According to data published by the European Commission, France paid out 155 billion euros to support businesses between March and December 2020, the most to be paid out by any European country during the pandemic. This figure comes in addition to the corporate welfare schemes which were already available before the pandemic, estimated at 150 billion euros. In spite of a vigorous public debate on this subject at the beginning of the health crisis, corporations are still not required to meet any environmental, social or tax conditions in order to receive this unprecedented level of government support. The public doesn’t even have access to detailed information about which companies have received which forms of support, and for how much.

Over a year after the pandemic began, lawmakers and citizens have a right to know who has benefited from public funds and the amounts they have received. By refusing to establish stringent conditions to its support that would have forced corporations to commit to decarbonising their business, move their operations out of tax havens and refrain from paying out dividends, the French government has failed to map out a fairer, more sustainable economy.

In its two “Allô Bercy” reports (October 2020 and May 2021), Observatoire des multinationales sheds light on the concrete consequences of this failure:

* In the midst of a global pandemic, while all the major corporations listed on the CAC40 Index were being shored up by the French government, they managed to pay out nearly 51 billion euros to its shareholders (+ 22%), the equivalent of 140% of their 2020 profits. BlackRock and France’s prominent capitalist families were among those that reaped the most benefit, with the tacit support of the French state, which also enjoyed a share of the dividends.

* Over 80% of CAC40 groups which made use of France’s Covid short-time work scheme paid out dividends in 2020 and/or 2021 including companies suspected of abusing it. CAC40 corporations officially plan to cut 62,486 jobs worldwide including 29,681 in France. This means CAC40 shareholders receive an average 815,000 euros for each laid off worker. Despite the fact that certain CAC40 groups (Danone, Sanofi and Total) were able to keep paying out generous dividends during a pandemic while others were bailed out by the French government to the tune of billions of euros (Renault, Safran), the long-term strategy of the CAC40 heavyweights continues to be focussed on reducing their workforce, particularly in France.

Not only have France’s big corporations been authorised to continue prioritising dividends and job cuts despite being shored up with public money – they have also largely succeeded in hijacking France’s climate agenda, by convincing the government to give up on genuine climate action and provide them instead with massive subsidies for technologies such as hydrogen or for digitalisation.

This article – an abridged version of the May 2021 “Allô Bercy” - maps out the different forms of public financial support received by France’s CAC40 as part of the Covid rescue and recovery plans, and the absence of conditions attached to this support. It then proceeds to explain how big business succeeding in “capturing the recovery”

France’s main support schemes for corporations

Public funds have been flowing into the pockets of the private sector since the beginning of the pandemic. What do we know about the recipients of this support and what’s been done with it? This is a non-exhaustive list of France’s main sources of public support to corporations [1].

State-Guaranteed Loans

State-guaranteed loans (SGL) have been one of the most publicised business support schemes since the beginning of the pandemic. Under this scheme, devised by France’s Minister of Finance and the banking sector, the French state may guarantee loans (theoretically covering 90% of the loan for SMEs or 70% for large businesses) in order to encourage banks to grant loans to companies that are in financial difficulty. In addition, these loans are to be granted “at cost” (at least initially). There have been a few very notable cases (four billion euros granted to Air France in addition to a three billion direct loan from the French state, five billion euros granted to Renault), but overall total hundreds of thousands of companies – often very small businesses – have benefited from the scheme. It is not yet known how many companies will default on their SGLs, so the ultimate cost to the French state is yet to be ascertained.
It is one of the only support schemes that involves restrictions on dividend payouts and share buybacks. And companies registered in a a handful of official “tax havens” are not eligible for the loans. However, although certain businesses granted loans are in climate-sensitive sectors such as the automotive and aviation industry, there are no attached environmental or social obligations. The French government has been happy to settle for “voluntary commitments” which are not legally binding.
The 46 large businesses granted a SGL represent 0.01% of the companies which receive SGLs, but 12.3% of the total loan amount. Companies that “belong to a group”, i.e, subsidiaries, represent 66% of the total amount of SGLs.

