BNP Paribas has provided more details of its plans to withdraw from oil and gas exploration and production activities, following its announcement to strengthen its commitments on 24 January 2023.
The French lender, and asset finance bank, said it will no longer provide any financing dedicated to the development of new oil and gas fields regardless of the financing methods, it said in a press release.
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Beyond the energy sector, BNP Paribas will continue to align its loan portfolio with a net zero emissions trajectory, “and is setting new decarbonisation targets for the steel, cement and aluminium sectors, as presented in its 2023 Climate Report,” it said.
BNP Paribas confirmed that it remains on track with the trajectories announced in 2022 for the power generation, oil and gas, and automotive sectors.
Since 2022 (including 2023 year-to-date), BNP Paribas has ranked n°1 in global green bond issuance[1].
It is one of BNP Paribas’ strategic priorities to make a significant contribution to the financing of low-carbon energies, mainly renewables, in order to support the broader economy’s transition away from fossil fuels.
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By GlobalDataBased on extensive scientific research, the NZE (net zero emissions) scenario developed by the International Energy Agency (IEA) highlights the need for a very strong acceleration of investments in low-carbon energies, which is essential to enable the phasing out of fossil energies and the achievement of carbon neutrality by 2050.
BNP Paribas has already largely shifted its energy financing activities. At year-end 2022, low-carbon energies accounted for nearly 60% of BNP Paribas’ total financing of the energy sector.
As announced on January 24th, 2023, BNP Paribas aims to further shift its energy-based financing to 80% for low-carbon energies, representing at least €40 billion. In line with this commitment, BNP Paribas has decided to significantly reduce its support of the oil and gas exploration and production industry.
BNP Paribas is providing more detail on its plans to withdraw from oil and gas exploration and production activities and has updated its “Oil and Gas” sector policy accordingly.
BNP Paribas will no longer provide any financing dedicated to the development of new oil and gas fields regardless of the financing methods.
In the oil sector, BNP Paribas will reduce its financing of oil exploration and production by 80% by 2030 as follows:
- No longer providing any financing dedicated to the development of new oil fields (including project financing, RBL[2], FPSO[3], [4]);
- Phasing out financing to non-diversified oil exploration and production players (independent oil companies) which is intended to support oil production (corporate financing or RBL);
- Reducing the share of the general corporate-purpose facilities which is allocated to oil exploration and production.
As regards gas exploration and production, BNP Paribas will cease all financing dedicated to the development of new fields. As announced on January 24th, 2023, BNP Paribas is committed to reducing financing for gas exploration and production by more than 30% by 2030 (vs. September 30th, 2022 baseline).
As part of its 2023 Climate Report, BNP Paribas has set new portfolio alignment targets in three key sectors. These targets are informed by the International Energy Agency’s Net Zero Emissions (IEA NZE) by 2050 scenario and are set for 2030, which is considered as the appropriate time horizon when taking into account the respective industries’ decarbonisation inflexion points:
- Steel: a 25% emission intensity reduction vs. 2022 in order to reach 1.2 tCO2/t crude steel.
- Aluminium: a 10% emission intensity reduction vs. 2022 in order to reach 5.6 tCO2e/t aluminium.
- Cement: a 24% emission intensity reduction vs. 2021 in order to reach 0.51 tCO2/t cementitious products.
BNP Paribas confirms that it remains on track with the trajectories announced in 2022 for its first three sectors of focus:
- Oil and gas: 12% reduction in financing for oil and gas exploration and production at year-end 2022 vs. 2020 (targeted 12% reduction by 2025 substantially achieved); emission intensity of 67 gCO2e/MJ at year-end 2022, with a target of <61 gCO2e/MJ by 2025.
- Power generation: financed technological mix of energy sector comprised of 60% renewable energies at year-end 2022 (target of over 66% by 2025) and 7% coal (target of less than 5% by 2025); emission intensity of 179 gCO2/kWh at year-end 2022, with a target of <146 gCO2/kWh by 2025.
- Automotive: increase in the share of electrified vehicles financed in the total automotive portfolio to 14% at year-end 2022, with a target of reaching >25% by 2025; emission intensity of 167 gCO2/km (WLTP) at year-end 2022, with a target of <137 gCO2/km (WLTP) by 2025.
As BNP Paribas continues to align its loan portfolio with a net zero trajectory, the bank reiterates one of its key objectives from its GTS 2025 plan: to position the Group as a leader in the energy transition, with a target of deploying €200 billion to support its clients’ transition to a low-carbon economy by 2025[5]. BNP Paribas remains both strongly committed to and on track to meet its goal. This is reflected in its n°1 position in worldwide green bond issuance in 2022 ($19.5 billion[6]) as well as in 2023 year-to-date ($9 billion[7], in addition to $14.2 billion[7] in sustainable bond issuance).
Notes
[1] Source: Bloomberg.
[2] Reserve-Based Lending.
[3] Floating Production Storage and Offloading.
[4] The amount of financing, calculated in accordance with the PACTA methodology, includes loans specifically dedicated to exploration and production, whether granted to a project or to a company specialising in exploration and production (independent company or specialised subsidiary of a diversified group). Moreover, in respect of loans granted to energy companies, the amount of the financing will be determined pro rata of the proportion of the company’s revenue derived from exploration and production unless such activities are explicitly excluded from the financing scope.
[5] This target is part of the CSR scoreboard comprising ten indicators, the achievement of which is included in the calculation of 20% of the three-year loyalty plan for over 8,400 Group employees (managers or employees identified as “risk takers”) and 15% of the variable compensation awarded to Group corporate officers.
[6] Source: Bloomberg, bookrunner in volume at 31/12/2022.
[7] Source: Bloomberg, bookrunner in volume at 31/03/2023.
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