the following sectors will be covered by CBAM: cement, aluminium, fertilisers, electric energy production, iron and steel.

CBAM is designed to function in parallel with the EU’s Emissions Trading System (EU ETS), to mirror and complement its functioning on imported goods. It will gradually replace the existing European Union mechanisms to address the risk of carbon leakage, in particular the free allowances of EU ETS allowances.

Compared to the initial proposal by the Commission, the Council opted for a greater centralisation of the CBAM governance, where it makes sense and contributes to greater efficiency. For example, the new registry of CBAM declarants (importers) is to be centralised at EU level.

The Council also foresees a minimum threshold which exempts from the CBAM obligations consignments with a value of less than €150. This measure would reduce administrative complexity, as around one third of consignments to the Union would fall under that category, and their aggregate value and quantity represents a negligible part of greenhouse gas emissions of total imports of such products into the Union.

The French Treasury is mobilised for the CBAM

Since the announcement of the Green Deal in December 2019, the French Treasury has contributed to the design of a carbon border adjustment mechanism (CBAM) and then, in conjunction with the other relevant ministries, negotiated its implementation. Following the proposal formulated by the French authorities in response to the public consultation organised by the European Commission on the subject at the beginning of 2020, the French Treasury organised an international event in March 2021, bringing together European political leaders, academics, experts, representatives of international organisations and civil society actors from non-EU countries in order to stimulate reflection on the purpose and objectives of this mechanism. This event was accompanied by the publication of a Tresor-Economics and an opinion piece signed by several European ministers. Since the publication of the Commission's proposal for a regulation on 14 July, the Treasury has been working with the French Permanent Representation in Brussels and other ministries to develop the compromise reached between Member States on Tuesday 15 March.

Next steps

The Council still has to make sufficient progress on a number of issues which are closely related to CBAM, but are not part of the draft legal text of the CBAM regulation. This concerns in particular the phase-out of the free allowances allocated to industry sectors covered by the CBAM, established by the EU ETS directive, and appropriate solutions on the issue of limiting potential carbon leakage from exports, so that economic efficiency, environmental integrity and WTO compatibility of the CBAM are ensured.

Two other issues will continue to be followed:

the proposals by the Commission for own resources, based, inter alia, on revenues from the sale of CBAM certificates, which are under consideration for deliberation by 1 July 2022, in accordance with the inter-institutional agreement of 16 December 2020;
the Council noted the importance of greater international cooperation with third countries, including through the establishment, in parallel to the CBAM, of a climate club where carbon pricing policies can be discussed and encouraged.

Once sufficient progress will have been achieved at the Council, the Council will start negotiations with the European Parliament, after the latter has agreed its position.

Background

The Commission presented its proposal for a regulation establishing a Carbon Border Adjustment Mechanism on 14 July 2021. It aims to address the risk of carbon leakage caused by asymmetrical climate policies of non-EU countries (where policies applied to fight climate change are less ambitious than those of the EU). Application of the CBAM would prevent the emissions reduction efforts of the Union being offset by increasing emissions outside the Union due to the relocation of production to non-EU countries or increased imports of carbon-intensive products.

Technical work on the proposal takes places in an Ad Hoc Working Party on CBAM, which the Council specifically established for negotiations on this proposal. At its meeting on 7 December 2021, the ECOFIN Council took note of a progress report by the Presidency.

Minister of the Economy, Finance and the Recovery

"The agreement in the Council on the Carbon Border Adjustment Mechanism is a victory for European climate policy. It will give us a tool to speed up the decarbonisation of our industry, while protecting it from companies from countries with less ambitious climate goals. It will also incentivize other countries to become more sustainable and emit less. Finally, this mechanism responds to our European ambitious strategy that is to accelerate Europe’s energy independence."

A record balance sheet for the attractiveness of foreign investment in 2021

2022-03-17T00:00:00+01:00

2021, a record year for international investments in France: 1,607 investment decisions were recorded, up 32% compared to 2020. These project announcements would help create or maintain 45,008 jobs, i.e. 30% more than in 2020. The indicators in the report published by Business France have therefore exceeded their 2019 level (1,468 projects recorded for 39,542 jobs), reflecting France's renewed attractiveness in the context of the global pandemic.

