Mobilising the financial sector towards COP26

When governments, industry leaders, scientists, and non-governmental organisations (NGOs) meet in Glasgow in November 2021 for the 26th UN Climate Change Conference of the Parties (COP26), the question of how to accelerate climate action will be on top of everyone’s agenda.

“Uniting the world to tackle climate change” will require all parties to collaborate in this year’s COP26 on five core themes: clean energy, clean transport, nature-preserving solutions, adaptation and resilience and climate finance. 

Finance is now recognised as an essential lever in accelerating the scaling up of sustainable actions across the economy, and the banking sector is actively creating coalitions to mobilise the entire industry.

As part of BNP Paribas’ commitment to playing its part in climate action, the bank participated in two significant initiatives this week: the launch of the Financial Services Task Force (FSTF) and discussions on the Economics of Biodiversity at the virtual event “COP26: One Earth One Future,” a dialogue on nature, adaption and resilience.

Launch of the Sustainable Markets Initiative’s (SMI) Financial Services Taskforce (FSTF)

Under the climate leadership of HRH The Prince of Wales, BNP Paribas CEO Jean-Laurent Bonnafé with 11 other global banking executives announced on 18 February the creation of the Financial Services Task Force (FSTF), a progressive industry group launched by the Sustainable Markets Initiative (SMI). Ahead of COP26, the taskforce will focus on:

• Reducing carbon emissions to define a credible transition pathway for banks to move towards a low carbon economy
• Increase private investment into sustainable infrastructure projects
• Develop climate solutions including evolving carbon markets

HRH The Prince of Wales said: “The Financial Services sector has a vital role to play as a catalyst and driver for change across other industries. I am delighted that the Financial Services Task Force has come together under the SMI umbrella to identify ways to set our planet on a fundamentally more sustainable trajectory.”

“The Economics of Biodiversity”

Understanding how to value nature across the economy is a critical aspect of managing risks and preventing biodiversity loss. Putting a price on nature, natural resources and natural capital, will help put a financial cost on its loss, and is the objective of the Taskforce for Nature-related Financial Disclosures (TNFD).

As co-chair of the TNFD, BNP Paribas Head of Company Engagement Antoine Sire discussed the findings of the Dasgupta Review on ‘The Economics of Biodiversity’ and the important role of the finance sector to support nature-based solutions at the Wilton Park “COP26: One Earth One Future” virtual meeting.

During the event, Sire explained how TNFD improves the frameworks for decision making to ensure that the finance industry can advance the measurement, traceability and management of nature-related risks. The coalition encourages cross-sector knowledge sharing, collaborating with conservationists, economists, investors, corporates and scientists to increase the understanding of valuing nature.

The ultimate aim is for the TNFD to enable nature-positive outcomes and identify new opportunities for investing in initiatives and approaches that scale up biodiversity focussed solutions. On the systemic importance of the initiative, Sire said: “the disclosure and frameworks we are doing with TNFD are absolutely necessary for the kind of shift which is expected from business”.

The World Economic Forum (WEF) estimates that action for nature-positive transitions could generate over $10 trillion of annual business value and up to 395 million jobs within the next decade. WEF also estimates that the risk of not engaging in scaling up nature-based solutions is significant, given that $44 trillion – roughly over 50% of global GDP – is either highly or moderately dependent on nature and its services.

BNP Paribas’ Key actions on climate & biodiversity Protecting nature & climate: BNP Paribas has a range of sector policies on coal, shale-gas and tar sands aimed at protecting natural capital. In May 2020, BNP Paribas extended its coal exit policy to all OECD countries as part of its target to end the use of coal by its clients in the electric power sector by the end of 2030. In February 2021, the bank announced a strengthening of its financing policies, defining restrictive criteria to accelerate the progress of its customers in terms of fighting against deforestation and ensuring traceability. As a result, BNP Paribas will only provide financial products or services to companies (producers, meat conditioners and traders) with a strategy to achieve zero deforestation in their production and supply chains by 2025 at the latest. Supporting climate research: Since 2010, the BNP Paribas Foundation has financed the Climate & Biodiversity Initiative and provided €18 million for 27 research projects. Managing portfolio transition: In 2018, BNP Paribas joined forces with four other large banks to develop a common methodology for measuring and aligning our loan portfolios with the goals of the Paris Agreement. This methodology, called PACTA, covers the utilities, automakers, and oil & gas sectors, as well as other sectors across transportation and heavy industry. Scaling up sustainable finance: Overall, sustainable finance aims to support the transition to a low carbon economy by providing financing and investment capital to companies who are engaging on transition. BNP Paribas credentials include: #1 in the 2020 Sustainable Bonds ranking, supporting issuances for clients across the SSA, FIG and corporate sectors (Bloomberg) #1 in 2020 for sustainable loans mandated arrangers (Refinitiv Sustainable Finance League Tables) #1 arranger in Global Sustainability Linked Loans in 2020 (Bloomberg)