Deferrals and exemptions from tax payments and social security contributions

It would seem that predominantly small companies have benefited from this support scheme. Companies “belonging to a group” represent 35% of the total amount of payment deferrals while very small companies represent 56%. This support is subject to the same conditions as state-guaranteed loans. Without transparency regarding the recipients of this support, it’s impossible to follow up how this money has been used.

Short-time work scheme

France’s short-time work scheme (chômage partiel), which Emmanuel Macron himself described as “nationalising wages as had never been done before”, is one of the key measures introduced by the French government to address the pandemic. Under the scheme, the French government and French unemployment insurance organisation paid a large percentage of wages, with compensation capped at 4.5 times the minimum wage (a monthly income of 4,800 euros net). The scheme was very easily accessible, resulting in many businesses – both big and small – signing up for it and some even abusing it. It would appear that the main beneficiaries of the short-time work scheme were large businesses and their subsidiaries (66% of the total amount paid out).
Unlike the previous measures, there are no conditions attached to the short-term work scheme in regards to dividend payouts. No detailed information has been made public by France’s Department of Labour, but based on information published in regional and specialised newspapers as well as information provided by trade unions and the small amount of official information available, we know that at least twenty-seven CAC40 companies benefited from the short-term work scheme. Sixteen of these paid out dividends in 2020 and twenty-two in 2021, i.e, over 80% . Allegations of fraud have been made against at least three CAC40 companies: Atos [2], Bouygues [3] and Vinci [4].
An additional scheme was launched in the summer of 2020: the “long-term” short-time work scheme. The seven-billion euro fund allows businesses to reduce the work time of their employees by up to 40% while paying between 85 and 100 % of their wages. Safran is a CAC40 company to have signed up for this scheme.

Protection of “strategic” companies

As part of the second 2020 amended finance bill, French state shareholding agency Agence des participations de l’État was granted an additional 20 billion euros to invest in France’s so-called “strategic” corporations, which might be impacted by the pandemic or targeted by speculators. As of April 2021 this package has mainly been used to prop up SNCF, Air France-KLM and EDF, as well as to provide additional support for the car and aviation industry. Several French MPs suggested that this support be contingent on meeting certain environmental criteria. The French government, however, turned down these proposals.

Auto Rescue Package

The Auto Industry Rescue Package, drawn up by the French government in close collaboration with the automotive industry, was unveiled late May 2020. Other than bailing out Renault, the package includes subsidies to encourage purchases of electric cars or conversions to low-emission models as well as a billion-euro (including 800 million euros from government) “Clean Vehicle Fund” for subcontractors and to modernise the industry. It also includes 850 million euros subsidies for an electric battery plant, a project run by PSA and Saft (Total).
Much of the communication around the package was focussed on “transforming” the auto industry, but the package doesn’t, in fact, include any new commitments, as emission reduction was already an official target for this sector (although it’s true that carmakers used the pandemic as a pretext to attempt to delay meeting targets). Although switching to electric is encouraged, the subsidies to encourage people to upgrade still involve investments in combustion-engine vehicles (petrol and diesel). There are no attached conditions in regards to job protection.

Aerospace Rescue Package

This package was developed by the French government in close collaboration with the aerospace industry (GIFAS - Groupement des industries française Aéronautiques et Spatiales – the French Aerospace Industries Association) and France’s four major aerospace companies: Airbus, Safran, Thales and Dassault Systèmes. It includes additional measures to protect businesses facing difficulties due to the pandemic and the potential cancellation of contracts, additional public orders, direct subsidies and a fund (entrusted to private equity firm Tikehau) to invest in and support subcontractors. The state also set up a 1.5 billion euro fund to develop the “aircraft of the future”.
As with the Auto Rescue Package, the companies being propped up are not required to take any serious action regarding their carbon footprint, despite the climate impacts of the aviation industry. There are only funds towards research into various technological alternatives such as biofuel, electric and hydrogen planes. There are no attached conditions in regards to job protection.