66% of investment decisions came from Europe, up 36% from 2020, while the share for North America and Asia was 19% and 8% respectively. Germany has become the leading foreign investor in France, overtaking the United States (18% of investment decisions vs 15%). The United Kingdom rounds out the top three with 9% of investment decisions, followed by Belgium (7%) and the Netherlands (6%).

Business France's report seems to confirm France's reindustrialization direction

More than a quarter of the investment decisions recorded (460 out of 1,607, or 28.6%) involve industrial projects, which is again a very sharp increase compared to last year (+49%). Most of these industrial projects are site expansion projects (83%). It also appears that 29% of the projects and 34% of the jobs potentially created involve production activities. With 155 investment projects, the R&D and engineering sector is expected to generate over 3,000 jobs.

The investment projects identified are spread throughout the country, benefiting from the unfolding of Team France Invest

The main regions hosting projects are Ile-de-France, Auvergne-Rhône-Alpes, Grand Est, Hauts-de-France and Occitanie. However, the north-eastern quarter of the country concentrates the projects likely to create or maintain the most jobs. The report also states that 45% of foreign investment decisions involve municipalities with fewer than 20,000 inhabitants. This strong territorial network seems to be benefiting from the efforts of Team France Invest, since Business France has shared 1,930 projects with the regions and investors have received 1,222 territorial offers to facilitate their investment.

The full report will be published at the end of March.

An essential mission of the French Treasury

The French Treasury, with its network abroad, has stepped up its activity in this area of foreign investment attraction. As a member of Team France Invest, the Treasury plays a very active role in the organisation of the annual Choose France Summits and the investment announcements that traditionally accompany this event. The day of 17 January 2022 dedicated to attractiveness (following the cancellation of the in-person summit due to the pandemic context) was thus the opportunity to announce 21 investment projects, representing more than €4 billion in investments and expected to create 10,000 jobs. But the Treasury's economic services network is also very active in the area of prospecting abroad, and is behind some of the investment projects listed in this report, with more than 200 investment projects identified and/or supported in 2021.

Methodology of Business France's annual report

Available since 1993, the report lists foreign investment projects that create sustainable employment. It is based on project announcements validated by the teams of Business France and the Regional Development Agencies and counts the number of associated jobs. The number of jobs created or maintained retained in the Balance Sheet is that announced for the next three years, this period corresponding approximately to the time horizon for programming investments by companies.

Review of the Franco-German Fiscal Policy Seminar 2021

2021-12-02T00:00:00+01:00

On 9 and 10 November, the Franco-German Fiscal Policy Seminar was held, jointly organised by the German Federal Ministry of Finance and the French Treasury. This annual seminar aims to establish links between the world of academic research and public policy makers. This year's theme was "One year through the COVID-19 crisis".

The objective of this seminar is to present and discuss cutting-edge research in order to improve understanding of the economic mechanisms at work during and especially after the pandemic, and to inform public decision-makers on the appropriate responses, particularly in a Franco-German context which benefits from a common knowledge base.

The seminar was organised around five sessions (i) the impact of the crisis on covid, (ii) the debt burden, (iii) sovereign interest rates, (iv) fiscal stabilisation and (v) strengthening the resilience of the economic and monetary union. These sessions were preceded by a keynote lecture on the anatomy of the global savings glut by Mortiz Schularick (Sciences Po and University of Bonn), with the seminar being opened by Agnès Bénassy-Quéré (French Treasury and Paris School of Economics) and Jakob von Weizsäcker (German Federal Ministry of Finance).

14 papers were presented by their authors during this seminar. These papers were selected, via a call for papers, by the members of the Scientific Committee of the seminar.

+ The full report (in french) >>

Why a Franco-German seminar ?

Agnès Bénassy-Quéré (French Treasury & Paris School of Economics)
Jakob von Weizsäcker (German Federal Ministry of Finance).

