The lasting impact of Russia’s invasion of Ukraine on global energy markets has steered the sustainability conversation towards efficiency and practicality in western Europe. Beyond investing in low-carbon solutions to reduce the energy intensity of across a range of sectors, banks were preoccupied with clients’ transition plans to reduce their own financed emissions, while facing tougher disclosure regulations and public scrutiny of their continued financing of the oil and gas sector.
In this environment, BNP Paribas continues to lead by example in sustainable finance, positioning itself as a frontrunner, both in terms of volumes and innovation.
“We know what best-practice looks like, and we’re committed to offering the best solutions for clients across sectors,” says Agnes Gourc, head of sustainable capital markets, BNP Paribas.
The bank, which aims to transition over 80% of its energy production financing activities to low-carbon energies by 2030, had disbursed €28.2 billion of financing for low-carbon solutions as of September 2022, compared with €23.7 billion in fossil fuels.
As one of the region’s biggest lenders to the oil and gas sector, it has committed to taking a tougher stance on hydrocarbons and announced that it would no longer provide dedicated financing to new oil capacities this year.
Beyond funding wind and solar assets, BNPP’s low-carbon transition group has been focusing on scaling up transition technologies like green hydrogen. The bank was joint global coordinator and bookrunner in the IPO of European green hydrogen producer Lhyfe in May 2022. The IPO raised €110 million from institutional and individual investors.
BNPP has also been focusing on its exposure to other hard-to-abate sectors where decarbonization isn’t as linear. It successfully leveraged its credentials as a sustainable finance expert to encourage clients to set more ambitious transition targets for themselves.
“The sustainability-linked model is useful to make progress in those sectors that are high emitters but serious about decarbonization, and the market has been responsive this year,” adds Gourc, who has been elected as vice-chair of the executive committee of the International Capital Market Association Principles.
We know what best-practice looks like, and we’re committed to offering the best solutions for clients across sectors
Agnes Gourc
Over the awards period, BNPP ranked first in the European sustainability-linked debt capital markets league table by bookrunner, with a 11.87% market share, having completed 30 transactions to the value of $3.34 billion, according to Dealogic.
A number of deals stood out in the past 12 months, most notably Anglo American’s inaugural sustainable bond. BNPP was sole sustainability structuring adviser on the €745 million 10-year sustainability-linked bond, which included sustainability performance targets on job creation, water usage and greenhouse gas emissions. BNPP also assisted Anglo American in structuring its first sustainability-linked financing framework.
Another key deal was Spie’s sustainability-linked refinancing of its €1.2 billion syndicated loan, for which BNPP acted as global coordinator and documentation agent. The company also completed a sustainability-linked financing framework for future financing with the help of the bank.
On the social side, BNPP published its social bond framework and issued its first social bond in December 2022. The bank’s strategy is to expand the geographical development and diversification of social impact bonds (SIBs) as an arranger and investor. It saw the signing of three SIB contracts this year totalling €11.6 million.
