What role does Data play in steering BNP Paribas' ESG strategy?
Imène – First of all, BNP Paribas' climate commitments, described in detail in our climate report, are at the heart of our ESG strategy. As part of the GTS 2025 plan, the Group has identified the alignment of its financing trajectory with its carbon neutrality objectives as one of the 3 priority areas in terms of sustainable finance. Among the specific sectoral commitments made within this framework is a very sharp reduction in our support for fossil fuels: we are aiming for a maximum fossil fuel share of 10% in our energy credit portfolio by 2030, and we made a commitment in 2020 to have completely stopped financing thermal coal in the OECD zone and Europe by 2030, and in the rest of the world by 2040.
The Group is also committed to decarbonising other sector portfolios, such as real estate, whose climate performance is monitored using Energy Performance Certificates (EPC). All these commitments need to be rigorously monitored on a daily basis. This is what ESG Data is all about - data that did not exist a short time ago, or even does not yet exist in some cases. We need to get our act together to build it and then collect it. It's a shared challenge between our customers and ourselves, and one that takes time.
Enam – Indeed, meeting our commitments means first of all identifying and collecting data (greenhouse gas emissions data, energy performance certificates (EPC) data, customer ESG score data, ESG fund data, ...., to help us accurately monitor the trajectory taken by the Group. We also use this data to measure our progress and ensure that we stay on course. We can collect some of this data within the Group, but generally it is data published by our customers, which we recover from their CSR reports or via external suppliers or open source, meaning that in this case the data is available on the market and we have access to it.
What is ESG Data?
ESG Data can be defined as all the data that can qualify the environmental and social performance of a given company or counterparty, enabling us to identify their Environmental, Social and Governance risks (known as extra-financial).
What is the current and future regulatory framework for ESG data?
Enam – There is a regulatory framework set by the regulators on ESG data, even if it is fairly recent and therefore still under construction. As such, it is not yet as well established as that for financial data, for example. However, we can already mention three major European regulations on ESG data:
- The European Taxonomy is a classification of activities defined as sustainable, known as "green" activities, in line with the objectives of the European Green Deal and the Paris Agreement aimed at achieving a carbon-neutral economy by 2050 in the European Union. The European Taxonomy currently covers 142 activities in 9 sectors. To measure alignment with the taxonomy, there is a ratio, the Green Asset Ratio (GAR), which calculates the proportion of assets invested in sustainable economic activities. It was produced for the first time in 2023.
- Pillar 3 ESG is a reporting system that provides transparency on ESG governance management and publishes indicators relating to climate risks (e.g. financed CO2 emissions). It was published for the first time in 2022 and continues to be enriched.
- The CSRD, or Corporate Sustainability Reporting Directive, is a European directive that replaces the Non-Financial Reporting Directive. The CSRD requires the publication of very precise reporting on the way in which each company manages environmental and societal challenges. This reporting will be standardised across all companies, and its first publication is expected in 2025 for 2024 data for the Group and its subsidiaries (BGL, ARVAL, BNP Paribas Fortis, BNP Paribas Polska).
How has the Group organised itself to meet these challenges?
Imène – We are convinced of the importance of developing "Open source" tools and methodologies to align financial portfolios with our climate objectives. Within the team, for example, we have worked with other members of the French Banking Federation to develop a methodology for measuring the climate performance of French residential property portfolios, as well as with the French energy transition agency, ADEME to improve the use of energy performance certificates. This Open Source work is important because it fits in with our social commitments to help other peers use the same methodologies and benefit from our work and advances, in order to maximise the impact on the real economy.
Regarding CSRD, the Group has set up a taskforce for its own reporting, which combines the skills of Group CSR, the Finance & Strategy function, GDO (Group Data Office), some entities and other Group functions to structure this extra-financial data. This taskforce has been working on this issue for several months. It is important to note that the CSRD has a major impact on the Group, as several hundred employees will all be contributing to the extra-financial reporting.
Enam – Sustainable finance, and more broadly sustainable development as a whole, are at the heart of the Group's development strategy: this is what is covered by the 'S' - for Sustainability - in our GTS 2025 plan. As a result, appropriate Data governance has been put in place, and a large number of teams are involved at all levels.
Contributing to the scientific literature is part of our societal commitments:
We believe it is important to contribute to scientific research in the quantification of environmental risk. This is why many of our works - on various themes - are shared in "Open source". For example, we explored the use of machine learning to predict missing Energy Performance Diagnostics.
Among our publications on portfolio alignment measurement methodologies, we can mention one that investigates methods for aggregating clients' climate performance at the portfolio level. We compared their characteristics through mathematical demonstrations and Monte Carlo simulations.
We were also interested in quantifying biodiversity risk. In this context, we recently published a first document that compares ecosystem integrity indices.
We wish to continue exploring new themes of environmental research