Sunday, 19 May 2024

BNP Says It Is No Longer Doing Bond Deals for Oil and Gas

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BNP Paribas SA is no longer participating in conventional bond issuance for the oil and gas sector, as the European Union’s largest bank expands its list of restrictions on fossil-fuel clients, Bloomberg reported.

BNP spelled out the status of its policy in response to written questions from Paris-based nonprofit Friends of the Earth-France, which were submitted ahead of its annual general meeting on Tuesday. The bank has previously imposed a ban on financing the development of new oil and gas fields, and pledged to phase out financing for companies specialized in oil exploration and production.

“With regard to bonds,” BNP said that it refrains from “participating in conventional bond issues in the oil and gas sector,” according to its written response. The bank previously said it hadn’t done conventional bond issuances in the oil and gas sector since the middle of February last year.

In an emailed comment to Bloomberg, BNP confirmed it’s not participating in “conventional bonds issuance to companies active in upstream oil and gas.”

BNP has gradually been limiting oil and gas clients’ access to financing as the bank contends with ever stricter ESG regulations as well as a lawsuit brought by climate nonprofits last year. At the same time, BNP has continued to step up its presence in sustainable finance, and is now the biggest underwriter of green bonds globally, according to data compiled by Bloomberg.

Banks that burnish their green credentials stand to improve their chances with issuers that have made environmental, social and governance metrics part of their selection process for bond underwriting. KfW, the German development bank whose 2024 funding plans have been set at roughly $100 billion, is among major issuers to have said that it takes ESG metrics into account.

In its response to Friends of the Earth, BNP said it is also “gradually reducing the share of general credits granted to large integrated energy companies, attributable to the exploration and production of hydrocarbons.”

Paris-based nonprofit Reclaim Finance said it welcomed the move. “The transformation underway” at BNP “sets them apart from other international banks,” Lucie Pinson, director of Reclaim Finance, said in an emailed comment.

Still, the nonprofit said the bank “has left the door open to other types of financing, such as loans, which could also contribute to the expansion of fossil fuels,” meaning it “still has some way to go before it fully implements its climate commitments.”

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