BNP Paribas Bucked 2020 Bank Trend in Fossil-Fuel Financing

(Bloomberg) -- As banks reduced their overall financing of oil, gas and coal companies by almost 9% last year, French lender BNP Paribas SA boosted its funding.

BNP Paribas, which has one of the industry’s most-restrictive financing policies, provided $41.1 billion to fossil-fuel companies through loans and debt- and equity-underwriting services in 2020, up 41% from the prior year, according to a report published Wednesday by Rainforest Action Network. The bank was the only one of the 10 largest fossil-fuel financiers to increase its funding last year. Wells Fargo & Co.’s financing fell 42%.

“During the Covid-19 crisis, all sectors of the economy needed support and BNP Paribas, like other banks, played an important stabilizing role for the economy,” the Paris-based company said in an emailed statement. Its clients have included BP Plc, Total SE and Royal Dutch Shell Plc, all of which are commited to cutting their reliance on fossil fuels and investing more in renewable energy-related businesses.

BNP Paribas said its financing of the oil and gas sectors was less than other industries. Its outstanding loans for oil and gas companies grew by 4.1%, compared with 6.5% for all other industries. The bank’s financing of the oil and gas industry represented 1.9% of its total loans as of Dec. 31.

Banks have offered more than $3.8 trillion of fossil-fuel financing since the signing of the 2015 Paris Agreement. JPMorgan Chase & Co., the market leader, cut its loans and underwriting services to the biggest corporate polluters by 20% last year, according to RAN, which used data from Bloomberg LP, the parent of Bloomberg News, to prepare its report.

The slowdown in fossil-fuel financing caused by the coronavirus pandemic is providing banks with a choice, said Ginger Cassady, RAN’s executive director. They can either back away from an industry that’s “driving the climate crisis or they can recklessly snap back to business as usual as the economy recovers,” she said.

“Going into the Glasgow climate summit at the end of the year, the stakes could not be higher,” Cassady said. “Wall Street must act now to stop financing fossil expansion.”

Banks have been taking steps to address climate change by limiting their exposure to energy projects that are most harmful to the environment, such as thermal coal mining. Italy’s Unicredit SpA has the most-restrictive policies of all the banks, followed by BNP Paribas and Credit Mutuel SA, according to RAN, which compiled its report with other environmental groups, including the Sierra Club and BankTrack. Russia’s Sberbank PJSC ranked at the bottom, followed by Truist Financial Corp. in the U.S. and State Bank of India.

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