BNP Paribas vows to end coal financing by 2040
Corporate bank BNP Paribas has pledged to stop all funding for thermal coal globally by 2040, with an interim target of 2030 for EU Member States.
The commitment will see the bank working with thermal coal companies currently covered by its portfolio, to encourage them to shift to new, low-carbon business models. If they fail to do so, they will face divestment in 2030, if based in the EU, or 2040, if located elsewhere.
BNP Paribas halted funding for new coal-fired power plants in 2017 but has continued to invest in legacy facilities and electricity companies which generate a proportion of their energy using coal. The share of coal in the electricity mix of electricity companies financed by BNP Paribas fell below 20% for the first time in 2018.
The bank claims that strengthening its position on top of this will help bring about the International Energy Agency (IEA)’s Sustainable Development Scenario (SDS), in which the CO2 intensity of the worldwide energy mix falls by 85% by 2040, against a 2014 baseline.
In a bid to support the transition to clean power as divestment from coal continues, BNP Paribas has also set a new time-bound target for financing renewable energy development. In 2015, the bank pledged to double its renewable energy financing to €15bn (£12.83bn) by 2020. Having surpassed that target in December 2018, the firm will now work to provide a cumulative €18bn (£15.4bn) by 2021.
“Like all players in the economy and society whose objective is to contribute to the necessary transition to a lower carbon economic model, BNP Paribas has a role to play,” BNP Paribas’ director and chief executive Jean Laurent Bonnafe said.
As a bank, we have the opportunity, and the will, to participate in the acceleration of the energy transition by supporting our customers in this necessary transformation. To succeed, such a transition must be fair and balanced, taking into account the reality of the economic model and the daily needs of people around the world. These new commitments, which have clear objectives, mark a new stage in our objective of making a decisive contribution to the climate challenge.”
Divestment booms, but so do emissions
Amid a wave of new scientific research and climate activism, BNP Paribas is one of many large financial firms to have outlined coal divestment plans.
At a landmark vote earlier this month, the European Investment Bank (EIB) vowed to stop all financing for fossil fuel projects at the end of 2021 and unlock €1trn in sustainable development over the next decade.
Elsewhere, the likes of Legal and General Investment Management (LGIM), Lloyds of London, Aviva, Allianz, Axa, Legal & General, SCOR, Swiss Re and Zurich and The Church of England have all begun their divestment process. Climate action group Unfriend Coal revealed in its latest report that 24 of the world’s largest investors have collectively excluded coal from $6trn in assets to date.
The impacts of these moves, compounded by action from policymakers and the falling costs of renewable generation, are already being felt. Analysis from Carbon Tracker this week revealed that electricity production from coal is on track to fall by around 3% globally in 2019 – the largest year-on-year drop on record.
But, more broadly, this has not been enough to reduce the power sector’s emissions in line with the Paris Agreement, according to the UN. The latest report from the body’s World Meteorological Organization shows that concentrations of greenhouse gases hit a record high in 2018.