Paris, 14 May 2024: At its Annual General Meeting today, BNP Paribas indicated that it would refrain from participating in certain types of non-earmarked financing – bond issues – for companies in the oil and gas sector. Reclaim Finance welcomes this change at a time when the bank is reducing its financing for major companies in the sector, and calls on BNP Paribas to formalize this approach by including this rule in its climate policy and extending it to other financial services likely to contribute to oil and gas expansion.
In answers to written questions tabled for the Annual General Meeting, BNP Paribas states: “we refrain from participating in conventional bond issues in the oil and gas sector” (1). This recent change was confirmed at the company’s AGM today (Tuesday), and echoes statements made to the French Senate’s Commission of Inquiry into TotalEnergies on 6 May. Jean-Laurent Bonnafé, Chief Executive Officer of BNP Paribas, said that he had “withdrawn from these conventional bonds because we were told “but you can see that this is general money and it can finance anything and everything” (2).
We can only welcome the transformation underway within BNP Paribas and note how this sets them apart from other international banks such as Crédit Agricole, HSBC and Barclays. This announcement is all the more important given that BNP Paribas has historically been heavily involved in financing oil and gas majors (3). But it should be noted that this is not a firm commitment to no longer provide this type of support, and that the bank has left the door open to other types of financing, such as loans, which could also contribute to the expansion of fossil fuels. After several months of not supporting major oil and gas companies, BNP Paribas provided a loan to Italian oil major Eni in December (4). This just goes to show that BNP Paribas still has some way to go before it fully implements its climate commitments.
Lucie Pinson, director of Reclaim Finance
BNP Paribas has not said that it is applying its approach for bonds to general loans to companies in the oil and gas sector, even though they are similarly not earmarked and can, in the words of Jean-Laurent Bonnafé, finance ‘anything and everything’. However, the bank points out that general loans represented a tiny proportion of its loans to the sector in 2023 (5) and says that it has ambitious targets for reducing exposure to the oil and gas sector for its lending. In other words, these loans should also be phased out, but BNP Paribas’ involvement in the loan granted to the Italian company Eni last December shows that they are still possible.
Questions also remain concerning sustainability-linked bonds (SLBs), which are untargeted bonds associated with often very superficial climate objectives. These bonds are not conventional bonds (6) and therefore seem likely to continue to be backed by the bank, even if they support the full range of corporate activities, including oil and gas expansion.
There are also concerns about which companies are covered by the decision to no longer participate in new bonds, adopted in February 2023 according to the bank. Three bond transactions with companies producing hydrocarbons which are planning new projects have been supported by BNP Paribas since that date (7). This could be explained – but not justified – by the fact that these companies are classified as operating in the industrial sector (The Abu Dhabi National Energy Company and KOGAS) or are integrated companies with relatively little activity in oil and gas production (Orlen).
While the bank ceased financing new oil and gas fields in 2023, it still provides direct financing to new liquefied natural gas terminals, which are just as incompatible with a 1.5°C trajectory according to the conclusions of IPCC scientists and the projections of the International Energy Agency.