“Production Taxes” Cuts

This tax cut is part of the French government’s 100 billion euro recovery package, announced in September 2020. It involves halving the Company value-added contribution (Cotisation sur la Valeur Ajoutée des Entreprises - CVAE), the corporate property tax (Cotisation Foncière des Entreprises (CFE) and the property tax on buildings (taxe foncière sur les propriétés bâties – TFPB). These cuts are estimated at 10 billion euro a year. Employers’ lobby groups have been trying to get these tax breaks for years, clinging onto the old-fashioned idea that such cuts “would make France’s tax system more attractive and boost competitiveness”. However, a study by the Council of Economic Analysis shows that these taxes don’t have a major effect on competitiveness [5]. Moreover, it is not only the industrial sector that will benefit from these cuts, as the financial sector also pays the CVAE, for example.
These tax cuts, which will affect, as is often the case, local government, will indiscriminately benefit all taxable companies regardless of their size and their activity, even the most climate-harming. This explains why this measure has been hotly contested by a number of public bodies including the High Council on Climate. It is also being contested because it is capital intensive companies or those with a high turnover that will benefit most from the tax cuts. The government rejected proposed amendments that would make only small businesses eligible for the tax cuts.

France’s recovery plan

France’s 100 billion euro recovery plan is part of Europe’s wider Recovery and Resilience Package. 40 billion of this will come from the European Union. In return France has pledged to implement controversial reforms such as pensions and unemployment insurance, as well as reducing public debt through an austerity budget.
There are several components to France’s recovery package. These include support for green hydrogen (2 billion over 2 years, 7 billion in total), the digital sector and “digitalisation” of businesses and government (10 billion – which should open up lucrative contracts for GAFAM and the French digital heavyweights), healthcare, upgrading the rail network, renovating buildings, the circular economy and nuclear energy.
The European Union has stated that at least 37% of the recovery package amount must go towards meeting climate objectives and the remaining amount should not contribute to an increase in greenhouse gas emissions (which the cut in production taxes would do, for example). France’s view is that these conditions only apply to the 40 billion euros provided by the European Union: the High Council on Climate, however, feels that 70% of the package could have a “significant effect on a rise in CO2 emissions”.

Central banks’ bond-purchase programme

In March 2020, in response to the pandemic, the European Central Bank decided to dramatically expand its asset purchase programme launched following the 2008 financial crisis. 750 billion euros were injected into the Pandemic Emergency Purchase Programme with the aim of purchasing sovereign and corporate bonds. Over the following months, another 500 billion, then 600 billion were added to the fund. The programme is due to end at the end of March 2022.
Bonds are a way for businesses to finance themselves through the stock market instead of taking out a bank loan: they receive money from bond purchases which they undertake to pay back to investors over a certain period at a fixed rate. In practice, bond purchases made by the European Central Bank are delegated to national central banks – i.e., the Bank of France in the case of French corporations. Other investors who will also be more likely to buy bonds that they deem a “safe” choice because they were purchased by central banks. A large number of CAC40 companies have benefited from the bond-purchase programme, including several (Total, Air Liquide, Sanofi) that claimed to have received no public financial assistance during the health crisis, and which increased their dividends in spite of the pandemic.

How the French government opted to subsidise questionable technologies as a substitute for genuine climate action

From the beginning of the Covid-19 pandemic, many have argued the crisis should be turned into an opportunity to overhaul our production system to respond to the climate emergency. But big corporations have succeeded in avoiding the introduction of ecological conditionalities in the bailout and recovery funds. Worse still, they have captured large parts of these funds for questionable technologies.

The massive rescue and recovery plans introduced in response to the Covid-19 pandemic have put the question of how to channel this public support towards the needs of the climate transition back at the heart of the public debate. On the face of things, no one disputes the need for massive investments for a sweeping transformation of our economy to avoid a climate breakdown. In reality, behind this appearance of consensus, there are two profoundly divergent visions.

In the first vision, drastically reducing our emissions requires government intervention in the form of regulations, or even bans, and a supervision of the private sector – particularly large polluting corporations - to ensure that they remain on the required trajectory. Achieving an effective reduction in our emissions requires structural transformations for which large companies and public authorities are ultimately responsible.