Keynote

Mortiz Schularick (Sciences Po and University of Bonn)

Session 1 - The covid crisis unfolding

Causal effects of closing businesses in a pandemic : Presentation - Discussion
Supply shocks in supply chains: Evidence from the early lockdown in China : Presentation - Discussion
From Macro to Micro: heterogeneous exporters in the Pandemic : Presentation - Discussion

Session 2 - Debt overhang

The Debt Capacity of a Government : Presentation - Discussion
Breakup and Default Risks in the Great Lockdown : Presentation - Discussion

Session 3 - Sovereign interest rates

The Liquidity Channel of Fiscal Policy : Presentation - Discussion
Dispelling the Shadow of Fiscal Dominance? Fiscal and Monetary Announcement Effects for Euro Area Sovereign Spreads in the Corona Pandemic : Presentation - Discussion
Do Fundamentals Explain Differences between Euro Area Sovereign Interest Rates? : Presentation - Discussion

Session 4 - Fiscal stabilization

Does tax policy work when consumers have imperfect price information? Theory and evidence : Presentation - Discussion
What are the price effects of temporary VAT Changes ? Evidence from Germany : Presentation - Discussion
Should We Insure Workers or Jobs During Recessions? : Presentation - Discussion

Session 5 - Strengthening the resilience of the EMU to future shocks

The Effects of Government Spending in the Eurozone : Presentation - Discussion
Monetary-Fiscal Crosswinds in the European Monetary Union : Presentation - Discussion
Conditionality in Official Lending: Compliance through Strategic Assessment : Presentation - Discussion

Crédits photo : Ludovic Suttor-Sorel

The Group of Creditors of Cuba and the Republic of Cuba agree to defer payments due under the 2015 agreement

2021-06-10T00:00:00+02:00

This agreement provides more time to the Republic of Cuba to honor several payments due under the 2015 Arrangement, while maintaining the present value of these amounts.

During the meeting, the delegation of the Republic of Cuba provided a description of the economic and financial situation of its country and presented the measures taken by the Government of the Republic of Cuba to support Cuban economic development in the context of the COVID-19 crisis.

The representatives of the Governments of the Group of Creditors of Cuba and the Republic of Cuba confirmed their willingness to preserve the 2015 Arrangement and their commitment to ensure the full implementation of this arrangement, which is a key milestone and entailed a normalization of financial relationships between the Group of Creditors of Cuba and the Republic of Cuba.

Background note:

The Group of Creditors of Cuba includes Australia, Austria, Belgium, Canada, Denmark, Finland, France, Italy, Japan, the Netherlands, Spain, Sweden, Switzerland and the United Kingdom.

France remains the most attractive country in Europe for foreign investors

2021-06-10T00:00:00+02:00

France held its no. 1 position in 2020, receiving 985 investment projects across the country. For the second year running, it was ahead of the United Kingdom (975) and Germany (930).

This achievement demonstrates the robust fundamentals of the French economy, strengthened by the proactive reforms the Government has implemented over the last four years.

A vast programme of long-term reforms has been implemented since 2017 to enhance France’s attractiveness for businesses. The Government has taken strong steps to boost competitiveness: cutting corporate taxation, reforming the labour market, making the research tax credit permanent, and reforming the taxation of persons through the creation of the flat tax on income and the real estate wealth tax.
In addition, the Government has worked to simplify procedures for companies and investors, particularly through the 2019 business transformation and growth (PACTE) Act. These structural, long-term reforms made France Europe’s most attractive country in 2019.

France’s continued leadership this year demonstrates the effectiveness of the massive support measures deployed by France to address the economic consequences of the COVID-19 crisis. An exceptional emergency plan was implemented to support companies and preserve the economy’s fundamentals, jobs and, therefore, skills and expertise, with a clear result: foreign investors remain confident in France, as shown by regular reinvestment in their French sites (60% of projects identified are extensions).

The swift implementation of the France Relance recovery plan in summer 2020 and the Government’s continued attractiveness policy have bolstered France’s position in Europe. This survey confirms the excellent perception of the French business environment and the Government’s economic policy among international business leaders: 44% of foreign investors think France Relance is more effective than the recovery plans adopted by other European countries, while 56% of investors questioned planned to bring back activities to France.

The detailed responses show that France stands out in many categories. It ranks first for:

Installation of industrial projects, well ahead of competitors, with 341 manufacturing and industrial projects as against 153 in Turkey and 112 in the United Kingdom.
Installation of R&D centres, with 115 new investments in 2020, ahead of the United Kingdom (114) and Germany (63).
Job creation, with 30,558 new jobs created in 2020, up 21.6% since 2017, including 10,636 jobs created in the industrial sector (35% of the total).

