Assessing Additionality in the Sustainable Finance Frameworks of France and BNP Paribas Asset Management
In the past decade since the signing of the Paris Agreement, we have seen the rapid growth of Environmental, Social, and Governance (ESG) policies and sustainable finance which has greatly transformed capital investment markets. Within this space, France has emerged as a leader in the development of regulatory frameworks for sustainable finance. During our site visit with BNP Paribas Asset Management (BNPP AM) we gained deeper insight into how the company structures its own sustainable investing within the larger frameworks of France and the EU. However, when we seek to measure the impact of sustainable finance, we encounter a fundamental issue faced by other environmental policy schemes: additionality. In the context of sustainable finance, additionality refers to the extent to which a financial investment produces positive environmental impact that would not have happened otherwise. This metric is crucial to determining the actual impact of sustainable finance systems, but it is oftentimes difficult to effectively quantify. In this reflection I will identify two key definitions of additionality, and using these definitions analyze the ESG frameworks of France and BNPP AM to assess how well additionality is accounted for and regulated. Identifying strengths and potential gaps in the frameworks allows us to make recommendations for improvements and inform the development of future sustainable finance systems.
As sustainable finance frameworks are both discrete and voluntary, there is a lack of agreement or standardization on how the concepts within sustainable finance are defined. However, additionality is generally understood as meaning that an intervention has led, or will lead to, results that would not have occurred without the intervention. Within this definition is the requirement to establish causality between the intervention and the outcome which means that any system will need to have a mechanism determining that the outcome differs from that of the counterfactual. There are several dimensions by which we can categorize additionality, but this analysis will utilize the two main categories of additionality defined by the OECD in a 2021 working paper. Development additionality is the more straightforward of the two and concerns itself with the actual impact a project or company has on the environment or sustainability. Accounting for development additionality ensures that investments made have directly contributed to positive, tangible impact. Financial additionality refers to capital mobilization and investments that would not have otherwise occurred. More specifically, it means that an investment is considered additional if it is applied to a project or company that is not able to
obtain investment from the market itself. This distinction is crucial in sustainable finance as it ensures that we are enabling capital access to bridge funding gaps for environmental and sustainability projects, not simply relabeling existing investment. These two categories will serve as reference in analyzing the sustainable finance frameworks of France and BNPP AM.
As leaders in sustainable finance, France and the EU have developed a thorough regulatory architecture that governs sustainable finance practices and is designed to improve transparency, standardize definitions, and strengthen reporting to align capital flows with net-zero goals. At the EU level, four main regulations lay the groundwork for this architecture. The EU Taxonomy Regulation implemented in 2020 provides a classification system defining environmentally sustainable activities across six objectives and requiring compliance with technical screening criteria. The Sustainable Finance Disclosure Regulation (SFDR) implemented in 2021 mandates disclosure of sustainability risks and adverse impacts to reduce greenwashing and improve the transparency of sustainable investments. This was supplemented by the Corporate Sustainability Reporting Directive (CSRD) in 2025 which further enhances transparency by requiring standardized ESG reporting aligned with EU goals. The European Green Bond Standard implemented in 2024 adds a voluntary but rigorous framework that grants the designation of “European Green Bond” to bonds whose proceeds are 85-100% in alignment with EU Taxonomy.
France complements these regulations with Article 29 of its 2019 Energy and Climate Law which requires financial institutions to disclose how they integrate ESG criteria into their investment strategies. France also provides its own voluntary certification in the form of the Greenfin Label which sets strict selection criteria for funds, including minimum green investment thresholds, sector exclusions, and measurable environmental impact requirements. Across both EU and French systems, validity is ensured through standardized classifications, mandatory disclosures, and third-party verification. Together, these mechanisms aim to reduce greenwashing and ensure that sustainable finance claims are credible, measurable, and aligned with environmental objectives.
France’s sustainable investments are managed through its Green OATs (Obligations Assimilables du Trésor) framework. This framework is a sovereign green bond system designed to finance environmental policy and support Paris Agreement commitments. It aligns with the ICMA Green Bond Principles and the EU Taxonomy, targeting six environmental objectives through seven sectors, including sustainable buildings, clean transport, low-carbon energy, and biodiversity protection. Project selection is rooted in the “Budget Vert” methodology. All government expenditures are evaluated and classified as environmentally favorable, neutral, or unfavorable. Only expenditures deemed favorable and meeting strict sectoral criteria qualify as Green Eligible Expenditures, ensuring strong upfront selection validity. Proceeds are allocated ex-post to eligible expenditures, with safeguards such as caps on prior-year spending and excess eligible expenditure pools to maintain flexibility and integrity. The framework excludes fossil fuels, tobacco, weapons, and double-counted funding sources. Impact measurement is a key strength of this framework. Annual reports disclose allocation and key performance indicators (KPIs) and Evaluation Reports use counterfactual analysis to assess whether outcomes would have occurred without funding, directly addressing additionality. Oversight by an independent council and external audits ensures methodological rigor and credibility. Overall, the framework combines rigorous selection, strong validation through classification and auditing, and advanced impact measurement, making it one of the most robust sovereign green bond systems globally.
