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Two of Europe’s leading banks have retreated from oil and gas bond deals, eschewing a type of financing on which big fossil fuel companies have become increasingly reliant.
BNP Paribas and Crédit Agricole, the second and third largest banks in Europe by assets, have told shareholders that they will no longer underwrite bond issues for the sector unless they include green restrictions, clarifying their existing policies.
HSBC, the biggest European bank, agreed earlier this year to start disclosing its carbon footprint linked to such issuance but has not yet applied this type of climate restriction to general-purpose debt deals.
Pressure on banks to make their lending and underwriting portfolios more climate-sensitive is particularly high in France. Senior bosses, including the chief executives of BNP and Crédit Agricole, have been appearing at hearings held by the Paris Senate into the activities of oil and gas group TotalEnergies, including its climate impact.
Global banks have generally reduced financing for oil, gas and coal projects since pledging at the UN COP26 climate summit in Glasgow in 2021 to limit lending for fossil fuel expansion.
But they have been slow to extend their policies to other core activities such as general-purpose loans to oil and gas companies, or the underwriting and facilitation of bond deals.
In January, Crédit Agricole took part in a €1bn bond deal for Italian oil and gas company Eni. “This kind of bond deal cannot happen in the future as a consequence of our strategy,” the bank told the Financial Times on Thursday.
The two French banks are among the global lenders that underwrote more than $270bn in corporate bonds for fossil fuel companies last year, nearly $30bn more than the previous year, according to analysis by campaign groups co-ordinated by the Rainforest Action Network. Lending to those companies fell overall in the same period.
The decisions on the bond deals held the promise of a “sign of a real change”, said Lucie Pinson, director of the French campaign group Reclaim Finance.
Crédit Agricole said that it no longer took part in “untargeted bond issuances” where these did not respect its framework for issuances earmarked for green projects.
Last week BNP Paribas said in a statement prepared ahead of its own annual meeting that it would not take part in “conventional” bond deals for the oil and gas sector.
BNP said it “reserves” the ability “to act in the service of financing the energy transition”.
Both banks’ policies leave the door open to bonds that raise money for green projects, as well as deals with issuers that are part of the fossil fuel supply chain without producing oil and gas themselves.
The moves come as banks globally have for the first time started to disclose information on the carbon footprint of their capital market deals. This was an area that investors had previously seen as a climate blind-spot.
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