Moreover, 58% of business leaders believe France can become a global leader for ecology in the next five years.

Lastly, thanks to the post-Brexit effect and the attractiveness of the Paris financial centre, projects in the finance sector rose by 23% in 2020. This momentum makes Paris a leading European financial centre.

For more details, EY reports.

Publication of the implementing decree of Article 29 of the Energy-Climate Law on non-financial reporting by market players

2021-06-08T00:00:00+02:00

Published in the Official Journal on May 27^th 2021, the implementing decree for Article 29 of the Energy-Climate Law revises, clarifies and strengthens sustainability-related financial disclosures for market players. The decree contributes to greening the financial system as it supplements existing European legislation in three complementary areas: climate, biodiversity, and the integration of ESG factors in governance and risk management of financial institutions - making it is a cornerstone of sustainable finance legislation.

The decree is in line with existing European law, which has been strongly influenced by a pioneering French legislative framework since 2015

Since 2015, the French legislative framework already includes a regulatory framework for ESG transparency of investors (most notably on climate change). Article 173-VI of the French Energy Transition for Green Growth Act already required, indeed, systematic disclosure of the ways in which ESG criteria are taken into consideration in investment policies and risk management procedures, while encouraging financial actors to factor in climate-related risks.

The application review of the French framework then enabled, in 2019, to take stocks of lessons learned. It strongly influenced the European Disclosure framework, and most particularly the so-called "Disclosure" regulation - one of the pillars of the EU sustainable finance strategy.

Article 29 of Law No. 2019-1147 (Energy-Climate Law) of November 8^th 2019 falls within this context, and articulates French and EU requirements with a triple objective:

Safeguard and clarify the regulatory layout resulting from Article 173-VI;
Enhance this layout in order to meet the requirements of the Energy-Climate Law, with a focus on climate change and biodiversity erosion-related risks disclosure;
Learn from the lessons of French non-financial reporting experience, notably with regards to the structuration of information disclosed according to the following key pillars (defined by the Task Force on Climate-Related Financial Disclosures): strategy, governance, risk management and the use of specific metrics and targets.

The implementing decree supplements European law in 3 key areas

The implementing decree defines the practical details of Article 29 and complements European law in three key complementary areas:

Climate - notably with the required disclosure of alignment strategies with regards to the temperature objectives of the Paris Agreement (quantitative greenhouse gas emission targets to be set every five years until 2050), as well as the share of Taxonomy-aligned assets (or balance-sheet) and finally the share of fossil fuels related activities;
Biodiversity - notably through the required disclosure of alignment strategies with regards to international biodiversity preservation objectives (quantified target to be set);
ESG factors to be fully integrated in the risk management, governance and transition support systems (notably shareholder engagement) of financial actors.

+ Read the decree >>

The decree implementing Article 29 of the Energy-Climate Law was prepared jointly by the French Treasury Department and the Ministry for the Ecological Transition. Officers from the French Treasury carried out the upstream technical analysis and in-depth consultations prior to the drafting of this text. A close dialogue was maintained with market participants and supervisors of Paris marketplace, as well as think tanks, research institutes and non-governmental organizations.

+ Lire en français >>

Seven countries launch international coalition “Export Finance for Future” (E3F) to align export finance with climate objectives

2021-04-14T00:00:00+02:00

For the first time, a group of countries publicly demonstrate their willingness to both massively increase support for sustainable and climate-friendly projects and impose restrictions on fossil fuels overseas.

First movers taking coordinated action is essential to build momentum at a global level and accelerate the transition to a low-carbon economy. Leading by example, the E3F coalition aims at gathering quickly the largest number of new member countries so as to gain a critical mass, both to accelerate the progressive phasing out of carbon-intensive projects and significantly increase the financial support to exporters’ projects compatible with Paris Climate Agreement. The seven signing countries today call upon all other countries to join the coalition and align export financing with climate objectives.