In the second vision, that of the CAC40 and its allies, the only required intervention by public authorities is to open their purse so that the private sector can draw in as much money as possible, without being accountable for it. The corporate sector favours technological solutions that would allow them to change as little as puts its weight and its money towards development and adoption of these technologies, even though their actual climate benefits are questionable. Big business refuses to accept any form of public or citizen control over their climate commitments, even in return for the public subsidies they receive.

Between these two visions, the French government has made a clear choice. Whether in the spring of 2020 when the first Covid public support schemes were introduced, in the autumn of 2020 when the 2021 finance law and the recovery plan were examined, or this spring of 2021 during the parliamentary debate on the Climate and Resilience Act (following the Citizens Climate Convention), it systematically vetoed any form of climate conditionality for businesses. Its argument? Imposing binding conditions is not necessary, since the companies have already made "committments" to addressing climate change... However, these "commitments" are not binding in any way and are essentially based on questionable technological solutions, some of which do not even exist yet.

Questionable technologies and non-binding commitments

Can we trust large corporations to effectively and drastically reduce their greenhouse gas emissions (and by the same token ours) without the intervention of either government or the public? Neither their past performance nor the solutions they are proposing to achieve this today give cause for optimism.

As Oxfam showed in a recent report, only a handful of large French corporations have a strategy in place to reduce their emissions in line with the Paris Agreement. According to estimates made for the NGO, the majority of the CAC40 is leading us towards a global warming of more than 3°C, and even more than 4°C for companies such as Total or Air Liquide. A good half of the CAC40 does not even disclose all of its greenhouse gas emissions in a transparent manner. In the same vein, an examination of CAC40’s CO2 emissions disclosures by Observatoire des multinationales shows that at least half of the Paris stock market index has continued to increase its emissions in recent years.

As for their preferred technologies, some already exist (such as the electric car) while others are just distant promises (green hydrogen, decarbonised aircraft, etc.). In all cases, they are mainly aimed at preserving established production and consumption models. Switching to electric cars, for example, does not solve the problem of emissions from tyres and braking systems, and involves additional emissions from manufacturing and raw materials - with limited climate benefits in the end compared to petrol or diesel vehicles. The real solution is a transport and land-use policy that limits the use of private cars. But this is precisely what neither the carmakers Renault and PSA, nor other players in the sector such as Michelin and Valeo, want to hear about.

French big business on the front line against the Citizens’ Climate Convention’s proposals

It is therefore not surprising that France’s big businesses, while loudly proclaiming their commitment to saving the climate, actively opposed the proposals made in June 2020 by the Citizens’ Climate Convention, which targeted precisely the kind of practical policy changes that would have hurt their interests. In our investigation “Lobbies versus citizens. Who’s after the French Citizens’ Climate Convention?”, we exposed in detail how industry and its allies have undermined the ’citizens’ proposals before they even reached the National Assembly. This lobbying offensive was particularly aimed at proposals to regulate or limit certain problematic activities or consumer goods, such as unnecessary air travel, SUVs or advertising for polluting products.

Several CAC40 executives have publicly expressed their opposition to the Climate Convention. Renault chairman Jean-Dominique Sénard condemned the plan to tax the heaviest (and therefore most polluting) vehicles as "completely useless": "Customer is king. I don’t see why we should make them feel guilty. (...) We want to preserve jobs in the car industry? Let’s start by reducing the tax burden on mobility." A Safran executive denounced "aviation-bashing" and the "poisonous atmosphere in France" where "people tend to overestimate the impact of aircrafts”. Mercedes Erra, executive chairwoman of Havas (Vivendi group), led the offensive against anti-advertising proposals, claiming she had finally succeeded in "converting politicians". Saint-Gobain CEO Pierre-André de Chalendar, meanwhile, was active in opposing the introduction in French law of the notion of “ecocide”.

As always, however, the most discreet and effective lobbying took place behind closed doors. Through the action of its main lobby groups such as Afep (French Association of Private Enterprises), France Industrie and Medef, it was effectively CAC40 as a whole which made a common front against the proposals of the "citizens", and more generally against any form of conditionality for public support to corporations.

