Credit Agricole S A : Transcript du "Climate Workshop" du 6 décembre 2022 (en anglais uniquement)

CASA Climate Strategy

Climate Workshop

Tuesday, 6th December 2022

CASA Climate Strategy - Climate Workshop

Tuesday, 6th December 2022

Acting for Tomorrow

Philippe Brassac

Chairman of the Board of Directors, Crédit Agricole CIB

Working every day in the interest of our customers and society

Okay, I understand we can start. Good afternoon, everyone. I am really pleased to welcome and to host you within these locations in Montrouge. Very pleased, most of all, to try to give you clarity about our climate or energy transition policy and try to give you all the explanations you possibly need about our assumptions, about our definitions, about our methods used to evaluate and disclose each of our metrics or figures. Thank you so much for being present today or being connected.

First of all, let me give you the big picture. Let me give you the big picture on the global framework and timetable in which everything we shall comment today will be included. This timetable is really singular. We are living in unprecedented discrepancy between this incredible opacity on the short term. Nowadays, nobody is able to predict inflation, GDP, or rates simply for the following month. And I am convinced this is a lasting situation for the next few years. On the other hand, a long-term, let us say 2030 and beyond, that has never been so clearly stated, so clearly described, made explicit, at least in terms of expected, wished and necessary future.

This structural opacity for the short term is naturally due to the accumulation of numerous consequences of at least three global shock waves.

First shock wave: The necessary normalisation of monetary policy post-COVID. Thousands of billions of euros are still circulating today within the Eurozone that did not exist simply at the very beginning of 2020. To fight against inflation and to protect our currency, ECB needed to increase rates, to try to lower debts and reduce leverage - perhaps a little bit too late and too fast now, but this is absolutely another story.

Second shock wave: All the systemic consequences on the economy of this awful, this dramatical Russian-Ukrainian war and notably on prices, and now availability of energy and many other commodities. This supply chain turmoil will not abate quickly, even if a peaceful outcome were to be found in the coming months. Just like to take an example of an image of ripples in water after a strong impact.

Third shock wave: After 30 years of global GDP boost, the natural end of the more and more globalisation paradigm, simply because trees do not grow to the sky, simply because the planet is limited. .

Our DNA: Societal usefulness versus universality

So, an incredible opacity on the short term and, on the other hand, when we are looking at what do we have to do to build a sustainable future for 2030 and beyond, clearly things have never been so clear. The necessary energy transition, of course, on which we shall focus today; the healthcare challenge too, because setups are clearly not at scale today to face aging populations all around us and notably in Europe. And let me add the social challenge: our societies can no longer simply add more and more solidarity to the economy. They have

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CASA Climate Strategy - Climate Workshop

Tuesday, 6th December 2022

to be more directly inclusive. This is not only a political matter. This is obviously a necessity for the stability of the world system. This is how we see the new paradigm.

Now, let me restate for you why we do consider that our historical development model at Crédit Agricole Group is naturally adapted for this kind of paradigm.

Our model is based on the first axis, regularly extending the scope of our activities to adapt to the global range of the financial and patrimonial needs of our customers: loans, savings, insurance, real estate solution, and now energy transition and so on - the axis of the relationship model.

However, there is a second axis. The second axis is mastering the different business lines we need, taking the form of legal entities not only to serve our universal banks, but also to add another level of development through partnerships or external growth in a consolidating world.

This is a kind of double development architecture. Thus, with this architecture, I think that in your head now, you can easily understand why there is no reason for the opacity of the short term to slow down our commercial development.

Climate: One of the three dimensions of our societal strategy

Three priorities for transition everywhere, for everyone

The support of a universal bank with this global range of solutions is increasingly requested by customers for their concrete, for their day-to-day needs in an uncertain environment, notably for hedging numerous and diverse risks. You can also understand why the societal challenges on which we need to invest today to accompany the shift in society are much more opportunities for us than threats or constraints.

We financed agriculture one century ago, equipped modest households with banking accounts in the 1950s, helped households become owners of their housing in the 1970s and 1980s, just for some examples. These were clearly both societal challenges and amazing springboards to our commercial development. This is the concrete story of the first bank in France, the first bank insurer and the first asset manager in Europe that our predecessors succeeded in building.

The global equation for energy transition

Now, let me focus on this CASA Climate Workshop. Let me say, more concretely, CASA energy transition strategy, even if it is more difficult to say.

First, we need to move away from caricatures and approximations. The issue can be reduced to quickly lower the brown part of bank's balance sheet. You must not mistake greening balance sheet for really helping the economy become greener. On the palette of colours, everybody knows that less of brown does not mean more of green. To master to see the global battle field, we need to state the global energy transition equation. Here it is.

Accelerating the advent of renewable energy

First, accelerating the advent of renewable energy - let us say the advent of green. The key word is 'accelerating' because this revolution will naturally occur one day after the exhaustion of fossil energies, but much too late. We need to quicken the pace, let us say, from one century to probably just one decade.

