2020 Universal registration document and annual financial report - BNP PARIBAS 617

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A COMMITTED BANK: INFORMATION CONCERNING THE ECONOMIC, SOCIAL, CIVIC AND ENVIRONMENTAL RESPONSIBILITY OF BNP PARIBAS

Duty of Care and Modern Slavery Act and Human Trafficking statement

The use of ESG evaluation questionnaires in calls for tenders and the inclusion of their results in the overall evaluation of the supplier form part of the Strategic Sourcing control plan.

In addition, the GSS business has set up an Annual Reporting process so that the progress made by entities can now be assessed.

OUR BANKING AND FINANCIAL ACTIVITIES

The distribution of financial products and services

The Group has identified two main risks in the distribution of its products and services for individuals: non-discrimination in the access to financial services and the right to privacy (protection of clients personal data).

To reduce the risk of discrimination in the access to financial services, the Group implements a financial inclusion approach, by supporting microfinance through financing and services provided to specialised institutions, by improving access to credit and insurance, and by supporting clients facing difficulties as because of their disability or their financial situation. In addition to regulatory requirements in relation to the Duty of Care, the Group has launched several initiatives that fall under its civic responsibility (see Products and services that are widely accessible, Commitment 7).

Moreover, as part of its general policy on managing personal data, BNP Paribas intends to use the best data protection systems available in all the entities and countries where the Group is present (see also Combat social exclusion and Support human rights, Commitment 8).

Financing and investment activities

The activities of BNP Paribas customers may involve risks in relation to human rights and fundamental freedoms, human health and safety, and the environment. At the end of 2018, the Group published Responsible Business Principles for its customers, thus reaffirming BNP Paribas s expectation to engage with customers whose business practices demonstrate a high level of governance and responsibility with respect to human rights, fundamental freedoms, human health and safety and the environment.

With a view to limiting the impacts of greenhouse gas emissions and contributing to the energy and energy transition, the Group announced in 2020 a total withdrawal from the financing of the entire thermal coal value chain by 2030 in the OECD and the European Union and by 2040 in the rest of the world.

The Bank had already stopped financing coal-fired power plants, as well as stakeholders whose main business was related to the unconventional hydrocarbons sector. At the end of 2019, the Group also made a public commitment to protect the oceans, in order to play an active role in protecting marine biodiversity. BNP Paribas also promotes the United Nations heath recommendations, and at the end of 2017 it suspended its financing of and investment in the tobacco industry.

The Group has an exclusion list and a monitoring list. These lists are periodically revised to include, in particular, new situations involving serious harm to the environment or human rights. The exclusion list covers companies that the Group does not wish to maintain commercial relations with.

BNP Paribas had already implemented ESG risk management systems for its financing and investment activities before the Duty of Care law came into force (also see Rigorous management of Environmental, Social and Governance risks (ESG), Commitment 3). These systems are notably based on:

■ the development of financing and investment policies to regulate sectors with high ESG risks. These policies, which are available on the Group s website, are updated according to regulatory changes, their expected changes, and reports from the operational teams of the Group s businesses;

■ the respect of the Equator Principles for major industrial and infrastructure projects. BNP Paribas has been a signatory to the Equator Principles since 2008: they aim to avoid, reduce, mitigate or offset the negative impacts of large industrial or infrastructure projects on communities, ecosystems or the climate;

■ the integration of ESG criteria into the Know Your Customer process (KYC);

■ a progressive integration of ESG criteria into lending and rating policies;

■ the development and use of tools to manage and monitor such risks, such as specific questionnaires for activities that have salient risks;

■ training on ESG risk management systems for Financing business lines and Control functions;

■ an operational control plan.

To ensure that the existing system is adapted to the requirements of the French Duty of Care law, BNP Paribas uses mapping of the risks to which its clients are exposed that covers all business sectors and all the countries where the clients legal entities are located:

■ for each business sector, the salient risks related to human rights and fundamental freedoms, personal health and safety and the environment were defined according to a methodology for rating the level of sensitivity and occurrence of each risk, that is based on the United Nations Guiding Principles reporting framework. The level of risk inherent in each business sector was then determined based on the presence of salient risks;

■ a level of environmental and social risk was defined for each country where the clients of the Group operate on the basis of reference sources from recognised international organisations and NGOs, such as the International Labour Organisation, the World Bank, the United Nations Environment Programme, Human Rights Watch, Transparency International, and the World Resources Institute;

■ the risk levels inherent in the sectors and countries where the Group operates were then combined to take into account the clients legal entities with a high level of environmental and social risk.

2020 RESULTS In 2019, the action plans previously defined continued to be implemented under the aegis of the Heads of the relevant businesses and functions, who are members of the Group Executive Committee.

Our employees

By the end of 2020, 100% of entities with more than 1,000 employees had already implemented at least one of the 10 commitments of the ILO s Business Charter on Disability. The objective included in the criteria of the medium-term incentive plan of more than 7,700 key employees was reached in 2021.