Published on :
The European Central Bank published new indicators this week to assess the impact of climate change on the financial sector. New indicators also to monitor the development of sustainable finance.
In this data farm, indicators relate to the volumes of bonds issued with the “green” label. The objective: to measure the progress of financing for a low-carbon economy.
The European Central Bank (ECB), although there is no internationally recognized standard to define what a “green bond” is, ensures that for two years, twice as many of these bonds have been issued. A good progression certainly, but they still only represent barely 5% of total emissions.
Another set of indicators focuses, on the contrary, on the carbon emissions supported by financial institutions. These latest data include, by the ECB’s own admission, sometimes significant limitations. However, according to preliminary results, in the euro area most carbon emissionsfinanced by shares or bonds are held by investment funds. But, it would seem that it is the banking sector that finances the most carbon-intensive activities, “ the activities of the companies they finance produce relatively more emissions to achieve a given level of income ».
Acceleration in the energy transition for BNP Paribas
BNP Paribas, Europe’s leading bank, intends to reduce its financing of the oil extraction and production sector by 80% by 2030.The establishment also plans to slash its outstanding financing for gas extraction and production by 30%.. At the same time, credits for low-carbon projects should increase.
The bank, which prides itself on having 55% “low carbon” energies in its portfolio against 45% fossil fuels, plans an 80-20 distribution by 2030.
Commitments made just before the deadline of a formal notice by environmental NGOs. Last October 26, they had given three months, until today so [26 janvier], to the bank to review his copy. According to them, between 2016 and 2021, BNP Paribas has established itself as the world’s leading financier of eight oil and gas giants.
As it stands, the collective is still not satisfied
Oxfam France, Friends of the Earth and Notre affaires à Tous regret the “ commitments too low “. They certainly note the objectives of reducing outstandings in the extraction and production of oil, but they criticize the establishment for not making a commitment on all the financing levers, leaving aside shares and bonds.
Reclaim Finance, for its part, believes that this will not prevent BNP from supporting a few large clients despite their strategy of expanding into fossil fuels.
BNP Paribas is not the only bank
Nine NGOs have drawn up an initial assessment of the Alliance of Banks for Carbon Neutrality, a branch of the Glasgow Financial Alliance for Net Zero (GFANZ), a financial alliance created on the occasion of COP26 in Glasgow. According to these organizations, including Reclaim Finance, 350.org or Recommon, “ between the date each bank joined the Alliance and August 2022, the 56 largest members contributed, […] $269 billion to 102 major fossil fuel developers ».
And it is not only this study to cast doubt on this alliance. According to Financial Times, American banks such as Bank of America, JP Morgan and even Morgan Stanley, had threatened in September to leave after an update of the criteria of the “Race to Zero” campaign. Among the fears exposed, those of legal fallout in the event of breaches. Pressure also came from the political class, on the Republican side in particular. For example, Texas has been hostile to institutions that do not support fossil fuels enough to its liking.
So, should we really rely on this Alliance and voluntary approaches? Some doubt it and ask the public authorities and regulators to beef up the game.
Not all public entities feel concerned. Jerome Powell, Chairman of the Federal Reserve of the United States (Fed) believes that the American Central Bank has no vocation to become a “climate decision maker”. It returns the ball to the government and to Congress.