Paris-based global bank BNP Paribas announced today that it will end its direct financing for new oil and gas fields, strengthening its policy – released earlier this year – to reduce its fossil fuel financing activity.

The move makes BNP Paribas the second largest global bank to commit to exiting new oil and gas project financing, after HSBC unveiled a similar policy in December 2022. Responsible investing NGO ShareAction, which has been engaging with the firm over its fossil fuel financing activities said that the announcement will pressure the banks’ major European peers to follow suit.

Kelly Shields, Project and Campaign Manager at ShareAction, said:

“Now Societe Generale, Crédit Agricole, Barclays and Deutsche Bank are firmly in spotlight as the remaining top financiers of oil & gas expansion in Europe that have still to make a commitment to cease financing for new oil and gas fields. Investors will continue to hold these banks’ feet to the fire to ensure they enact policies that align with a 1.5C pathway and protect people and planet for future generations.”

BNP Paribas released a series of new energy financing policies in January 2023, including commitments to reduce financing for oil extraction and production by more than 80% and for gas extraction and production by over 30% by 2030, and to transition 80% of its energy financing activities to the production of low carbon energies by that date as well.

The bank came under significant pressure following the release of the new policy, however, as it left the door open for continued financing of new oil and gas projects. BNP Paribas was among a group of large European banks targeted in a campaign led by ShareAction and including investors representing more than $1.5 trillion in assets, calling for commitments to end financing for new oil and gas fields this year, and the bank was also sued by a group of French NGOs in February over its financing for new oil and gas projects.

The updated policy released today retains the 80% and 30% financing reduction targets for oil and gas, respectively, but includes commitments to “no longer provide any financing dedicated to the development of new oil and gas fields regardless of the financing methods.”

BNP Paribas’ 2023 Climate Report, released today, also includes a series of 2030 interim decarbonization targets for financing carbon-intensive sectors, including commitments to a 25% emission intensity reduction for the steel sector, 10% emissions intensity reduction for aluminum, and a 24% emissions intensity reduction for cement. The bank set targets for the oil and gas, power generation and automotive sectors last year.

ShareAction applauded the bank’s updated policy, but said that it will continue to engage with BNP Paribas over gaps in the policy that would enable “indirectly financing new oil and gas activities.”

Shields said:

“Following months of engagement with investors and ShareAction, BNP Paribas has improved its oil and gas policy at least in part. Its new commitments are welcome and suggest that banks’ financing appetite for new oil and gas is rapidly drying up. That said, BNP Paribas still has a way to go before meeting the climate standards expected of them by investors and the public.”