Written by Russell Ward. This article first appeared in Bloomberg News.
BNP Paribas SA promised to stop financing shale and oil sands projects as part of its latest efforts to tackle climate change.
France’s biggest bank will no longer do business with companies whose main business stems from oil and gas obtained from shale or oil sands, it said in a statement on Wednesday. The policy covers companies involved in activities ranging from exploration to marketing and trading. The bank added that it won’t fund oil or gas projects in the Arctic region.
BNP Paribas said it’s committed to bringing its financing and investment activities in line with international efforts to keep global warming below 2 degrees Celsius by the end of the century. Achieving that target relies on reducing the world’s dependence on fossil fuels, starting with those extracted from shale and oil sands — activities that emit high levels of greenhouse gases, it said.
“We’re a long-standing partner to the energy sector and we’re determined to support the transition to a more sustainable world,” Chief Executive Officer Jean-Laurent Bonnafe said in the statement.
BNP is already targeting 15 billion euros ($17.7 billion) in financing for renewable energy projects by 2020 and 100 million euros of investment in startups in areas such as power storage and efficiency, it said. The bank is also withdrawing from funding of coal mines and coal-fired power plants and is no longer supporting companies that aren’t trying to diversify their energy sources away from the fuel.
U.S. oil and gas output has surged over the past six years as drillers unlocked oil trapped in shale formations, partly by injecting water, sand and chemicals under high pressure to crack open reservoirs. The process known as hydraulic fracturing — or fracking — has been at the center of controversies about contaminating water sources and causing earthquakes.
Meanwhile, investor sentiment toward oil sands — a heavy crude that is capital intensive to extract — has soured as prices halved from above $100 a barrel over the past three years, with Royal Dutch Shell Plc selling out of its oil sands assets in Canada.