Three years after the publication of the International Energy Agency’s (IEA) first Net Zero Emissions (NZE) scenario, projecting a halt to the development of new oil and gas fields, BNP Paribas and Crédit Agricole have announced that they will no longer participate in conventional bond issues by companies in the sector. In so doing, two of the world’s 10 biggest banks are finally taking note of the scientific imperative to halt the expansion of oil and gas production. They are also converting this acknowledgement into action by ending one of the most important forms of non-earmarked financing for the energy sector. This action must now be extended to loans and companies developing new oil and gas transport infrastructure, and should be emulated by other international banks.
Within a few days of each other, BNP Paribas and then Crédit Agricole announced that they would no longer participate in issuing conventional bonds for companies involved in oil and gas extraction and production (1).
A ground-breaking measure to be applauded and emulated
The measures cover both specialized and integrated companies, including the oil and gas majors. It is a major move for both banks given their previous high levels of financing for the sector. BNP Paribas was the leading bank behind BP, Shell and TotalEnergies between 2019 and 2023, while Crédit Agricole was the second-largest financial backer of TotalEnergies and one of the main backers of Eni over the same period (2).
Non-targeted bonds also accounted for 45% of all financing to the six major European oil & gas companies over the last 3 years by BNP Paribas (52%) and Crédit Agricole (38%) (3) – a significant percentage that is comparable to the financing for the sector as a whole by the two French banks (41%) (4). If generalized to the 60 largest international banks, this would cover 51% of financing granted to the sector.
While the manner of this announcement is to be deplored, and in particular the fact that the banks have not yet written this measure into their sectoral policies, a silent revolution is taking place in the practices of the two giants of the French banking sector. While other global banks are backtracking on their climate commitments or showing no sign of weakening their support for the biggest polluters, BNP Paribas and Crédit Agricole are taking a further step towards respecting the scientific consensus on the imperative of halting oil and gas expansion.
Compromising loopholes
Two shortcomings, however, call into question the banks’ willingness to fully align themselves with a 1.5°C trajectory. The first is the fact that the announcement concerns only conventional bonds, leaving out corporate loans, even though the two share identical financing objectives.
It should be noted, however, that both banks do have targets for reducing their exposure to the oil and gas sector, which, in the case of BNP Paribas at least, should make this kind of transaction exceptional over the coming years (5). Exceptional, but not impossible, as evidenced by BNP Paribas’ participation in a loan to Eni last December (6). The possibility of participating in future loans to oil and gas companies is greater for Crédit Agricole which has an exposure target for 2025, but, unlike BNP Paribas does not have a target for 2030 (7).
Moreover, there are no measures for companies involved in the development of new oil and gas transport infrastructure, including for liquefied natural gas. Such infrastructure development hinders our chances of limiting global warming to 1.5°C just as much as the development of new oil and gas fields. The banks cannot meet their own climate commitments without ending their support for the companies building them. This is all the more urgent as BNP Paribas and Crédit Agricole still seem to be providing strong support. For example, we have noted 12 transactions (loans and bond subscriptions) by BNP Paribas and 14 transactions by Crédit Agricole to oil and gas infrastructure companies since January 2024, compared with 0 and 2 transactions respectively to hydrocarbon companies over this period (8).
Sustainability-Linked Bonds: an open door to greenwashing
Unconventional bonds are not covered, starting with green bonds, which are financing mechanisms earmarked for specific projects. While it is important to ensure that the activities financed are sustainable, continuing to facilitate these bonds could help meet the massive need for investment in sustainable energy.
But the banks are also leaving the door open to Sustainability-Linked Bonds (SLBs), another type of unconventional bond which, unlike green bonds, are not earmarked for specific activities, but finance all the activities carried out by the companies benefiting from them. These bonds are problematic in more ways than one. In particular, they are criticized as greenwashing when issued by a company which, far from having a robust transition plan, continues to develop new fossil fuel projects that are strictly incompatible with a 1.5°C trajectory (9).
However, this type of untargeted bond remains rare. Over the past three years, companies active in oil and gas exploration and production have issued 778 bonds, including just 7 SLBs (10). BNP Paribas and Crédit Agricole participated in only two of these transactions, both for Eni (11).
Although imperfect, the announcements by BNP Paribas and Crédit Agricole undeniably represent a major step forward in the fight against climate change. It is urgent that the other major international banks follow suit. As for the two French banks, consistency would dictate that they refrain from participating in other non-earmarked financing – loans and Sustainability-Linked Bonds – for companies developing new fossil fuel projects. We will not fail to denounce such transactions should they arise, and we call on the two banks to extend their approach to companies involved in hydrocarbon transport, and in particular the development of new LNG terminals.