The result speaks for itself. All the proposals formulated by the "citizens" that were likely to lead to concrete changes were emptied of any substance. Those that touched the "heart of the machine" (a tax on dividends to fund the climate transition, strict conditioning of public subsidies to environmental criteria) have purely and simply disappeared from the bill. All the amendments relating to corporate climate responsibility, even those calling for a simple improvement in transparency in this area, were declared inadmissible by Richard Ferrand, the President of the National Assembly, so that they were not even debated...

Lobbying, revolving doors and corporate capture in times of pandemic

How did large companies manage to capture a large share of rescue and recovery packages, while escaping any kind of environmental, social or fiscal conditions? Essentially by taking advantage of their privileged access to decision-makers.

The CAC40 declared a total of nearly 20 million euros in lobbying expenses in Paris for 2020. In addition, the main corporate trade and lobby groups Medef, Afep (Association française des entreprises prvées) and France Industrie declared more than €3 million lobbying expenses. A large part of this lobbying activity was directly aimed at seeking financial support or a roll-back of regulations under the pretext of a health crisis. Of the 287 lobbying activities declared by CAC40 groups in 2020, more than a third (96) had Covid-related financial support and/or regulatory advantages as an explicit objective. However, because of the inadequacies of the French lobbying register, many declared lobbying activities are formulated in such vague terms that it is impossible to understand what their actual objective.

Some major French corporations seem to have devoted all their lobbying activities to seeking public aid: Air Liquide ("Support for a financing mechanism for the hydrogen sector in France"), Airbus ("Highlight the impacts of the COVID19 crisis in relation to the development of recovery measures by government"), ArcelorMittal ("Ask for the French government’s support in terms of aid: financial, short-time working, etc. given the impact of the Covid-19 pandemic on the steel industry"), Sanofi ("Ask for a support from public authorities to locate a strategic investment in France") or Thales ("Aeronautics support plan: Raise awareness on the importance of supporting the civil and defence aeronautics industry in the context of the Covid-19 crisis"). Other corporations were either less active or less transparent.

The same can be said of the major industrial and corporate lobby groups. Whether France Industrie, Union des industries et métiers de la métallurgie (UIMM), Afep or Medef, a large part of their 2020 declared lobbying activities were relate to the management of the health crisis and in particular to seeking direct and indirect support for the private sector. Medef and France Industrie do not hide the fact that part of this lobbying was aimed at avoiding the introduction of social, tax, or environmental conditions for receiving public support.

As the European Union is also a major provider of public support to corporations, particularly in the context of the preparation of the EU recovery plans, French corporations have also been active in Brussels, but in most cases their lobbying expenditure for 2020 is not yet known. Privileged access to European decision-makers can also be measured by the number of meetings they have had with top Commission officials: there were no less than 142 between January 2020 and April 2021, i.e. one every three and a half days. Again, more than a third of these meetings (50) were explicitly related to the development of rescue and recovery packages.

Public-private collaboration

However, these most visible lobbying activities are only the tip of the iceberg. One only has to consult the French lobby register to see that virtually every single economic sectors have solicited the government to be included in the recovery plan. The key advantage of big corporations such as those in the CAC40 is their privileged access and proximity to decision-makers. This proximity is due to several factors, including their social background and having trained in the same grandes écoles, the practice of ’revolving doors’ between the public and private sectors, and the existence of numerous ’consultation’ bodies and social venues (clubs, events, etc.), often corporate-funded, where they can meet on a formal and informal basis.

During the health crisis, collaboration behind closed door between the public and private sectors was the rule. The state-guaranteed loan scheme was designed by the Ministry for Finance and the French Banking Federation, the financial sector’s trade group, whose executives are former officials of the same Ministry. The rescue packages were developed in close collaboration with France Industrie, the main industry lobby group. The aeronautics support plan was developed by a former Airbus executive, within a working group bringing together government, the four major companies in the sector (Airbus, Safran, Thales and Dassault) and representatives of their suppliers. Another example: the working group set up to work on the energy renovation of buildings as part of the recovery plan was chaired by an executive from Saint-Gobain, a company which is likely to be the main beneficiary of this part of the recovery funds.