In a string of new measures unveiled yesterday, the bank has tightened its rules on providing finance to companies invested in coal, giving European firms until 2021 to align their coal strategies with a 2030 exit date.
Companies planning to build new coal-fired power plants will no longer be able to get financing from BNP Paribas, following the banking giant's introduction of a string of new policies aimed at eliminating its exposure to coal-fired electricity projects.
In an update to its coal sector policy published earlier this week, the French bank has vowed to stop financing companies this year that would contribute to new coal-fired electricity plants - whether through purchasing, the expansion of existing plants, or the construction of new ones.
South-Korea's KEPCO, Japan's Marubeni and Indonesia's PLN, which received $600m, $299m, and $65m respectively from the bank between 2017 and September 2019 according to campaign group CoalExit, will soon no longer be eligible for support.
Under its new rules, BNP Paribas will only provide financing to companies that have adopted a clear coal exit strategy with a timeline that wil lead them to no longer possess or operate coal-fired assets in EU and OECD countries before 2030, and in all other countries before 2040.
The bank confirmed it would start excluding companies planning new coal capacity or without a publicly-defined coal exit date from this year. It has given other firms until 2021 to reconsider their coal exit dates and align them with 2030 or 2040 goals.
In other words, in order to be eligible for continued financing from BNP Paribas, European energy companies now have until 2021 to adopt a full coal power exit plan in line with BNP Paribas' 2030 objective.
Kaarina Kolle, senior coal finance and utility coordinator at green campaign group Europe Beyond Coal, applauded the news. "BNP Paribas has been one of the staunchest supporters of European coal power utilities over the years," she said. "Finally, we can close that chapter as the bank's clients RWE, CEZ and Fortum/Uniper will no longer be benefitting from financial services unless they commit to closing their coal business by 2030."
BNP Paribas granted €185m to Germany's RWE, €150m to Czechia's ČEZ, and €1,263m to Finland' Fortum between November 2018 and December 2019, according to research set to be published by Europe Beyond Coal campaign this month.
The bank said under its new policy it will monitor companies' exit strategies annually to ensure they are still on track to meet their coal exit timeline.
Lucie Pinson, founder and executive director of Reclaim Finance, commended the ambition contained in BNP Paribas' new policies and urged the bank to ensure they were implemented effectively.
"We applaud the immense progress made by BNP Paribas today and call international banks to follow," she said. "However, we will remain extremely cautious when looking at the implementation of the bank's new policy. A failure to effectively translate the policy into clear actions could neutralise its impact. Last but not least, it's now time to adopt similar criteria on coal mining and infrastructures in order to make its coal exit complete".
Reclaim Finance warned that BNP Paribas has not adopted any immediate or strict inclusion criteria for its existing clients, and noted that the new policies' success depended on the bank's efforts to diligently follow through on its commitment to suspend all new financial services to companies that fail to adopt a credible coal exist strategy.
In related news, the Guardian reported today that the UK government's development bank, CDC Group, revealed a new climate strategy that would see it limit investments to companies and projects that are in line with the Paris Agreement.
The new policy would see the institution end support for the most polluting fossil fuel projects, including the production of oil and coal, and channel almost a third of its spending towards climate-related projects.
The move follows calls from campaigners for government-backed banks and agencies to end support for fossil fuel projects in the run up to the UK's hosting of the COP26 Climate Summit in Glasgow next year. Critics have highlighted how the over £3bn of public money has been used to support polluting projects abroad since the Paris Agreement was signed in 2015.
The government has subsequently taken a number of steps to tighten investment and lending criteria to minimise climate risks and officials are reportedly in talks to further strengthen fossil fuel financing policies.
Nick O'Donohoe, CDC's chief executive, said the new strategy would shape all of the institution's activities as it seeks to aid development in Africa and Asia. "Climate change remains the single largest challenge faced by the planet and is the defining issue for our generation and for those that will follow," he said. "That is why we have launched this ground-breaking climate change strategy that will shape every single investment decision we make moving forward."
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