Bank pledges to step away from some fossil fuels ahead of annual meeting of shareholders

BNP Paribas has said it will no longer finance new gasfield projects, further restricting some of its funding for fossil fuels, as campaigners pursue lawsuits against the eurozone’s biggest bank for supporting the sector.

The French banking group on Thursday joined other leading fossil fuel lenders such as HSBC in extending a previous commitment on new oil projects to include some gas activities, an area where clients such as BP and TotalEnergies have big operations.

But climate activists noted that most of the bank’s support for oil and gas is given through corporate loans and bond underwriting services, not the direct loans that BNP has addressed in its new policy. Alexandre Poidatz, Oxfam France’s head of advocacy, said the move was “a big step according to BNP, but a small step for humanity”.

The bank has previously committed to restricting its lending to companies involved in oil and gas exploration and production by 2030 — by 80 per cent for oil and 30 per cent for gas. Campaigners argue this leaves the door open to underwriting services for oil and lending to gas companies.

BNP is at present in the top 20 of the world’s biggest financial backers for companies in the oil and gas sector. The latest annual ranking by the Rainforest Action Network estimated that BNP had provided $20.8bn worth of financing to the sector in 2022, more than other European banks, and a total of $165bn since 2016 following the Paris climate agreement.

BNP said in January that its outstanding loans for gas extraction and production stood at €5.3bn at the end of 2022. It said its loans to cleaner energy sources, a category in which it includes renewable power and nuclear energy, stood at just over €28bn, compared with almost €24bn for fossil fuels.

It said on Thursday it would also cease so-called reserve-based lending, where loans are secured against oil reserves of companies taking on debt.

The bank, like many others involved in financing fossil fuels, has argued that it is accompanying companies as they pivot towards cleaner energy sources and is providing funding accordingly.

Lucie Pinson, founder of campaign group Reclaim Finance, said BNP should commit to “progressively restrict all of its financial services to companies” that did not drop all of their new oil and gas projects. “This is the only way for BNP to help prevent and arm itself against the risk of the climate situation worsening,” she added.

Pressure on BNP to detail its climate strategy and do more to cut support for fossil fuels has increased in recent months. The bank faces a lawsuit brought by Oxfam, Friends of the Earth and Notre Affaire à Tous in a French court, on the grounds that its financing for the industry breaches a legally binding duty in France to ensure its activities do not harm the environment.

Lorette Philippot, campaign lead at Friends of the Earth France, said BNP’s move was a “step in the right direction” but “sadly failed to respond to an elementary and urgent demand . . . to stop supporting the development of any new oil and gasfields”. The focus on oil created a “two-speed policy” that allowed the bank to finance gas expansion, including by French energy giant Total, Philippot added.

A group of scientists wrote to the bank on Monday ahead of its annual shareholder meeting next week, challenging it to recognise a “scientific consensus” that investments in new gas projects, not just coal, must be “immediately stopped”.

Its signatories included scientists involved in the latest report from the UN Intergovernmental Panel on Climate Change, which warned that the world had a “brief and rapidly closing window” to adapt to climate change.