Daily ESG Briefing: BNP Paribas launches 250-strong ‘low-carbon transition group’

The latest developments in sustainable finance

BNP Paribas has announced the creation of the Low-Carbon Transition Group, a new unit within the French bank which will support corporate clients and investors decarbonise their exposures, and deploy capital to low-carbon activities. The Group will be headed by Severine Mateo, formerly BNP Paribas’ Head of Energy, Resource & Infrastructure for Global Banking EMEA, and will have 250 staffers worldwide – 150 drawn from teams currently involved in the low-carbon transition and 100 new recruits.

The European Investment Bank and the Japan Bank for International Cooperation, a state-owned lender which funds overseas Japanese investments and foreign aid, have agreed to explore co-investment opportunities in projects which contribute to EU carbon neutrality such as offshore wind, battery storage and hydrogen technology development. The two institutions will also partner on developing projects globally which are aligned to the UN Sustainable Development Goals. The agreement was formalised in a Memorandum of Understanding, signed yesterday.  

Green central banking body, the Network for Greening the Financial System (NGFS), has published a report on the progress its members have made in implementing supervisory best practices on climate which the NGFS published a year ago. According to the body, “further progress is needed to fully embed” climate-related risks into supervisory practices, with members facing challenges over data gaps, lack of harmonised methodologies and insufficient internal resources. The NGFS said it will roll out a “multi-year capacity building programme” for members aimed at upskilling staff and aligning practices.

UK accounting watchdog the Financial Reporting Council (FRC) has informed regulated companies that it will focus on the disclosure of climate-related risks in its monitoring of annual reports and accounts in next year’s 2021/2022 cycle. The FRC said that it expected “material climate change policies, risks and uncertainties to be included in narrative reporting and appropriately considered and reflected in the financial statements”. From next year, UK premium-listed companies will be required to provide TCFD-aligned reporting on a comply-or-explain basis. 

The UN Environment Programme Finance Initiative (UNEP FI) has proposed a global framework which sets out the criteria for “credible, transparent and comparable” Net Zero and climate targets by financial institutions. According to the UNEP FI, the absence of a standardised framework for such targets could “raise questions about the motivations” of institutions who continue to have financial relationships with companies in high-carbon sectors. The Science Based Targets initiatives – which oversees the most widely used voluntary framework for Net Zero target-setting by companies – and the WWF provided input to UNEP FI’s proposals. 

Robeco has pledged to slash the carbon footprint of its portfolio in half by 2030, and an interim reduction of 30% by 2025. The 2030 target will apply to operational emissions, said the asset manager. Robeco has also committed to “step up” voting and engagement with the top emitters in its portfolio and investment universe, in addition to “intensifying”calls for climate action among sovereign bond issuers in collaboration with other investors.