Clear and consistent
For a coherent and consistent top-down approach to ESG that has taken a decade to refine, setting targets that exceed industry standards and a pioneering approach to biodiversity and social issues, BNP Paribas is IFR’s Bank for Sustainability.
Financing the energy transition has been BNP Paribas’ environmental priority since 2011, but the French bank went further in 2022 by aligning its entire business towards the transition and exceeding its commitments as a member of the UN-convened Net-Zero Banking Alliance, which BNPP joined in 2021.
The French bank reiterated this “relentless focus and mission” in its 2022–25 strategic plan, which focuses on growth, technology and sustainability and was published in February 2022.
“Having one of the three pillars of the plan means that a third of the efforts of our senior management is dedicated to sustainability,” said Antoine Sire, head of company engagement.
BNPP followed up with its first climate analytics and alignment report in May that outlined targets to reduce financed carbon emissions intensity, cut credit exposure to high-emitting sectors and increase sustainable finance.
“Our strategy is threefold: align our portfolio with our net-zero commitment; measure and pilot our carbon-related risks; and broaden and deepen our client relationships to support them as they make their low-carbon transition,” said Jean-Laurent Bonnafe, BNPP’s CEO.
This approach requires a carefully coordinated ecosystem across the bank. The sustainable capital markets team works closely with ESG financing advisory, which bridges the gap between issuers and investors and advises on regulatory trends and ESG ratings analysis.
Both groups work with a new 250-strong low-carbon transition group that supports large corporate clients with targeted sustainability advice and an internal group called the Network of Experts in Sustainability Transitions.
All teams are supplemented by the bank's global market research and the consistency of its approach is underpinned by internal tools, including its ESG data platform and ESG assessment framework, which give a common ESG profile of clients.
As that commitment shows, BNPP’s edge in sustainability is still very much driven from the top down.
“This is a transformation run by the CEO of the bank itself with a sustainable finance committee that includes all the businesses,” Sire said. “We have a very comprehensive approach; we believe that we’re on the path for a very strong reduction of our contribution to fossil energy but at the same time we are pulling all the levers we can to accelerate the energy transition of our clients.”
Above and beyond
BNPP’s climate and analytics report set 2025 carbon intensity reduction targets and KPIs using a 2020 baseline, going further than the Net-Zero Banking Alliance targets for 2030 that the banking sector is trying to implement.
“We decided to have 2025 targets because we want to act today. Internally, it was really important to send a signal that we shouldn’t wait for six years before doing something,” said Nathalie Jaubert, deputy head of group corporate social responsibility. “Our starting point is better than the benchmark, we are doing more to be aligned with net zero and we are very comprehensive in the impact.”
BNPP’s financed carbon emissions intensity reduction targets for 2025 include a 30% drop in power generation, a 10% decrease in oil and gas production and refining and a 25% drop in automotive manufacturers.
The bank also pledged to reduce its credit exposure to upstream oil and gas production activities by 2025.
“Our sector target for financing upstream oil is very strong and one of our key achievements,” Sire said.
The bank also pledged €200bn to help large corporates transition as part of its 2025 plan and set targets to issue more than €350bn of ESG-labelled debt by 2025 while managing more than €300bn of sustainable and responsible investments and savings.
BNPP’s impact work is comprehensive and aligned with the International Energy Agency's net-zero scenarios, which are updated annually and unusually include methane emissions.
BNPP’s 2025 strategic plan also identified key corporate impact areas. The group is targeting biodiversity, social inclusion and sustainable savings, as well as climate, and has also set a goal on the circular economy for its businesses.
“Our sustainability effort is really grounded on the impact,” Sire said.
BNPP is a leader in biodiversity protection and conservation, particularly in combating deforestation and ensuring traceability. It set a policy in 2021 to encourage clients buying beef or soya from Brazil’s Amazon and Cerrado regions to adopt “zero deforestation” in their production and supply chains by 2025.
Its biodiversity commitment was recognised by responsible investment group ShareAction in December when it ranked BNP Paribas as the top bank for climate (60%) and biodiversity (68%).
Biodiversity metrics are at an early stage in the financial services industry and BNPP is involved in the Taskforce on Nature-related Financial Disclosures, which is aiming to create a framework for the financial sector to manage its risks, dependencies and impacts on nature.
The bank took several new commitments in 2022 as part of the Act4nature voluntary initiative, which include evaluating all clients on biodiversity criteria by 2025. But biodiversity remains difficult to measure and BNPP is working to create new key performance indicators.
“I think we are really leaders in terms of deforestation policy. My challenge for the team is to be able to build something around biodiversity that is as solid as what we’ve done on climate. We’re not there yet,” Jaubert said. “We’re working with other groups to really test the kind of KPIs we can implement.”
This comprehensive approach and emphasis on impact is also leading BNPP to focus on social considerations, including financial inclusion, microfinance and offering sustainable retail products.
BNPP created the Just Sustainability Transitions Institute to coordinate and increase the amount of financing for populations most vulnerable to climate change and biodiversity loss. It is also a leader in social bonds, such as December’s inaugural €50m structured social index-linked bond.
The bank has set a target to reach 6 million beneficiaries of products and services supporting financial inclusion by 2025. It is rolling out its retail bank subsidiary Nickel, which gives people excluded from banking services an account and payment card and had more than 2.4 million customers in Continental Europe at the end of 2021.
ShareAction’s December report ranked banks in order of their environmental policies across climate and biodiversity governance, climate risks, climate opportunities, biodiversity strategy and policy engagement and collaboration with stakeholders.
Although BNPP was the top performer overall and the only bank to get a B+ rating with an overall score of 63%, against a sector average of 42.7%, ShareAction said this score showed the bank “still has a long way to go”.
In late October, a group of French NGOs launched legal action against BNPP, calling for the bank to immediately stop providing direct and indirect financing for new fossil fuel projects to comply with the goals of the Paris Agreement to limit global warming.
BNPP said at the time it was looking into the matter and described its objectives to reduce oil financing reduction as among the “most ambitious” set by large global banks.
ShareAction asked BNPP to continue to tighten its oil and gas policies, publish its global Scope 3 emissions data, set targets to reduce absolute emissions and extend coverage from the bank's loan portfolios to all capital markets activity.
Although BNPP is working on these points, it is not yet ready to publish. "Even though we do acknowledge that publishing our Scope 3 data is key, I'm not sure we're ready to do that yet considering the maturity of the data and methodology and we're working on capital markets activity," Jaubert said.
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