2020 Universal registration document and annual financial report - BNP PARIBAS 561

7 A COMMITTED BANK: INFORMATION CONCERNING THE ECONOMIC, SOCIAL,

CIVIC AND ENVIRONMENTAL RESPONSIBILITY OF BNP PARIBAS

7

Our economic responsibility: financing the economy in an ethical manner

selected promote the transition of the sectors studied and operational feedback to help other banks measure their alignment(1).

In addition, the Group:

■ supports and implements the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and publishes information in line with these recommendations. In 2020, they are summarised as previously in the concordance table (see GRI concordance table, ISO 26000, Global Compact, Sustainable Development Goals, Principles for Responsible Banking and TCFD, section 7.8) and grouped together in a dedicated report (see Summary of the management of climate-related issues at the end of 2020, section 7.6);

■ has also made a commitment to the Science Based Target initiative (SBTi). This coalition supports companies wishing to set environmental objectives in line with those of the Paris Agreement. In October 2020, the SBTi published a pilot methodology for financial sector companies (a revised methodology is due to be published in April 2021). BNP Paribas tests this methodology to verify its practical applicability through regular dialogue with the SBTi;

■ is interested in other market methodologies measuring the carbon footprint of banks, for example the Partnership for Carbon Accounting Financials (PCAF);

■ signed the Collective Commitment to Climate Action under the aegis of the UNEP FI which aims to share the tools to align the activities of the banks with the objectives of the Paris Agreement.

A common methodology to assess the alignment of the loan portfolio with the objectives of the Paris Agreement (PACTA(2))

Electricity: a loan portfolio aligned with the objectives of the Paris Agreement The application of the PACTA methodology to the loan portfolio of companies in the electricity sector made it possible to calculate two indicators to measure alignment. These calculations apply to 90% of the loan portfolio and provide a view of the portfolio at the end of 2020 and a projection for the year 2025.

BNP Paribas has chosen to use the Sustainable Development Scenario (SDS) of the OECD as a reference to be consistent with the Group s target to be in line with the objectives of the Paris Agreement. The choice of this scenario, which is more ambitious than the Global SDS, is also consistent with the portfolio of electricity producers financed by BNP Paribas, which mainly operate in the OECD region.

The projection made takes into account:

■ the strategy of our customers, which leads them to modify their sources of electricity production; and

■ the impact of the Group s commitment to no longer finance companies that use coal to produce electricity in Europe and the OECD in 2030 and in the rest of the world in 2040 (see Strengthening CSR climate policies, Commitment 3).

The electricity mix calculated using the same methodology as in previous years on the basis of generation, unlike the calculation performed using the PACTA methodology, shows an average carbon footprint that is smaller than that of the global mix. In 2020, with 42.2% from fossil sources (gas, coal and oil) and 34.7% from renewable sources (hydraulic, wind, solar and other renewables), it compares favourably with the IEA mix which has 63% fossils and 26.6% renewable.

(1) https://group.bnpparibas/uploads/file/credit_portfolio_alignment_vf.pdf

(2) Paris Agreement Capital Transition Assessment.

Electricity generation (%)

World 2019(*) BNP Paribas 2018

BNP Paribas 2019 BNP Paribas 2020

0

5

10

15

20

25

30

35

40

Wind, solar and other renewables

HydroNuclearOilGasCoal

(*) Source : WEO.