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Tuesday, 6th December 2022

Secondly, accelerating the advent of green energy instead of fossil energy and not simply adding green to fossil fuels as it can be expected, for example, in Asia and China for starting point reasons.

However, to reach these two targets between them, we need to master this huge challenge. Let me say this impressive mountain we have to climb all together by equipping with projects, tools, and services using green energies - all of society, from large customers to the most modest households. Facing inexplicable concerns regarding synchronicity, time to market and time to equipment cannot be the same for industrial innovations and day-to-day household equipment.

As a consequence of the previous point, we shall have to mix and to superpose different generation of offers and products within several cycles of equipment and reequipment. At the end of the day, the global energy transition equation is much larger and complex than a green asset ratio; our public commitment about financing or not financing such energy company.

A few comments now on the first branch of the equation: accelerating the advent of green or green energy. Jérôme will demonstrate that Crédit Agricole Group is already number one, in terms of green financing after the State, of course, and public structures.

As a symbolic signal of a cultural shift, let me refer to the fact that we were last week the very first bank in France to disclose a €1 billion loan directly dedicated to the renovation of our nuclear plants. When we are asked if we do finance enough green projects I always answer, to the surprise of the people in front of me, 'Yes, unfortunately.' Why 'unfortunately'? Because all significant green projects are fully financed. The limit is not our ability to finance, but the lack of projects.

Let me now comment something perhaps you never or rarely hear or read about. I already explained that the urgency was to accelerate the advent of green rather than respecting the natural or the normal pace of such a technological revolution. Concretely, that means that technological obsolescence cycles will not be respected, business models will not stabilise, and the supply and demand will not balance out at all times. This transition will be mechanically much more risky than the old paradigm.

We do not need any brown penalising factor in order to convince us to finance green projects that are not numerous enough, by the way. In fact, we would need a green supporting factor in order not to slow down the shift towards green because of our risk appetite frameworks. Perhaps you may have a tendency to mainly focus on the question of ESG commitment compliance. My modest advice is that you should focus on the classical counterparty risk too.

Equipping all of society

On the second branch of the equation, massively equipping all of society, we have to launch many new offers, we have to structure new activities for tens of millions of customers and probably for the next five, ten, 15, and perhaps 20 or 30 years. Naturally, we are not starting from scratch, but we want to accelerate and amplify. This is why we decided to launch a new business line, Crédit Agricole Transitions & Énergies.

We do expect Crédit Agricole Transitions Assurances became for insurance activities.

• Énergies will become what Crédit Agricole However, both climate challenges and time to

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market are much shorter now than compared to 20 years ago. That concretely means Crédit Agricole Transitions & Énergies must succeed in five years while Crédit Agricole Assurances was allowed to succeed, for example, in 20 years.

My most important message about this chapter is that energy transition represents, first and foremost, an amazing new potential for commercial development. However, mindsets must change. ESG does not mean constraints or disinterested actions for society. ESG means professionally aligning your own interests with the individuals and collective interests of your environment. At Crédit Agricole, we call that the magic potion, 'usefulness and universality'. There is nothing better as the road map for future.

Green rather than fossil fuels

Third and last branch of the equation, specific efforts to decarbonise our portfolios. This is unfortunately very often the only question which we are asked. We are members of each Net Zero alliance. Today, we shall give you concrete and precise landmarks regarding Net Zero Banking Alliance and, in particular, about our trajectories for the main sectors we significantly finance today.

In a nutshell, let me sum up our commitments. We will nearly divide by two each carbon emission intensity trajectory by the year 2030. For fossil sectors, for which we think in terms of volumes and not in terms of intensity, we are restating today and providing more detail on our different policies.

To sum up once again, complete exit from thermal coal by 2030 for OECD and by 2040 for the rest of the world. For oil and gas, we shall reduce our financed emissions by 30% for 2030. Specifically for oil, because gas is considered by EU as a transition energy, we do not finance new oil exploration projects and we aim to reduce our upstream outstanding by 25% as soon as 2025.

I hope I was not too long. Two key words to sum up our different policies: we are committed and we are demanding. Only one takeaway message, if I can. We do not want to be either the bank that mainly financed the old world or the bank that prefers to only finance the new world. Definitively, we are the bank that will help society move from the present to the future.

Thank you so much for your time. I do apologise because I shall have to join another meeting, but I leave you my three deputy CEOs and a lot of bright, top managers in this room. I do hope that this workshop will be a very intensive and very positive.

Simply now, Jérôme, I leave you the floor. Thank you so much and hope to see you soon.

Introduction

Jérôme Grivet

Deputy CEO (Steering and Control), Crédit Agricole S.A.

Accelerating the advent of renewable energy

Thank you, Philippe. Good afternoon, everyone. I will try to develop a little bit more in detail what Philippe just explained as our global strategy regarding climate and climate change and the role we can play in this area. Then, I will, of course, hand over the floor to the specialists

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