BNP Paribas says it is allocating EUR15 billion by 2020 to the renewable energy sector in support of the world’s transition to a low-carbon economy. The bank has also decided to strengthen its policies for the management of carbon risk.

 

BNP adds that there is broad scientific and political consensus today that the current trajectory in CO2 emissions must be curbed before 2020 if we are to restrict global warming to a 2ºC increase over pre-industrial levels. In this context, BNP Paribas has decided to further intensify its efforts in this area. The commitment was more than double the EUR6.9 billion set aside for renewable energies in 2014.

 

In addition, the bank will promote green bonds to institutional investors, a market in which BNP Paribas aims to rank among the top three players worldwide for euro-denominated issues by 2018.

 

Jean-Laurent Bonnafé, director and CEO of BNP Paribas says: “Our decision to more than double our financing in the renewable energy sector and to reinforce our carbon risk management procedures is both an environmental and economic necessity.

 

“It has been calculated that if we want to limit the increase in average global temperatures to 2ºC, only one third of existing fossil fuel reserves can be burnt.  The electricity mix currently financed by the BNP Paribas Group, with 23% renewables that is, hydroelectric power, photovoltaic and wind power – and 23% coal-fired power, is already more advanced than the global average mix which, according to the International Energy Agency, comprises 21% renewables and 40% coal.”

 

BNP Paribas also decided that it will no longer finance coal mining activities, whether through direct financing of mining projects or by financing mining companies specializing in coal extraction, unless they have put in place an energy diversification strategy. 

 

 

BNP Paribas has also made the choice to support the gradual transition to a less carbon-intensive economy in Asia and sub-Saharan Africa.

 

 

The bank recognizes that climate strategies of individual countries may vary according to their current state of economic development, given that some 1.3 billion people worldwide still do not have access to electricity.

 

For high-income countries, the bank will not be extending further financing to coal-fired power plants. For the rest however, it will consider extending funding if a country meets the following criteria:

 

-       The host country must have made a commitment to limit greenhouse gases (GHG) emissions as part of the COP21 framework

-        A proper community consultation process must be put in place for local populations potentially impacted by the project, arrangements must be made to provide compensation where necessary, and they must have access to a grievance mechanism

-       The power plant must be designed to reduce its GHG emissions as much as possible

 

In addition, the bank will only provide financing to power generation companies that have a formal diversification strategy to reduce the share of coal in their power generation mix that is at least as ambitious as that of their host country.

 

BNP Paribas is also going to include a climate component in its methodology for rating companies and projects financed by the bank. Going forward, the bank will progressively integrate the use of an internal carbon price in its financing decisions, to reflect the changes brought about by the transition towards sustainable energy and to take into account the associated risks.

 

BNP Paribas also plans to significantly step up its initiatives in energy efficiency. It will further expand the offers already available to individual customers for the purpose of making home energy efficiency improvements, both through loan plans plus dedicated services and through partnerships with equipment suppliers and installation providers. 

 

BNP Paribas also intends to increase its support for companies which devote a significant part of their business activities to finding solutions for reducing energy consumption.

 

"We have also made a commitment to invest EUR100 million by 2020 in start-ups working to develop solutions in areas such as energy storage and smart grids,” says Bonnafé.