2020 Universal registration document and annual financial report - BNP PARIBAS564

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

MEASURES TO COMBAT DEFORESTATION AND PROTECT BIODIVERSITY BNP Paribas has been committed to combating deforestation and protecting biodiversity through several financing and investment policies since 2011, its commitment to several multi-stakeholder initiatives and its public position in favour of ocean protection (see Enabling our clients to transition to a low-carbon economy respectful of the environment Commitment 10).

To help combat deforestation, particularly in Brazil, BNP Paribas has strengthened its agriculture policy by introducing specific criteria for clients producing or buying beef or soy from the Amazon and Cerrado in Brazil. The Group is encouraging them to become "zero-deforestation" and to transparently demonstrate their progress towards reaching full traceability (direct and indirect) in beef and soy supply by 2025.

UPHOLDING THE EQUATOR PRINCIPLES ON PROJECT FINANCING As a signatory to the Equator Principles along with 110 other financial institutions worldwide, and in its role as financial service provider and adviser, BNP Paribas works with its customers to identify, assess, and manage the environmental and social risks and impacts linked with major industrial and infrastructure projects. According to these principles, the negative impacts of these projects on communities, ecosystems or the climate must be avoided or minimised, mitigated and/or offset. Projects graded A present significant risks and systematically involve an external review; those graded B present more limited risks; and those graded C present minimal or no risks.

In 2020, the Equator Principles Association published version 4 of the Principles with an update including the broadening of the scope of application of the principles, the applicable norms and standards in the designated countries, and references to the Guiding Principles of the United Nations in terms of human rights and the Paris Agreement in terms of combating climate change. BNP Paribas updated its procedures to apply the new version of the Equator Principles as from its entry into force on 1st October 2020.

2015 2016 2017 2018 2019 2020

Number of transactions concerned in the year 17 23 8 17 8 8

Number of grade A transactions in the year 1 2 1 3 2 2

Number of grade B transactions in the year 15 21 7 14 6 6

Number of grade C transactions in the year 1 0 0 0 0 0

MANAGING PHYSICAL RISK Following the pilot exercise carried out in 2019, BNP Paribas relied on the data of an external consultant (S&P Trucost) to assess the physical risks of its loan portfolio based on client exposure (geolocation of their assets) and their vulnerability to climate events (sensitivity related to activity). Six main climate events were modeled: water stress, fire, flooding, heat wave, storm and rising sea levels. This study was carried out according to three climate change scenarios (extreme, moderate and low) and modeled for the year 2020 and the horizons of 2030 and 2050. The most extreme scenario corresponds to an average warming of more than four degrees Celsius by 2100.

This assessment made it possible to assign physical risk scores to approximately 1,700 customers representing EUR 200 billion of outstanding loans. The majority of the sample has a low level of physical risk depending on the methodology used.

This study shows that, in general, the highest climate risk scores are those relating to the risks of water stress, in all geographical regions, and forest fires, mainly in the United States and Mediterranean Europe, and in particular for clients operating in the electricity sector.

The comparison of these results with three reference standards (S&P Europe 350, S&P500, S&P Asia BMI) does not show any atypical characteristics of the client portfolio analyzed in terms of exposure to physical risk.

However, given the evolving nature of these methodologies, this analysis will be gradually refined, as will the data used.