2018 Registration document and annual fi nancial report - BNP PARIBAS530

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

7

Our economic responsibility: fi nancing the economy in an ethical manner

■ engaged in a direct 5-year dialogue with 7 of the top 100 companies worldwide with the highest level of greenhouse gas emissions, so that they improve their governance vis-à-vis climate change, and fi nalised its commitment made in 2017 as a member of the Climate Action 100+;

■ strengthened the Sustainability Centre led by Jane Ambachtsheer, the new Director of Sustainable Development and CSR World, the CSR team has appointed a head of climate change research, Mark Lewis. The scope of responsibility of the Head of Governance and commitments made with companies, governments and legislators was broadened with the appointment of a stewardship manager for the Americas zone, who will be shortly joined by a stewardship manager for Asia;

■ was again awarded the highest score, A+, by the PRI (UN Principles for Responsible Investment) for its expertise in terms of sustainable investment and integration of ESG criteria in management.

BNP Paribas Cardif, the Group s insurance subsidiary:

■ systematically factors ESG and carbon criteria into its investment and divestment choices. In 2018, the scope of ESG analysis was extended to 80% (versus 58% in 2017) of the assets in the general fund (totalling EUR 112.4 billion at 31 December 2018);

■ promotes the transition to a low-carbon economy by financing innovative projects. The objective set in 2016 to double green investments within its general euro-denominated funds (green bonds, funds or infrastructure projects involving energy effi ciency) by 2020, was reached as early as 2018 with EUR 2.6 billion at the end of December;

■ Since 2017, the general fund has applied a tobacco-free investment policy and in 2018 signed the Tobacco-Free Finance Pledge.

Integration of ESG criteria into supply chain management

ESG criteria are integrated into the supply chain at various levels in accordance with the Group s Sustainable Sourcing Charter: first, in standard contracts used by the Procurement teams which include a clause on respect for the environment and social practices; and second, in tender offers issued by Group Procurement . Thus, in 2018, 2,300 supplier ESG assessments were carried out. Specifi c questionnaires were created for categories with high environmental or social challenges, such as printing, publishing, temporary work, bank cards and IT services.

In the high or very high risk categories, these questionnaires are now carried out using the ESG risk mapping prepared by AFNOR on the initiative of BNP Paribas and three other banks.

MANAGEMENT AND MONITORING TOOLS FOR ESG RISKS

Monitoring and exclusion lists

To identify the companies presenting the highest environmental and social risks, the Group defi nes and applies fi nancing and investment policies and manages exclusion and monitoring lists in accordance with the level of identifi ed ESG risks. At the end of 2018, these lists included 992 companies: 857 were excluded and 135 under monitoring. Whereas no business relationship whatsoever is allowed with a company on the exclusion list, the companies on the monitoring list are subject to Group measures intended to ensure that they permanently change their practices and reduce their ESG risks. Lastly, BNP Paribas compiled an exclusion list that clearly mentions specifi c goods and activities the Group does not want to fi nance. These lists are periodically updated using data supplied by customers and external sources, and by analysing the key controversies involving companies faced with serious violations of environmental standards or human rights.

Transactions handled by the Group s CSR teams

In 2018, the Group s CSR teams were asked to give an expert opinion in the assessment of ESG risks for 1,627 complex or sensitive transactions (financing, new accounts, export support, etc.) compared to 1,251 transactions the previous year.

Share of loans to companies subject to an environmental and social management system which is specifi c to the sector of activity concerned

In order to manage the gradual deployment of ESG risk management approaches specifi c to the different sectors, the Group annually monitors the share of corporate loans governed by this system. In 2018, it was almost unchanged at 55.6%.

Operational control plan

In order to ensure that ESG risk management tools are strictly applied in all entities and business lines, the Group deployed a CSR operational control plan in 2015. It ascertains that the operational measures put into place at every level are adequate, and initiates a continuous improvement dynamic, necessary for the proper management of ESG risks. Work to update this operational control plan was started to incorporate the new ESG requirements defi ned by the Group pursuant to the Duty of care law .