The 2020 Banking on Climate Change report is the product of a tight collaboration between Reclaim Finance, Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International and Sierra Club, and is supported by more than 250 organisations from 45 countries throughout the world, including Friends of the Earth France. The report aggregates loans and the issuance of shares and bonds of 2,100 companies in the coal, oil and gas sectors worldwide over the period 2016-2019.
BNP Paribas and 34 other banks are covered in the report, and the methodology is exactly the same for every single year between 2016 and 2019. Financial data comes from Bloomberg and the companies selected are the same for all the years.
Only part of the financing granted by a bank to each company covered by the Report Card is recorded. This part is equivalent to the share of the company’s activities in fossil fuels at the time of the transaction. That is to say that if a group buys another company active in the fossil fuels sector, the share of its activities in fossil fuels increases and so does the recorded share of the bank’s financing to fossil fuels. Conversely, these shares decrease when a group decides to acquire a new company that is not active in the fossil fuel industry.
The 2020 Report Card shows an increase of 72% of BNP Paribas’ financing to fossil fuels between 2018 and 2019. This sharp increase is in part due to some large transactions. The share of these transactions attributed to BNP Paribas follows the Bloomberg methodology (the ‘league tables’), that has been used every year since the first publication of the Report Card. This methodology is widely used around the world to track banks’ participation in global international financial transactions: it focuses on banks that play a leading role in bringing new transactions to the market. Bloomberg’s ‘league tables’ are recognized and used by financial institutions themselves. Using it allows us to deal with the opacity of the financial sector, the lack of detailed accounts by banks of the financial services that they offer and the difficulty of gaining access to the latter, even on paid-for databases.
The methodology having been the same for years, and being the same for all banks, other banks have also been assigned some large transactions (Barclays, Wells Fargo, etc.), and this has been the case in previous years as well. It is worth noting that French banks, including BNP Paribas, have widely used the report in the last two years to promote themselves. It would be ill advised for them to criticize the methodology today.
It is further worth noting that the report does not measure banks’ exposure to fossil fuels, but rather counts loans (which allow to measure the bank’s exposure), as well as the issuance of shares and bonds facilitated by the banks. In other worlds, the report measures flows and not stocks. A bank like BNP Paribas can therefore see its exposure to fossil fuels remain stable, or even diminish, whilst its financing increases. Rainforest Action Network demonstrated this very well in a briefing.
Read more about the full methodology here.