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Bank of France to integrate ESG into investment strategies by 2018-end

France's central bank is planning to incorporate environmental, social and governance principles in its investment strategy and will apply a charter on ESG investing to its own funds and its retirement plans by the end of 2018, according to Governor François Villeroy de Galhau.

The charter will be the first of its kind among the European Central Bank and the 19 national central banks of countries belonging to the eurozone, he told a news conference in Paris on March 12. Its aim will be "to strengthen the integration of ESG criteria in our investment decisions" and to ensure that investments are eco-friendly, he said.

Banque de France is one of eight central banks and supervisors creating a network designed to increase the role of green financing in the global economy, and Villeroy de Galhau said the move was in line with its involvement in the network.

Green financing refers to investments and lending in projects that are environmentally friendly, such as solar power and wind farms, which can reduce emissions and help countries meet commitments under the 2015 Paris climate agreement.

Villeroy de Galhau said the central bank planned to increase green financing, in particular the development of the green bond market, and to look at current and future risks to the financial sector as it moves to more sustainable financing.

His comments came as the Banque de France reported a 5.7% rise in net banking income to €8.2 billion, boosted by a 25% increase in the bank's balance sheet to €1.05 trillion from €855 billion due to ECB bond purchases as part of its monetary stimulus plan and to 4% growth in currency in circulation. Net profit fell 5.5% to €3.3 billion.

Villeroy de Galhau said the central bank was continuing its work with fintech companies and startups through its innovation laboratory, which will move to its own premises in May. The lab is analyzing and testing new technologies and how they can be applied to the world of banking.

Villeroy de Galhau said the lab was currently working on 14 projects and was planning to add eight more.