On October 26th, 2022, Friends of the Earth France, Notre Affaire à Tous and Oxfam France had given BNP Paribas – Europe’s first and the world’s fifth largest funder of fossil fuel expansion (1) – three months to comply with the law on the duty of diligence (2). BNP Paribas is providing an initial response to the BNP Paribas case by communicating new commitments that are too weak to meet the scientific requirements to face climate change: renouncing to finance new oil and gas projects. BNP has been forced to make announcements that do not live up to its responsibility in the face of the climate challenge.
With two days to go before the legal deadline for BNP Paribas to respond to this formal notice, the French bank has announced that it will reduce its outstanding financing for oil extraction and production by 80% by 2030, and by 30% for gas (3). This commitment does not cover all of its activities in support of fossil fuels and does not put an end to the financing of new oil and gas projects.
The commitments announced by BNP Paribas continue, in fact, to ignore the first lesson to be learned from the scientific work and the first demand of the formal notice: to immediately stop financially supporting – directly as well as indirectly – new fossil fuel projects. BNP Paribas simply assures that it has not financed any oil projects since 2016, leaving out a large part of the problem. As a result of all its financial support for all fossil fuels (4), BNP Paribas has become the world’s leading financier of eight oil and gas giants between 2016 and 2021, which alone are planning more than 200 new fossil fuel projects (5). A report published again this month by 13 NGOs, including Reclaim Finance and Friends of the Earth France, revealed that since joining the Net-Zero Banking Alliance (NZBA) in April 2021, BNP Paribas has been involved in 30 transactions providing $7.1 billion to a dozen companies developing new fossil fuel projects (6).
For Lorette Philippot, campaigner at Friends of the Earth France: “With these commitments, BNP Paribas is missing another opportunity to translate into action the repeated calls of the international community to stop the mad rush of investments in oil and gas. Both the International Energy Agency and the United Nations have stated that this is a red line (7). BNP Paribas can no longer claim to be committed to carbon neutrality while continuing to bank on the development of new fossil fuel reserves.
The targets for reducing its oil and gas extraction and production by 2030, which BNP Paribas is now adopting, are certainly an acknowledgement of the need to make a rapid exit from fossil fuels. Unfortunately, these announcements completely ignore BNP Paribas’ support through its equity and bond issuance activities, a key lever for financing companies in the sector.
Alexandre Poidatz, head of advocacy at Oxfam France, adds: “Behind this announcement effect, a much more complex reality: the reduction targets defined by BNP Paribas do not prevent the bank from maintaining at the same time its support to companies that develop new hydrocarbon projects that are incompatible with the carbon budget presented by the IPCC. A loan granted today and allowing the development of a new fossil fuel project will not necessarily appear in the bank’s outstanding loans in 2030, even if this infrastructure will continue to pollute well beyond 2030.”
Justine Ripoll, campaign manager at Notre Affaire à Tous, concludes: “If these commitments are the only response to our formal notice, we can already say that they are absolutely insufficient. The method remains the same: to play on the public’s lack of knowledge of the activities and terms of the financial sector to mask the lack of ambition and sense of responsibility of a financer of climate chaos.”
(1) Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance, Sierra Club, Urgewald, mars 2022, Banking on Climate Chaos – Fossil Fuel Finance Report 2022. Le rapport, ainsi que la base de données désagrégée par acteur financier et entreprise, sont disponibles en ligne.
(2) Les Amis de la Terre France, Notre Affaire à Tous, Oxfam France, octobre 2022. Dossier de presse – Affaire BNP Paribas : vers le procès d’un financeur du chaos climatique.
(3) Communiqué de presse diffusé par BNP Paribas le 24/01/2023 : “BNP Paribas, an established leader in financing the energy transition, embarks on a new phase of strong acceleration”.
(4) By not directly financing new oil projects, BNP Paribas is leaving the gas sector out of the picture. Moreover, this only concerns a small part of the bank’s support for hydrocarbon development, i.e. project financing: neither its loans to companies, nor its investments in the financial markets, nor its support for the issue of new shares or bonds are concerned.
(5) Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance, Sierra Club, Urgewald, mars 2022, Banking on Climate Chaos – Fossil Fuel Finance Report 2022. The report, as well as the database disaggregated by financial actor and company, is available online.
(6) Les Amis de la Terre France et Reclaim Finance, communiqué de presse diffusé le 17 janvier 2023 : Hypocrisie climatique : les acteurs financiers engagés pour la neutralité carbone jettent de l’huile sur le feu
(7) In its World Energy Outlook 2021, the International Energy Agency (IEA) concluded that “no new oil and gas fields are needed beyond those already approved for development” to limit global warming to 1.5°C. Its World Energy Outlook 2022 continues to emphasize this finding. On the contrary, the IEA stresses that “no one should imagine that the invasion of Russia can justify a wave of new oil and gas infrastructure in a world that wants to achieve carbon neutrality by 2050.” Similarly, the United Nations High-Level Expert Group (HLEG) stressed in its November 2022 report that “there is no room for new investment in fossil fuel supply.” UN High Level Expert Group (HLEG), november 2022. Integrity matters : net zero commitments by businesses, financial institutions, cities and regions.