Edition 7, June 2022

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This month we begin by delving into the circular economy and discuss how finance can accelerate the movement. We also profile our recent research collaboration with Cambridge University, which analyzed the transition of carbon intensive sectors towards net zero. Finally we discuss the potential to scale up carbon capture technologies as a lever to net zero - don’t miss our next ESG Business Briefing about this taking place on 14 June | register here:

Circular economy: financing sustainable business models

Moving to a circular economy will be instrumental in efforts to reach net zero, particularly for consumer goods manufacturers and retailers. Corporates in these sectors are looking to finance in order to further incentivise their efforts to reduce, reuse and recycle, supported by a changing regulatory landscape.

In March 2020, the European Commission presented its 'New Circular Economy Action Plan' as part of its Green Deal, which also includes the rollout of the EU Taxonomy.

From a sustainable finance perspective, the role of finance in accelerating the circular economy will continue to strengthen, as corporates and investors seek to capitalise on new opportunities across their value chain. This has included the emergence of circular economy KPIs within finance, focussed on reduction of plastic waste, recycled materials within the supply chain, and specific resource intensities amongst others. The potential for inter-sector circularity also remains a growth area, and increasingly corporates are looking to sector collaborations and materials innovation to harness circular approaches across their business.

Find out more →

Transition to net zero: corporates must translate targets into action

The 2021 UN Climate Change Conference (COP26) held in Glasgow highlighted the urgent need for private sector engagement on climate action required to meet global net zero commitments.

In order to assess the current state of corporate sector transitions, challenges of adopting transition plans, understanding financing needs, and sector specific assessments across oil & gas (O&G), power generation, steel, cement, and aviation, BNP Paribas commissioned Cambridge University to investigate the net zero corporate landscape. Through a survey of 53 corporates in hard to abate sectors, researchers measured corporate transition in five carbon intensive sectors across 24 countries around the globe between September and November 2021. The study, titled ‘Understanding Corporates’ Transitions to Net Zero: Industry survey on net zero transition progress and challenges’ tackled key questions across finance, business model adaptation, climate risk, skills and more.

Find out the key takeaways from the survey?→

Carbon capture: essential for net zero?

Carbon Capture Utilisation Storage (CCUS) is considered by many to be an important clean technology to support carbon intensive industries in their transition to net zero. The application of CCUS across the power generation, oil & gas, steel, cement and transportation sectors could become a key lever in the net zero transition.

The International Energy Agency (IEA) predicts in its 2050 Net Zero Emissions scenario for the energy sector that CCUS applied to high emitting sectors could account for 19% of greenhouse gas emissions reductions if scaled rapidly in the coming years. Driving finance towards CCUS projects and developing infrastructure across the CCUS value chain will be critical; but will rely on sustainable business model implementation.??

CCUS is a grouped term to describe ways to trap CO2 and either store (CCS) or utilise (CCU) the carbon. Currently, the most advanced and widely adopted carbon capture technologies are chemical absorption and physical separation. These can achieve a high capture rate of up to 80-95% at the point of capture, which is generally performed at the highest concentrated point of gas emission exhausts. The capture rate depends on concentration of CO2 at source however. The technology is certainly evolving rapidly, but challenges remain to ensure efficiency and that the process produces a net climate benefit.

The development of the technology has accelerated over the last decade, driven by the urgency of the climate crisis, increase in the price of carbon, and investment in the hydrogen value chain – which uses CCUS in some of its production. Innovation has flourished, and the carbon tech sector has seen the emergence of numerous start-ups, backed by investor appetite.

The potential to scale up carbon capture technologies across carbon intensive sectors remains high and finance will be essential.

Find out more →

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We hope you have found our seventh edition inspiring and insightful covering both the opportunities and challenges on the pathways to net zero. Until the next issue, may your transition to net zero accelerate smoothly!