• Sustainable finance

“Ratings are reliable indicators for our investors and our stakeholders, notably our investors and our clients”

This Tuesday, 18 January, Corporate Knights has announced its ranking of BNP Paribas among the most sustainable businesses in the world, placing it 1st among French banks and 4th among banks overall. During the last quarter of 2022, BNP Paribas has already received extra financial ratings from CSA, Moodys and MSCI.

These rankings and ratings have clear and robust methodologies that demonstrate BNP Paribas' position as an ESG leader in France and Europe. But how do these agencies evaluate the Group's actions on environmental, societal and governance aspects? And what are the challenges for the Group to maintain its position, particularly in the eyes of its clients? Louis Chenat, Head of Extra Financial Communication within the Group CSR Department, gives us an explanation of these important evaluations.

What is your role in the CSR department of BNP Paribas?

I lead the extra financial communication team within the Group's CSR department. Our team is in charge of preparing the various environmental reports, such as the Universal Registration Document (Chapter 7) or the TCFD report, which will become a more comprehensive climate report this year. Our mission is also to respond to our external stakeholders such as extra financial rating agencies, investors and our customers, who ask us about our CSR policy.

What is an extra financial rating? 

An extra financial rating is given by a rating agency that independently evaluates our strategy, commitments and results in environmental, social and governance (ESG) matters. Our rating reflects both our environmental successes, our ambitions concerning human resources and our governance. We respond annually to a questionnaire on the implementation of the three ESG criteria. Our goal is to respond to all major rating institutions because it is important for us participate in independent evaluations in order to communicate on our ESG approach as widely and transparently as possible.

When did the Group start taking an interest in these ratings? 

Since 2010, we have developed our CSR strategy, so it was at that date that we sought to promote our strategy through agency ratings. Interestingly, our ESG performance has risen sharply since then, and continuously; progress is now more limited because, after a certain moment, earning points becomes much more difficult. What is encouraging is that whichever the rating agency, BNP Paribas is the French leader in the majority of rankings and among the global leaders: ranked Moody’s #1 diversified bank and among the top 6% of the 10,000 companies evaluated for the CSA.

extra-financial ratings bnp paribas 2023

BNP Paribas' extra financial ratings (2010-2022).

Why is it so important to be included?

One of the first elements of the response comes from the General Management: There is a real desire on its part to include CSR as one of the three pillars of our 2022-2025 strategy, as shown by the S of the GTS 2025 plan. BNP Paribas' model is driven by ESG objectives. Also, the rating agencies allow us to clearly show when we achieve our objectives based on the detailed scores and analyses we receive from them.  

In addition, ratings are reliable indicators for our external stakeholders – primarily our investors and clients. As such, everyone knows that BNP Paribas is reliably ‘audited’ by independent evaluators – which increases the value and importance of the ratings assigned to us.

In concrete terms, how do you work with the agencies? 

I must first highlight the remarkable collective work of the entire extra financial communication team who can respond appropriately to the often long and complex questionnaires of these agencies.

Every year, rating agencies give us between two weeks and two months to answer their questionnaires, which sometimes count up to 80 questions! On certain responses, it is our responsibility to find the information within other teams such as Human Resources, Compliance, LEGAL, and Finance & Strategy. This is how we build joint responses, through expertise found throughout the Bank: We are the coordinators and successful ratings is above all a collective success, that is not possible without everyone’s involvement.

The vast majority of our responses are based on public elements. We do not have often the right to give information that has not been previously published, particularly in our environmental reports. So, in a way, the agencies evaluate not only what we do, but also what we communicate! This requires us to think year-round about how we will communicate our information.

Is your contact with these agencies limited to these evaluation periods? 

We have little interaction with agencies, which are independent third-party evaluators; However, throughout the year, the agencies can challenge us on projects that have been targeted by local associations, NGOs, the press... what we call controversies. They usually give us 48 hours to respond, which is very little time! They are testing our ability to respond quickly and comprehensively. We also have discussions with these agencies to understand their methodologies so that we can try to improve, but we of course do not have access to their point or score calculations.

How do you see the evolution of these ratings over the next few years? 

The CSR landscape is changing radically: We are at the heart of a regulatory upheaval that will revolutionize the way we report on our exposures to sensitive sectors and our efforts to reduce our portfolio's carbon footprint.

Today we respond manually: Most responses will soon be automated as more public information is available and of an increasingly diverse nature. Our challenge will be to explain this information and our strategy in a clear and succinct manner. This will lead extra financial rating agencies to review their methodology, and for us how to answer their questions.

Find the Corporate Knights 2023 ranking online here

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