During our session with BNPP AM, they showed us their Green Bond Framework that guides their sustainable finance operations. Project selection is governed by a Green Bond Committee and follows a multi-step screening process. First, projects must fall within predefined eligibility categories. Second, a strict exclusion list removes sectors such as fossil fuels, nuclear energy, tobacco, and defense. Third, all projects undergo ESG risk screening, assessing impacts on communities, human rights, water use, and safety, with large projects needing to comply with the Equator Principles. Governance is distributed across internal teams: the Sustainability Center conducts screening, Treasury monitors assets to avoid double counting, and the Head of CSR makes final decisions. Annual third-party reviews are also conducted to reinforce selection validity. Impact measurement follows the ICMA Harmonized Framework, using KPIs tailored to specific asset classes. At the portfolio level, BNP applies a five-pillar scoring system that examines intentionality, materiality, additionality*, measurability, and externalities to assess impact quality and identify high-impact investments. External audits are used to verify both allocation and reported impacts, ensuring credibility. While less focused on causal attribution than sovereign models, BNP’s framework emphasizes standardized, quantifiable metrics and rigorous ESG screening, reflecting a project-based, market-driven approach to sustainable finance.
As they are covered by the same EU regulatory architecture, both frameworks share similar structures for use of proceeds, management, and reporting. Both also contribute to transparency and credibility through third-party verification and annual audits. Where the frameworks differ is in their selection mechanisms and impact measurement. France’s framework selects expenditures through the Budget Vert, situating green bond allocation within national fiscal policy. BNPP AM uses a project-level screening process with ESG risk analysis and exclusion criteria, reflecting private-sector due diligence. The most important distinction lies in impact measurement and additionality as France employs counterfactual analysis to demonstrate causal impact, whereas BNP focuses on performance-based metrics and impact scoring.
Within both investment frameworks, there are thorough guidelines focused on ensuring the development additionality of investments. Underpinned by the regulatory architecture of France and the EU, explicit and consistent standards and definitions lay a strong foundation for analyzing development additionality. However, France’s Green OATs framework demonstrates a comparatively stronger system for establishing development additionality than that of BNPP AM. France’s framework uses ex-post evaluation reports that explicitly compare outcomes against counterfactual scenarios, supported by independent oversight and detailed performance indicators, to capture both direct and broader systemic effects. In contrast, BNPP AM focuses on standardized KPIs and portfolio-level impact scoring, which measure outcomes but do not establish whether those outcomes are causally attributable to its investments. As a result, BNPP AM’s framework reflects strong measurement practices but a weaker capacity to demonstrate causality.
What is notable about the frameworks for both France and BNPP AM is the lack of specific provisions or guidelines regarding financial additionality. Both frameworks excel at classifying investment projects and establishing systems to ensure that they are additional in their environmental and sustainability contributions, but do not set requirements for their investments to be different from what is otherwise available within the market itself. This is not to say that such investments do not happen, but it does create questions about what these financial frameworks contribute in terms of capital availability that is not already provided by the market. A lack of financial additionality does not preclude the significance of development additionality and there is certainly important value in the creation of frameworks that verify the validity of sustainable projects. Identifying and lending validity to sustainable projects serves as an overall market indicator and encourages the mobilization of investment in sustainable companies. However, when looking at the specific investments made by France and BNPP AM there is much greater impact to be had when financial additionality is taken into account.
To better establish the financial additionality of their sustainable finance frameworks, there are several improvements that can be made to the selection mechanisms and investment offerings employed by France and BNPP AM.
A percentage of investments can be allocated to new projects or companies to promote innovation rather than supporting regular operations.
Annual or semi-annual reports can be conducted to identify funding gaps for sustainability-focused industries and technologies and a percentage of investment can be allocated to those industries and technologies to help bridge those gaps.
Concessional financing options can be offered for higher risk projects to reduce their risk levels and enable further investment.
These improvements can be more readily adopted by public investors like France as they do not have the fiduciary responsibility to shareholders that BNPP AM has. However, they are not wholly at odds with fiduciary responsibility and can be taken into consideration by private firms when deciding how they wish to balance fulfilling this responsibility with having the strongest impact with their investments.
France and BNPP AM have developed sustainable finance frameworks that significantly advance transparency, standardization, and the measurement of environmental impact, particularly in their treatment of development additionality. France’s Green OAT framework is especially strong in its use of counterfactual analysis and independent evaluation, allowing for a more credible demonstration of causal impact, while BNPP AM’s approach provides a consistent, metrics-driven system that enhances comparability across investments. Despite these strengths, both frameworks exhibit a notable gap in their limited incorporation of financial additionality, leaving open the question of whether investments are truly mobilizing new capital rather than reallocating existing investments. Addressing this limitation is critical to maximizing the effectiveness of sustainable finance, as stronger mechanisms for identifying funding gaps, supporting higher-risk or innovative projects, and incorporating concessional financing could ensure that investments are both impactful and genuinely additional. Strengthening the integration of financial and development additionality will ultimately be essential for aligning the sustainable finance frameworks of France and BNPP AM with their broader objectives of driving meaningful and accelerated advancements in sustainability and achieving net-zero targets.
*BNPP AM uses the term “additionality” to refer to the uniqueness and scale of solutions rather than the definition used in this paper.
References
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BNP Paribas Asset Management. "Integrating Sustainability as a Global Asset Manager: Overview and Practical Examples." NYU Global Affairs Visit, 17 Mar. 2026.
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