(Bloomberg) -- BNP Paribas SA pledged to stop financing shale and oil sands projects, expanding earlier commitments in support of global efforts to tackle climate change.
France’s largest bank will no longer do business with companies whose main activity stems from oil and natural gas obtained from shale or oil sands, it said in a statement on Wednesday. The policy covers companies involved in activities ranging from exploration to marketing and trading. The bank added that it won’t fund oil or gas projects in the Arctic region.
BNP Paribas said it’s committed to bringing its financing and investment activities in line with international efforts to keep global warming below 2 degrees Celsius by the end of the century. Achieving that goal relies on reducing the world’s dependence on fossil fuels, starting with energy from shale and oil sands, the bank said.
Echoing environmentalists on a disputed subject, the bank said the extraction of fuel from these sources emits high levels of greenhouse gases and harms the environment in other ways. BNP Paribas may be the first large bank to blacklist shale oil, which has enabled the United States to curb oil imports and pushed down energy prices.
Once a global leader in oil financing, BNP has withdrawn from funding coal mines and coal-fired power plants in recent years, along with other big European banks including Societe Generale SA, HSBC Holdings Plc and Credit Agricole SA. Energy excluding electricity represented 4 percent of BNP’s total lending commitments, down from 6 percent in mid-2015, according to its filings.
“Our role is to help drive the energy transition,” Chief Executive Officer Jean-Laurent Bonnafe said in the statement. “We’re a long-standing partner to the energy sector and we’re determined to support the transition to a more sustainable world.”
U.S. oil and gas output has surged over the past six years as drillers unlocked oil trapped in shale formations, partly by injecting water, sand and chemicals under high pressure to crack open reservoirs. Banned in France, the process known as hydraulic fracturing -- or fracking -- has been at the center of controversies about contaminating water sources and causing earthquakes.
Meanwhile, investor sentiment toward oil sands -- a heavy crude that is capital intensive to extract -- has soured as prices halved from above $100 a barrel over the past three years, with Royal Dutch Shell Plc selling out of its oil sands assets in Canada.
Last year, BNP decided to halt further development of its reserve-based lending business, the key avenue for financing shale companies. In 2012 the bank sold its reserve-based lending activities in the U.S. and Canada to Wells Fargo & Co., including $9.5 billion of loans.
BNP also repeated its target for 15 billion euros ($17.7 billion) in financing for renewable energy projects by 2020 and 100 million euros of investment in startups in areas such as power storage and efficiency.
With assistance from Ben Sharples, Javier Blas and Donal Griffin. To contact the reporters on this story: Fabio Benedetti-Valentini in Paris at firstname.lastname@example.org; Russell Ward in Tokyo at email@example.com. To contact the editors responsible for this story: Marcus Wright at firstname.lastname@example.org; Dale Crofts at email@example.com Cindy Roberts, Paul Armstrong.