BNP Paribas strengthens fossil fuel exclusions policy, sets sector-specific emissions targets
BNP Paribas has set new targets to reduce the carbon intensity of its investments in the energy and automotive sectors, as it works to deliver a net-zero portfolio by 2050.
The French multinational announced the new targets on Tuesday (3 May) in a new ‘climate analytics and alignment report’. The report also details stronger exclusion policies for the fossil fuel sector.
BNP Paribas will reduce the emissions intensity of its investments in the power generation (30%), upstream oil and gas and refining (10%), and automotive (25%) sectors. The targets are deadlined at 2025 and have a 2020 baseline. They are all, additionally, minimum targets – BNP Paribas will reduce emissions intensity further if possible.
These three sectors represent some 7% of BNP Paribas’s total portfolio of investments and finance.
To reach the upstream oil and gas and refining target, in recognition of the fact that companies in this sector are extremely hard-to-abate, BNP will reduce its credit exposure to upstream oil by 25% by 2025. It will also reduce its credit exposure to upstream gas and to fossil fuel refining by 12% within the same timeframe.
Part of this reduction will be delivered by strengthening exclusion policies for the oil and gas sector. From this year, BNP Paribas will stop financing and investing in companies with more than 10% of their activities in tar sands or shale oil and gas (fracking). It will also stop financing or investing in companies deriving 10% of more of their activities from the Arctic region, and end financing and investing for all companies with any involvement of oil and gas in the Amazon.
For the power generation and automotive sectors, there are no new exclusion policies. Instead, BNP Paribas has outlined the next steps for greater engagement with companies.
In the power generation space, BNP Paribas will reduce coal’s share in its power generation portfolio capacity mix from 10% in 2020 to 5% in 2025. It will also aim to increase renewable energy’s share from 57% to 66% within the same timeframe. BNP Paribas is aiming to provide an additional €11.4bn to renewable energy projects by 2025. The International Energy Agency’s (IEA) 2050 Net-Zero Energy pathway has been used to set these targets.
For the automotive sector, BNP Paribas will work more closely with auto manufacturers to gather data on Scope 3 (indirect) emissions. It will work to bring the share of electric vehicles (EV) activities in its automotive portfolio capacity mix past 25% in 2025, up from 4% in 2020. Corporates will be offered bonds and loans from BNP Paribas to help them finance the transition to EV production.
A further seven high-emission sectors will be covered by new intensity targets and, potentially new exclusion requirements, from BNP Paribas by 2024, said the firm’s chief executive and director Jean-Laurent Bonnafe.
He said: “Our aim is to continue to be at the forefront of combatting climate change by moving further and faster to limit the rise in global temperatures to 1.°C by 2050. As the task becomes ever more urgent, we have integrated new targets in our strategic plan for 2025 to finance the energy transition. In the current geopolitical context, it is even more essential that we maintain an ambitious course towards a net-zero economy and finance the acceleration of renewable energies. Our strategy is threefold: align our portfolio with our net-zero commitment; measure and pilot our carbon-related risks; and broaden and deepen client relationships to support them as they make their low-carbon transition.”
The announcement from BNP Paribas comes shortly after its Asset Management arm signed on to support a new Global Standard on Responsible Climate Lobbying. The Standard stipulates that investors will take action against businesses thatrenew lobby “to delay, dilute or block climate action” at the policy level or within their markets.
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In the energy sector, it is of interest to note that the only reliable and economic non carbon power source, is nuclear, but is not mentioned.
The renewable sector, it must be noted, depends on natural sources of energy which are outside our control, we can’t make the wind blow.
No raft of business strategies will alter this situation.
A breakthrough in electricity storage might improve things, but is a formidable obstacle.
My own origin is from the early days of nuclear energy, as a chemist.