An insider look at our long and winding road to net zero

?? This month, BNP Paribas unveiled its 2024 Climate Report, an in-depth study of ?the strategies, governance, and risk management practices we have adopted to address climate change. As this new report shows, while from a distance, the path to decarbonisation might seem straightforward and uniform, it is everything but, and progress varies widely across industries as a multitude of complex factors come into play. Join us as we explore what it takes to decarbonise a portfolio like ours, and why it’s not always a smooth journey.

• Limiting global warming to +1,5°C requires immense efforts from the entire financial system. In 2021, that is what led us to join the Net-Zero Banking Alliance (NZBA) as a founding member launched by United Nations Environment Programme Finance Initiative (UNEP FI) . Together, NZBA members pledge to align the emissions arising from their credit activities with trajectories that meet the 2050 carbon neutrality goal. This involves adopting credible transition scenarios, focusing on highly emissive sectors, setting interim targets for no later than 2030, and disclosing progress and action plans annually. These commitments have led BNP Paribas to engage in thorough yearly analyses of our advances in each of the sectors we operate in.
• In line with these requirements, since joining the NZBA, BNP Paribas has set 2025 or 2030 intensity emission targets in oil & gas, power generation, automotive, steel, aluminium, and cement. As of December 2023, we had already exceeded our 2025 upstream oil & gas and upstream oil financing reduction targets. We had initially aimed to bring these levels down respectively by 12% and 25% (compared to December 2020) but have since managed to reduce them by 37% and 43%. Additionally, in oil as in power generation, automotive (2025 targets) steel, and aluminum (2030 targets), our 2023 trajectory is globally in line with our targets.
• This year, aviation, shipping, and commercial real estate join the list of the sectors for which we have set ourselves emission intensity targets for our loan portfolio. As regards aviation (aircraft use), we aim to take emission intensity from 956 gCO2e/RTK to below 785 by 2030, in line with the IEA NZE 2025/2030 benchmark. In shipping, we aim for a decrease from 8.3 gCO2e/dwt.nm in 2022 to the 5.6-6.4 range in 2030. Finally, our target for commercial real estate is a reduction emission intensity in building ownership and exploitation from 28.4 to the 16.7-19.5 kgCO2e/m2 range over the same period.

• Setting and reaching targets of this sort is not always easy. That is why, this year, we have opted not to set targets for certain specific sectors. Take residential real estate for instance: 75% of Europe’s 229?million homes must be renovated by 2030, but the pace of renovation remains far too slow due to high energy prices and a shortage of workers and materials.
• Moreover, decarbonising real estate largely depends on each country’s energy mix, which financial actors have no control over. And no bank can drive renovation alone; it requires a collective effort from policymakers, financial actors, industry experts, and consumers. This does not mean we are not doing everything in our power to support our clients’ energy transition – our “My Sustainable Home” initiative continues to promote financing for efficient properties, support renovation with dedicated loans, and work with experts to offer comprehensive renovation solutions.
• We have made a similar decision for our agricultural credit portfolio. Agriculture is highly fragmented, with different emission profiles based on the crop, country, weather, soil conditions, and farming practices. This diversity, combined with the lack of detailed climate data at the client level, makes aligning our portfolio especially hard. Other technical obstacles include still-developing methodologies and the absence of appropriate scenarios for target-setting. While statistical methods could estimate emissions across the portfolio, they lack the granularity to assess individual clients or farms accurately.
• Banking is not the only field at stake; in asset management too, we are making progress on our journey to decarbonise our portfolios and?to overcome hurdles specific to our industry. “While we see progress towards net zero, the path is bumpy and not moving quickly enough”, writes Jane Ambachtsheer , Global Head of Sustainability at BNP Paribas Asset Management .?BNP Paribas Asset Management’s?new sustainability report tracks the firm’s achievements and the challenges ahead. ??

• Overall, decarbonisation is a humbling journey. This is just as true for us as it is for other banks across the globe: “As NZBA members go through the technically demanding process of setting and meeting targets, they face many challenges”, from mastering carbon accounting to developing new methodologies and risk models, writes UNEPFI. In fact, aiming for zero carbon emissions is a first for everyone involved. And though the journey is challenging, we at BNP Paribas are committed to one major purpose: to support our clients’ transition, giving them the tools and opportunities to accelerate it to collectively reach a carbon-free, sustainable economy that benefits everyone. ?

?? Ecodair is on a mission to boost social integration and sustainable tech. And it just raised 3.5 million euros to take its growth to the next level!

• Founded in Paris in 2004, Ecodair is a pioneer in the social and solidarity economy sector. Its mission: to train, integrate and provide work to individuals from vulnerable backgrounds through tech reconditioning. Twenty years on, Ecodair employs 170?people across five sites; just last year, it processed a whopping 46,000 pieces of IT equipment!
• The funding Ecodair has just raised from BNP Paribas, Banque des Territoires , Crédit Mutuel Asset Management , and Phitrust will support its efforts to help men and women facing mental disabilities or precarious employment situations, while making computer reconditioning a reflex, for more sustainable and circular tech practices.
• A regular user of its reconditioning services, BNP Paribas has been Ecodair’s banking partner for 14 years and is happy to witness and support its growth. To find out more, head over here.

?? What do ESG regulations hold for companies this year?

• BNP Paribas CIB ’s Regulatory Anticipation team has the lowdown on the European Sustainability Reporting Standards (ESRS) and the IFRS Sustainability Disclosure Standards, two new standards that represent a paradigm shift in sustainable investing.
• By introducing access to transparent, quality data and comparability of disclosures, both ESRS and IFRS-S are expected to significantly benefit investors as well as companies. Disclosing their efforts to anticipate and mitigate ESG risks and align with sustainability goals will reduce businesses’ exposure to transition risk, create new opportunities, and make operations more efficient. A virtuous cycle!
• Head there for more insight from our experts ??

?? It’s a special anniversary: 2024 marks the 35th year of BNP Paribas’ commitment to microfinance.?

• BNP Paribas’ 2024 Microfinance Social Performance Report is out. A great opportunity to reflect on a journey that began all the way back in 1989, with our support to microfinance institution (MFI) Crédit Rural de Guinée. Since then, we have helped 3.2 million indirect beneficiaries, 84% of whom are women.?
• And our commitment remains steady: in 2023, we supported 21 MFIs with million in loans and investments. And our employees spent close to 19,000 hours doing pro-bono microfinance work, a 20% increase from the previous year. In 2024, we will focus on helping micro-borrowers cope with climate change and boost their resilience.
• We sat down with Marie Degrand-Guillaud , CEO of Nickel , and Alain Levy , head of Microfinance Americas and Asia at BNP Paribas, to talk financial inclusion and future prospects. Read more below! ??

?? One day, Maya B. ’s nine-year-old came home from school puzzled and anxious. He had just learned about climate change.

• Hearing about the climate and biodiversity crises can hit the little ones especially hard. How can adults help transform a sense of dread into curiosity and even optimism??
• Maya Bonan Guillou, Sustainability Risk Officer at BNP Paribas Cardif shares the reads and visits that are helping her child navigate a fast-changing world.