Since the international community became acutely aware of the need for urgent action to limit global warming, and 195 countries signed up to the Paris Agreement in 2016, the world has embarked on a process of transition towards low-carbon energy. Switching from a high-energy-consuming economic system to a less energy-intensive, more sustainable model will require a balancing act between reducing energy consumption wherever feasible and meeting the unavoidable need for energy by drawing on renewable and low-carbon energy sources. From my perspective as a banker – and also an engineer by training – ‘energy transition’ is today practically synonymous with sustainable economic development.

Banks have always facilitated – and even given extra impetus to – the various revolutions that underpin modern life – from industrial mechanisation to transport, energy and household comforts.

If we wish to go on playing this role in the 21st century, our roadmap is clear. It is set out in the Paris Agreement, Article 2 of which describes the task of the financial sector, underlining the aim of “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” We know that our civilisation is unlikely to make any further progress unless we reform our energy system quickly and thoroughly.

This is not the first transformation challenge to which companies such as BNP Paribas have had to make an important contribution, but it is without doubt one of the most complex. There is a need to act with speed and determination, but without either destabilising the more developed countries or delaying the prospects for a better life which are held out to hundreds of millions of people in the emerging countries.

Since 2011, at BNP Paribas we have been constantly intensifying our commitment to fostering the transition to a more sustainable energy system. For instance, we offer our individual customers the opportunity to channel their savings into environmental projects through a broad range of ‘green’ funds that invest in such areas as alternative energy sources, water supplies and sustainable buildings. All our various businesses offer specific products and services to both corporate and individual clients wishing to be part of the energy transition. We are also taking steps to reduce our own environmental footprint and have set a target of achieving carbon-neutral status by the end of 2017.

Supporting the energy transition also involves encouraging energy firms to gradually withdraw from the exploitation of fossil fuel energy starting with those sources, such as oil and gas from shale and oil from tar sands, whose extraction and production emits high levels of greenhouse gases and has harmful effects on the environment. Accordingly, BNP Paribas has taken a decision not to provide finance either to coalmining or coal-fired power plants anywhere in the world. Going forward, we will agree to finance only those energy sector companies that are pursuing a policy of diversifying their energy sources.

We are a long-standing partner to the energy sector, which gives us considerable scope to help guide the decisions of our clients. Looking towards 2020, we will be stepping up our initiatives to promote the energy transition through the product and service offers we make to both businesses and individual customers. We have set a target of doubling to €15 billion the total amount available to finance renewable energy projects, and also of becoming a leader in Green Bond structuring. In addition, we have decided to earmark €100 million for investment in startups working on innovative solutions to drive the energy transition forward.

Oil and gas from shale and oil from tar sands: further measures to support the energy transition

I have announced today that BNP Paribas will no longer do business with companies whose principal business is exploration, production, distribution, marketing or trading of oil and gas from shale and/or oil from tar sands, and is also ceasing financing of projects that are primarily involved in the transportation or export of oil and gas from shale and/or oil from tar sands. In addition, we will not finance any oil or gas exploration or production projects in the Arctic region. 

A major bank financing economic development in the 21st century must act as an accelerator of the energy transition

In concrete terms, these decisions mean that we will cease providing finance to a number of companies and organisations that are not making an effort to be part of the transition to a less greenhouse gas-emitting economy. At the same time, we will play our part to the full, by supporting all our energy sector clients that are taking determined steps in this direction. In Europe, America and Asia, many companies are now undertaking considerable efforts to re-orient their business model, and these efforts will play a key role in achieving the energy transition. We intend to work hand-in-hand with those companies as they strive to make this transformation, which is absolutely vital for the future of planet Earth.

We are firmly convinced that a major bank financing economic development in the 21st century must act as an accelerator of the energy transition.