EDITION 1, JULY 2021

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Welcome to the first edition of?Towards Planet Net-Zero, a newsletter for our BNP Paribas CIB communities.

Since the signing of the Paris Agreement over five years ago, we have all progressively been moving to a lower carbon world. The year 2021 has now made that goal and pathway clearer – we must all transition to net-zero by 2050, or earlier.

At BNP Paribas we know that we cannot achieve this ambition without you, our clients, and we see now in the lead up to COP26 as the perfect time to launch?Towards Planet Net-Zero, a monthly publication. Our mission is to inspire you with short stories about our clients who are already on their way to net-zero as well as keeping you up-to-speed on the latest news and developments around net-zero

Together, we start the journey.

On the path with our clients: Tesco pioneering towards net zero

We increasingly hear from our clients that net-zero is becoming one of the most important topics on the boardroom table. Beyond peers making commitments, there is also the growing collective of net-zero alliances across the entire financial services industry, including the most recently

announced UN Net-Zero Banking Alliance, of which BNP Paribas was a founding signatory. These driving forces only continue to strengthen the strategic importance of a net-zero commitment, but also of creating a transparent and meaningful plan to achieve it.

What does all this mean: how will it impact you, your company and society? how do we move from words to action? how do we ensure a material transition to net-zero that cuts through the greenwashing and delivers on tangible change across multiple sectors? Every month in?Towards Planet Net-Zero?we will tackle these questions with our clients who are already leading the way in the transition.

This month we profile Tesco, a pioneer in net-zero commitments, who we supported across both of their recent sustainability linked bonds (SLB) and loans (SLL). Tesco was the first business globally to set a zero-carbon goal in 2009 and in 2017 was the first FTSE 100 Company to set science-based carbon reduction targets on a 1.5-degree trajectory. In 2020, the UK retailer fast-tracked its net zero commitment by 10 years to 2035. A key differentiator in Tesco’s sustainable finance approach has been a very consistent approach of integrating their sustainability strategy into their transactions with ambitious and material climate commitments including emissions reduction, renewable energy sourcing and food waste reduction, linked to their debt financing. The recent SLB received strong investor demand and was more than six times oversubscribed.

Tesco shows that finance can be an accelerator of both impact and the transition to net-zero. Evolving quickly, specifically KPI-linked sustainable finance, which has become a key asset class to embed additionality and decarbonisation into financing and investing strategies. Ensuring the robustness of these metrics and transition finance approaches relies on material KPIs, ambitious targets, transparent impact measurement and rigorous, regular disclosures. This is essential to drive a credible transition to net-zero, and this is why guiding rules are evolving, further promoting transparency and robustness of the market. In the past month, new versions of the Sustainability-Linked Loan Principles, Green Bond Principles (GBP) and Social Bond Principles (SBP) were all released as explained in an OpEd on our BNP Paribas CIB website, a must read for both sustainable debt issuers and investor.?

Read more:

• On the road to sustainability →
• Tescos' SLB →

Green is the new Gold (Standard)!

With the countdown to COP26 now being measured in weeks, the last month has been incredibly busy for policy makers across all continents, with governments ramping up G7 commitments on GHG reduction, and the European Commission publishing a landmark ‘Strategy for financing the

transition to a sustainable economy’, including critical developments for sustainable capital markets. A key part of the European Commission’s strategy is to set a new ‘gold standard' for green bonds with the introduction of the ‘EU Green Bond Standard’ (EU GBS), developed to protect investors from greenwashing and to ensure that legitimate environmental projects are financed.

Over the last ten years, green bonds have been used increasingly to raise financing for clean energy production and distribution, resource-efficient housing, or low-carbon transport infrastructure. The EU GBS will build on current best market practices, and will go one-step further to ensure the positive impact of the assets financed, requiring full alignment of the use of proceeds to the EU Taxonomy. Alignment with the EU Taxonomy, a dynamic text that will continue to evolve, makes the EU GBS a rigorous, yet scalable financing tool for companies, institutions and public authorities willing to demonstrate strong sustainable ambitions.

We expect this new standard to be a strong differentiator because:

• Issuers of green bonds will have a robust tool to demonstrate they are funding green projects aligned with the EU Taxonomy.
• Investors buying the bonds can ensure that their investments are not only sustainable, but also do not significantly harm the environment.

In the current exponential development of sustainable finance, we strongly support this EU recommendation. We expect the EU GBS to set a new standard and become a compass for all sustainable and responsible investments.

Central banks are playing a key role too. The European Central Bank ramped up their engagement on addressing climate risk, and announced several changes to the ECB’s policy strategy in the recent review. This includes disclosing climate-related information of the corporate sector purchase programme (CSPP), alongside requirements for greater disclosure of climate related data and the addition of climate change scenarios in the ECB’s macroeconomic models. The acceleration of the ECB to engage the market on this issue will likely have notable ripple effects.

Read more:

• ECB Strategy review →
• EU Green Bond Standards →

Mark Your Calendar for 20 October! Create your race plan for net-zero

Now in its sixth year, the BNP Paribas Sustainable Future Forum (SFF) - Global Edition will be broadcast live on Wednesday, 20 October across global hubs, exclusively for BNP Paribas clients. Under the mega-theme of ‘The Race Plan for Net-Zero’, the SFF will provide an in-depth program to

help our clients understand what they actually need to do and how they need to do it to?achieve net-zero emissions before 2050.?

Anchored by the pivotal role of finance in the transition to net-zero, we will blend our in-house sustainable finance experts with the inspiration of our clients who are leading the way and the experts from our partner organisations and coalitions, to concretely demonstrate the pathways to net-zero.?

Save-the-date for 20 October and look out for more event details including agenda and registration in early September. In the meantime, check out the event website here.

Don’t miss out!

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We hope you have found our first edition inspiring and insightful covering both the opportunities and challenges on the pathways to net-zero.

We also welcome all and any comments, especially topics you would like us to cover in upcoming issues, so please send us your feedback here.

Until the next issue, may your transition to net-zero accelerate smoothly!