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Natixis rolls out 'green weighting factor' for financing deals

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Natixis rolls out 'green weighting factor' for financing deals

The investment banking unit of French bank Natixis has rolled out a system whereby climate impact will play a role in determining how much capital will be allocated to financing deals.

The bank's "green weighting factor" is a mechanism that will see financing receive a positive adjustment when classified as "green" and a negative adjustment when classified as "brown," or worse for the environment. It will be applied to all of Natixis' financing, except for the financial sector.

Deals will be given a rating based on their climate impact, as well as an assessment of non-climate-related environmental factors such as water, pollution, waste and biodiversity.

For green deals, analytical risk-weighted assets are reduced by as much as 50%, while those that have a negative climate impact see their risk-weighted assets increased by as much as 24%.

Natixis noted that the green weighting factor is a system that could be replicated by other banks. It said it will share details with peers in 2020.

The announcement comes as 130 banks adopted the United Nations' Principles for Responsible Banking launched in New York.