BNP Paribas to stop financing new gas projects as risk of litigation increases

BNP Paribas said it would no longer finance new gas field projects, further limiting some of its fossil fuel lending, as activists pursue lawsuits against the euro zone’s biggest bank to shore up the sector.

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

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

The bank has previously pledged to limit its lending to companies involved in oil and gas exploration and production by 2030, by 80% for oil and 30% for gas. Activists say this leaves the door open for underwriting oil services and loans to gas companies.

BNP is currently in the top 20 of the world’s largest lenders to oil and gas companies. The Rainforest Action Network’s latest annual ranking estimates that BNP provided the industry with $20.8 billion worth of financing in 2022, more than other European banks, and a total of $165 billion since 2016 as a result of the Paris climate agreement.

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

It said on Thursday it would also end so-called reserve-based lending, in which loans are backed by the oil reserves of companies that go into debt.

The bank, like many others involved in fossil fuel financing, said it is accompanying companies as they move towards cleaner energy sources and is providing financing accordingly.

Lucie Pinson, founder of campaign group Reclaim Finance, said BNP should commit to “phasing out all of its financial services to companies” that haven’t abandoned all of their new oil and gas projects. “This is the only way for BNP to help prevent and arm themselves against the risk of climatic situation worsening,” he 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 funding for the industry violates a legally binding obligation in France to ensure that its activities do not harm the environment.

Lorette Philippot, campaign manager at Friends of the Earth France, said BNP’s move was a “step in the right direction” but “unfortunately it failed to respond to an elementary and urgent request. . . stop supporting the development of any new oil and gas fields.” The focus on oil has created a “two-speed policy” that has 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 next week’s annual shareholder meeting, challenging it to recognize a “scientific consensus” that investments in new gas projects, not just coal, should be “immediately stopped.”

Its signatories included scientists involved in the latest report by the United Nations Intergovernmental Panel on Climate Change, which warned the world had a “short and fast closing window” to adapt to climate change.