The Green Industry Act: A Revolution?

France has embarked on the path of ecological transformation with the promulgation of Law no. 2023-973 of October 23, 2023 on green industry.

With a clear objective of mobilizing 67 billion euros by 2030 for the ecological transition, France aspires to become Europe's leader in green industry. The law provides for the creation of 50"France 2030" sites, with a budget of €1 billion for development, and aims to reduce the carbon footprint by 6 million tonnes of CO2 per year.

But how does this law intend to achieve such objectives?

1 - The law focuses on green innovation, with measures such as the offer of 50 "France 2030" sites and a "green industry investment" tax credit. These initiatives aim to stimulate sustainable employment and reduce CO2 emissions.
2 - The Plan d'Epargne Avenir Climat (PEAC) for young people is one of the law's major innovations, designed to channel private savings into green projects. The insurance sector is also mobilized to contribute to financing the ecological transition.
3 - Industrial projects of major national interest (PIINM), defined by their significant impact on the ecological transition and national sovereignty, benefit from streamlined administrative procedures. These simplified procedures are designed to speed up the process of setting up industrial facilities.

What are the precise criteria for a project to be considered a PIINM, and how does this change the situation for manufacturers? Find out more

But beyond its ecological ambitions, what are the implications for savers and investors?

Implications for savers

The introduction of a minimum share of non-quoted assets in life insurance and PER raises questions. This measure, aimed at directing savings towards financing the ecological transition, also offers new investment opportunities. But what challenges should savers anticipate in the face of this new obligation?

As we have said, the "Green Industry" law aims to support key sectors such as renewable energies, sustainable agriculture, and green innovations, with the objective of encouraging the decarbonization of SMEs and ETIs while enriching the diversity of investment portfolios. It is designed to encourage French investment in unlisted green assets, primarily targeting life insurance contracts and retirement savings plans (PER).

From now on, contracts under controlled or profiled management must include a quota of investments in private equity, i.e. in unlisted companies. This choice enables the insurer to determine the most suitable investments according to the investor's profile and financial objectives.

The mandatory proportion of unlisted assets varies according to the investor's investment horizon:
- For a "Balanced" profile, with up to 70% of assets at risk, private equity must make up at least 4% of the portfolio.
- For a "Dynamic" profile, with more than 70% of assets at risk, this proportion rises to a minimum of 8%.
- For the PER, with a default "Balanced" profile, investment in non-listed assets varies between 3% and 8%, depending on the duration of the contract.

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Controversies and Risks for Savers

This situation has caused concern among investor advocacy associations such as Faider, who are pleading with the Ministry of the Economy for a review of the conditions, in anticipation of the publication of the implementing decree and the law's scheduled entry into force in autumn 2024.

Despite the potential for high returns, private equity presents, in their view, notable challenges, including reduced liquidity, dependence on a changing regulatory environment, and increased risk of capital loss.

Sector reactions and adaptations

Faced with these new requirements, insurers are considering strategies for integrating green assets into their offerings, including the creation of green-focused life insurance contracts. At the same time, fund managers are examining how to incorporate ecological criteria into their investment strategies, potentially by developing funds dedicated to responsible and sustainable investments or by reorienting existing funds.

Adapting to these new directives represents an opportunity for all market players to capitalize on the changes brought about by the law and actively participate in the ecological transition.