The seven members of the E3F coalition adhered today to a set of principles (read full statement of principles below) and, in particular, commit to:

Develop incentives to better support the development of exports to sustainable projects in all sectors of the economy;
Ending trade and export support directed to unabated coal power;
Reviewing our trade and export finance support to fossil fuels and assess how to best phase it out, taking into account industries’ respective characteristics;
Starting a climate-oriented review of our respective trade and export finance activities, so as to have a shared and documented understanding of their climate impacts, and work on improving transparency on climate-related information, in particular when it comes to the identification of sustainable projects;
Promoting the initiative and engage with other providers of official trade and export finance, in all relevant fora and in particular in the OECD, with a view to shape a level playing field that would duly take the climate emergency into account.

French Minister of Economy, Finance and Recovery, Bruno Le Maire, declared:

“Finance must be a driving force in the fight against global warming. The “Export Finance for Future” Coalition is part of this strategy. Today, for the first time, several countries publicly committed to massively increase support for sustainable projects and to assess how to best phase out export finance support to oil and gas industries. The moment is decisive. I invite all countries sharing our convictions to join this alliance to ensure full alignment between our national emission reduction strategies and our trade and export support policies and thus make a significant contribution to the fight against climate change. Ecological transition is the major challenge of the twenty-first century, and we can only take it up together.”

Statement of principles

Find below the statement of principles signed on April 14th by: Peter Altmaier – Minister of Economy and Energy - Germany ; Anna Hallberg – Minister for Foreign Trade and Nordic Affairs - Sweden ; Simon Kollerup– Minister of Economic and Business Affairs - Denmark ; Bruno Le Maire – Minister of Economy, Finance and Recovery - France ; Reyes Maroto – Minister of Industry, Trade and Tourism - Spain ; Rishi Sunak – Chancellor of the Exchequer - United Kingdom ; Hans Vijlbrief – State secretary for Finance - Netherlands.

In recognition of the latest scientific evidence regarding climate change, including the conclusions of the United Nations’ Intergovernmental Panel on Climate Change (IPCC), and namely that:

Human influence on the climate system is clear, and recent anthropogenic emissions of greenhouse gases are the highest in history;
Recent climate changes have had widespread impacts on human and natural systems;
Continued emission of greenhouse gases will cause further warming and long-lasting changes in all components of the climate system, increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems;
Limiting climate change would require substantial and sustained reductions in greenhouse gas emissions which, together with adaptation, can limit climate change risks;
Adaptation and mitigation are complementary strategies for reducing and managing the risks of climate change;
Substantial emissions reductions over the next few decades can reduce climate risks in the 21^st century and beyond, increase prospects for effective adaptation, reduce the costs and challenges of mitigation in the longer term and contribute to climate-resilient pathways for sustainable development;
The transition to a climate-neutral economy can offer significant economic opportunities and social benefits, in particular when contemplating avoided climate damages;

Recognising the role of official trade and export finance in promoting and supporting a shift in investment patterns towards climate-neutral, climate resilient projects and investments,

We, the governments of Denmark, France, Germany, Spain, Sweden, the Netherlands and the United-Kingdom, as members of the E3F coalition, reaffirm our commitment to contributing to:

Meeting the Paris Agreement goals and adapting our policies accordingly, in an effort to limit global average temperature increase to 1.5 °C above pre-industrial levels, and in particular,
Supporting the ongoing transformation of our export economies,
Supporting third countries’ economies in financing and implementing the transition to climate neutrality pathways, and,
Promoting consistent international standards and pursuing ambitious multilateral action.

In support of these principles, we undertake to:

Develop incentives to better support the development of exports to sustainable projects in all sectors of the economy, in order to:
- facilitate the investments in environmentally-friendly technologies and support the industries to innovate;
- decarbonise the energy sector;
- develop climate-resilient infrastructures;
- roll out cleaner forms of transport;
- support the urgent transition of carbon-intensive, heavy industries, in particular those still reliant on coal.
End official trade and export finance directed to unabated coal power;
End official trade and export finance for other thermal coal-related infrastructures, including mines as well as storage and transport infrastrures contributing in a significant manner to the thermal coal supply chain;
Review our official trade and export finance support to fossil fuel industries and assess how to best phase out support to these sectors, taking into account their respective characteristics;
Start a climate-oriented review of our respective official trade and export finance activities, so as to have a shared and documented understanding of their climate impacts, and work on improving transparency on climate-related information, in particular when it comes to the identification of sustainable projects;
Promote our initiative and engage with other providers of official trade and export finance, in all relevant fora and in particular in the OECD, with a view to shape a level playing field that would duly take the climate emergency into account.

