French multinational bank BNP Paribas will more than double the financing resources allocated to the renewable energy sector, from EUR 6.9 billion in 2014 to EUR 15 billion in 2020, and strengthen its policies for the management of carbon risk.
The bank will also continue to promote Green Bonds to institutional investors, a market in which the bank aims to rank among the top three players worldwide for euro-denominated issues by 2018.
“Our decision to more than double our financing in the renewable energy sector and to reinforce our carbon risk management procedures is both an environmental and economic necessity,” Jean-Laurent Bonnafé, CEO of BNP Paribas, said.
“It has been calculated that if we want to limit the increase in average global temperatures to 2ºC, only one third of existing fossil fuel reserves can be burnt. The electricity mix currently financed by the BNP Paribas Group, with 23% renewables that is, hydroelectric power, photovoltaic and wind power – and 23% coal-fired power, is already more advanced than the global average mix which, according to the IEA, comprises 21% renewables and 40% coal.”
The bank has decided that it will no longer finance coal mining activities, whether through direct financing of mining projects or by financing mining companies specialising in coal extraction, unless they have put in place an energy diversification strategy.
The bank will provide no further financing for coal-fired power plants in high-income countries. In other countries, BNP Paribas will consider the possibility to finance such projects provided that the host country has made a commitment to limit greenhouse gases (GHG) emissions as part of the COP21 framework.
In addition, the bank will only provide financing to power generation companies that have a formal diversification strategy to reduce the share of coal in their power generation mix that is at least as ambitious as that of their host country.
BNP Paribas is also going to include a climate component in its methodology for rating companies and projects financed by the bank. This means that going forward the bank will progressively integrate the use of an internal carbon price in its financing decisions, to reflect the changes brought about by the transition towards sustainable energy and to take into account the associated risks.
“We’re determined to live up to our role as a responsible bank by supporting companies and countries that are committed to the transition to sustainable energy use. This is a high priority in which technological innovation will help to drive progress. For this reason, we have also made a commitment to invest EUR 100 million by 2020 in start-ups working to develop solutions in areas such as energy storage and smart grids,” said Bonnafé.
Image: BNP Paribas UK