May 12th, 2020 – After years of hemming and hawing, BNP Paribas has specified its phase-out requirement for the coal power sector [1]. Specific provisions in the updated policy include extending the 2030 coal phase-out deadline to OECD countries outside the EU and excluding coal plant developers. Not included are measures to exclude and exit other sectors of the broader coal industry, such as extraction and transport, or strict exclusion criteria of existing clients highly exposed to coal.

Reclaim Finance, BankTrack and Friends of the Earth France conclude that while the new policy represents progress from the company’s November 2019 update [2], it is also a missed opportunity to commit to a full coal phase-out and to adopt measures to push all companies in its portfolios to close their coal infrastructure.

With this announcement, BNP Paribas is correcting one substantial failure of its existing policy by extending coal power sector phase-out commitments to OECD countries outside the EU. In November 2019, BNP Paribas committed to exit the coal power sector by 2030 in EU countries, and by 2040 elsewhere. At the time, environmental groups and progressive members of the international finance community criticised the bank for neglecting non-EU OECD countries, where more than 20% of global coal power production lies, which also must exit coal by the same deadline.[3] BNP paribas also confirmed its intention to exclude companies planning new coal plants from its financial support.

The updated BNP Paribas policy falls short by limiting its exclusion commitments to coal plant developers, overlooking other companies with otherwise high coal exposure. This reflects a level of ambition far short of best practices set by such peer financial institutions as Crédit Agricole, Crédit Mutuel, AXA and other financial players. The bank claims that the implementation of its policy will lead it to exclude half the companies in its portfolio, but the stipulations do not clarify which ones will be subject to exclusion based on their activity in the coal sector. The exclusion of companies with 25% or greater share of coal-related revenues only concerns new clients and it is unclear which existing clients, such as German utility RWE, which is among the bank’s most coal-dependent customers, will be excluded. This determination will depend on what the bank “believes” about any given client company’s likelihood to be aligned with the Paris Agreement objectives in the coming years.

Lucie Pinson, founder and director of Reclaim Finance, comments: “The absence of any strict exclusion criteria beyond coal plant developers shows the difficulty for BNP Paribas to definitively cut its ties with some big players in the sector. The bank plans to publish the details of its commitments in a future updated sector policy. To remove any doubt, the group must build on the good practices from AXA and Crédit Agricole and specify in that policy strict exclusion criteria for existing clients highly exposed to coal, and require other companies to adopt by next year a public and detailed closure plan of their coal infrastructures”.

Johan Frijns, director of BankTrack, added: “BNP Paribas has rightly corrected itself on earlier gaps in its coal policy by putting one target phase-out year in place for all OECD countries, as there was no justification for different targets in the first place. With this, BNP follows HSBC, Westpac, Citi and other large banks that all recently closed one policy gap while still leaving other gaps in place, such as coal extraction and coal transport in the case of BNP. Banks should stop wasting further precious time and immediately remove all remaining exceptions for companies involved in the coal sector one way or the other.”

Lorette Philippot, private finance campaigner for Friends of the Earth France, concludes: “BNP Paribas is proud to describe a decade of progressive coal exit. But the bank actually proves the inefficiency of its action regarding the climate issue: after 9 years, it still managed to announce an incomplete strategy on this sector. We unfortunately do not have the time to wait for banks and investors to decide themselves the hard choices that climate urgency imposes. The government must now act and not bail on its responsibilities: it must force private financial players to phase-out all fossil fuels in the time required to respect the Paris Agreement objectives.”

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