+ Read the signed Statement of principles >>

Flagship reforms implemented since 2017

2021-03-10T00:00:00+01:00

The French government has embarked on a vast program of pro-business reforms,aimed at generating more solid, inclusive and sustainable growth. This national strategy is based around four themes:

a new tax environment to encourage investment,
overhauling France’s social model,
administrative simplification and facilitating setting up sites in France,
and acceleration of the ecological transition.

The pro-business reforms undertakensince 2017,combined with the widescale measures introduced by “France Relance”(“Relaunch France”), are solid assets that will enable France, and the businessesdeveloping there, to tackle the post-crisis rebound from 2020 with greater agility.

Carbon Border Adjustments for Climate | Addressing carbon leakage to strengthen global climate action

2021-03-01T00:00:00+01:00

The scientific community keeps warning us about climate emergency and concerns are increasingly growing on our collective ability to meet the Paris agreement ultimate goals to limit the rise in the planet's temperature to well below 2°C above pre-industrial levels and to continue action to limit this rise to 1.5°C. More needs to be done, and faster. In the context of the necessary increase in global climate ambition, which will be at the heart of COP26 in Glasgow, the European Union (EU) leaders agreed last December to raise the EU net greenhouse gas emission reduction target for 2030 to 55% below 1990 levels, in order to put the EU on the path to GHG net zero emissions by 2050. In parallel, although more than 100 countries have committed or are considering to achieve a long-term objective of carbon neutrality, differences in climate ambition in short and medium terms are significant. As a consequence of this climate ambition gap, the risk of carbon leakage is increasing.

Carbon leakage refers to the situation whereby ambitious climate policies implemented in a region or country result in increased emissions in less ambitious regions through the reallocation of the production, thus undermining the effectiveness of these ambitious climate policies at global level and their social acceptability. In the end, carbon leakage transfers unfairly our emissions to other countries, leaving them polluting more in order to produce the goods we need and consume. Tackling carbon leakage is thus crucial to strengthen the impact of European action against climate change. This phenomenon severely compromises the effectiveness and acceptability of EU emission reduction policies and decarbonisation efforts. As highlighted in the academic literature, to meet this challenge, a Carbon Border Adjustment Mechanism appears to be the most efficient tool.

In that perspective, and following the European Green Deal Communication of December 2019, the European Commission will make proposals by June 2021 to enable the implementation of a Carbon Border Adjustment Mechanism at the European level by 2023. To be fair and legitimate, this mechanism will need to be designed in full compliance with the rules of the World Trade Organization (WTO) and consistent with the multilateral climate framework and global development issues. To be effective, its implementation will need to be carried out in an inclusive and transparent manner.

The main objective of this public international event will be to discuss central issues raised by the design and implementation of Carbon Border Adjustment Mechanisms generally. This would be an opportunity to communicate broadly and transparently on the purpose and objectives pursued by such instruments, and their main features. The conference will bring virtually together European political leaders, academic and experts, representatives of international organizations and civil society stakeholders from EU third countries in order to share views on the topic. The debates will be organized around three round tables, and will focus on (i) the issue of carbon leakage (ii), its consistency with the framework of the Paris Agreement and global development issues and (iii), the mechanism's compatibility with WTO rules.

+ Registration and agenda >>

Choose France videoconference with leaders of major foreign groups – Monday, January 25th, 2021

2021-01-29T00:00:00+01:00

These exchanges allowed the Government to maintain contact with business leaders and to take stock of their current investment projects in France. This meeting was an opportunity for President Emmanuel Macron to reaffirm his commitment to pursue economic policies that are favorable to investment, and to enhance the economic attractiveness of the French economy.

This "pro-business" agenda, which has already strengthened France's attractiveness, is reflected in the recent France Relance recovery plan, which offers numerous opportunities to companies. The recovery plan also contributes to accelerating the in-depth transformation of the French economy towards greater sustainability.

This long-term dynamic must be part of a broader collective reflection on how to rethink and reorient our economic models for a more resilient and fairer post-COVID world.

For further information regarding this event, please contact the French Treasury’s unit for Economic Attractiveness (Bilat5). The President's speech is available online (in french).