Universal registration document and annual financial report 2020

2020 Universal registration document and annual financial report - BNP PARIBAS596

a Committed Bank: information ConCerninG the eConomiC, soCial, CiviC and environmental resPonsiBility of BnP PariBas Our environmental responsibility: accelerating the ecological and energy transition

A key actor in the booming market of sustainability linked loans

BNP Paribas is also very active in the fast-growing market of Sustainability Linked Loans (SLLs). With an SLL, the interest paid by the borrower depends on the achievement of targets linked to sustainability, particularly the environment: the interest rates are lower if the company achieves its targets, and higher if it does not (see Other positive impact financings in Investments and financing with a positive impact, Commitment 1). These loans act as an incentive to improve the company s medium-term sustainable development objectives. The SLLs with only environmental criteria amounted to EUR 3.8 billion at the end of 2020.

SLLs are being introduced in increasingly diverse geographical areas but also extend to new sectors and areas (for example, biodiversity), illustrating the universality of sustainable development indicators, and in particular energy and ecological transition.

■ Thus, BNP Paribas contributed to a SLL for Touton, a French cocoa trader, on a loan of EUR 84 million with criteria linked to the number of farmers trained in sustainable agriculture, from an environmental and social point of view. The targets also include an increase in the proportion of Ghanaian cocoa certified as sustainable.

■ For Tesco, a key player in the British retail sector, BNP Paribas contributed to a credit facility of EUR 2.8 billion, whose interest rate is indexed on three ambitious environmental objectives related to climate, pollution and the circular economy: emissions, renewable energy supply and food waste reduction.

Financial innovation supporting the transition

Since 2015, BNP Paribas has launched 12 climate indices raising over EUR 4.15 billion (including EUR 1.4 billion in 2020). These solutions offer investors a financial return while enabling them to contribute to the energy transition.

In 2020, several innovative products were launched: For example, following the signing of a new partnership with the Tara Ocean foundation, a portion of the amounts collected on structured products based on green bonds or whose underlying are SRI securities issued by BNP Paribas, will be paid back for construction of the Tara International Polar Station, the new scientific station of the Tara Ocean Foundation. At the end of 2020, the total amount donated to the Tara Foundation for its research amounted to more than EUR 375,000.

In general, the Group is continually expanding its range of financial products linked to the energy transition for its corporate clients. Various innovative products were launched in this respect in 2020. Thus, BNP Paribas Fortis offered one of its clients, the company Katoen Natie, the opportunity to sustainably hedge financing risk through a green hedge . Interest rate hedging is linked to environmental conditions. If the predefined conditions are not met, the client pays a sustainability premium, which BNP Paribas Fortis does not receive, but invests in a previously defined ecological project.

USING THIRD-PARTY ASSET MANAGEMENT TO SUPPORT THE ENERGY AND ECOLOGICAL TRANSITION

The exercise of voting rights and shareholder dialogue to promote the energy and ecological transition

BNP Paribas Asset Management, the Group s asset management subsidiary, uses its voting rights in various companies to adopt resolutions in favour of the energy transition. Globally, BNP Paribas Asset Management is recognised as one of the most proactive asset managers in this area. Thus, in January 2021, the British think tank InfluenceMap published a report on the way in which the 30 largest global asset managers deal with the climate issue ( Asset Managers and Climate Change 2021 ). BNP Paribas Asset Management is one of the three highest-rated asset managers (with an A+ rating); it is one of five to have a clear and detailed strategy on climate engagement, one of five to be fully transparent on the subject, one of six to have engaged with companies on their lobbying and climate influence activities, one of six to have co-filed climate resolutions between 2018 and 2020 and the only one to have supported more than 95% of climate-related resolutions during these three years. In addition, in 2020, BNP Paribas Asset Management was ranked 2nd out of 75 asset managers by the organisation ShareAction, for its performance in terms of responsible investment, particularly on climate and biodiversity issues.

Third-party asset management supporting the energy and environmental transition

In addition to its carbon risk management system (see Systematic integration and management of Environmental, Social and Governance (ESG) risks, Commitment 3), BNP Paribas Asset Management offers a diversified range of green funds invested, in particular, in alternative energies and energy efficiency. At 31 December 2020, they represented EUR 18.4 billion in assets under management, making BNP Paribas Asset Management the European leader in sustainable thematic funds and the leading French player in SRI in terms of assets under management. BNP Paribas Asset Management continues to develop its offering, with the launch in 2020 of new strategies, such as the Blue Economy thematic fund, dedicated to responsible companies working in the marine economy, or the Earth fund, intended to capture opportunities among companies facing or responding to major environmental challenges.