BNP Paribas steps up its coal-exit timetable
18.05.2020 | Sustainable finance
Since 2011, BNP Paribas has demonstrated its commitment to energy transition by reducing financing for industries that use fossil fuels, and in particular coal. After announcing stricter objectives in 2019, the Bank has decided to step up its coal-exit timetable by increasing the number of countries concerned by such an exit by 2030.
BNP Paribas is also abiding by its decision to soon cease relations with any customer planning new coal-based production capacity and no longer accept any new customer whose power generation mix presents a share of coal exceeding 25%.
Banks have a major role to play in accelerating energy and ecological transition.
That’s why, in 2011, BNP Paribas undertook to tighten its criteria for funding coal-related activities while boosting its financing of renewable energies.
Tightening its large-scale commitments
Seeking alignment with the objectives of the Paris Agreement on climate change, the Bank had already made far-reaching commitments. In 2017, it stopped funding new coal-fired power plants. That same year, it ceased all dealings with shale-gas and tar sands companies.
In 2019, BNP Paribas applied the same rationale to coal-related activities, announcing that all of its customers must stop using coal within the European Union by 2030 and elsewhere in the world by 2040.
Now the Bank is announcing even stiffer restrictions:
- BNP Paribas’s target of having all electricity-producing customers in the European Union stop using coal by 2030 is being extended to customers in all OECD countries.
- The Group is upholding its decision to soon cease relations with any customer planning new coal-based production capacity.
- BNP Paribas will no longer accept any new customer whose power generation mix presents a share of coal exceeding 25%.
- This policy is expected to rapidly reduce the number of BNP Paribas corporate customers using coal-fired power by about half.
- As mentioned, BNP Paribas is increasing the number of countries in which it expects all electricity-producing customers to stop using coal by 2030. The Bank will not only be limiting bank credit for coal-using companies, but is also ceasing to issue bond loans for these clients. Since 2017, BNP Paribas has enforced a worldwide policy: it will no longer advise coal-using customers or carry out instructions to buy or sell coal-related assets.
According to Jean-Laurent Bonnafé, Director and Chief Executive Officer of the BNP Paribas Group, this pragmatic, ambitious and committed approach marks a first in the banking sector:
“Today, BNP Paribas is the only bank in the world to have set a coal-exit date, stop funding shale gas and tar sands companies and take a leading position in financing renewable electricity projects.”
A tougher, pragmatic coal-exclusion policy
All banking institutions must be realistic and pragmatic, and the Group is no exception. As a result, its ambitious environmental policy calls for providing customers with transition support.
According to a review of the bank’s portfolio, implementation of this policy will quickly cause the number of companies producing electricity from coal among BNP Paribas’ customers to fall by about half. The remaining customers already have a coal-exit trajectory aligned with Paris Agreement targets or are deemed likely to have one in the years to come.
Personnel from BNP Paribas will monitor the alignment process, stay in close touch with customers and make decisions as needed. They will check their portfolio regularly to ensure that BNP Paribas continues to be well aligned with the targets of the Paris Agreement.
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