Natixis, SocGen pull back from financing tar sands and Arctic oil production

The announcements are among of a string of developments linked to Paris climate event

France’s Natixis and Société Générale have both promised to stop financing tar sands extraction and withdraw from financing oil production in the Arctic.

The announcements are among of a string of developments linked to President Macron’s climate summit in Paris this week.

Natixis pledged to stop financing oil extracted from tar sands or companies whose business primarily relies on exploiting oil extracted from tar sands.
 Natixis also pledged to no longer finance oil exploration and production in the Arctic.

Its insurance arm is joining in the initiatives to fight global warming announced by the French Insurance Federation (Fédération Française des Assurances) on December 7.

It also said it would introduce an internal “Green Incentive” mechanism next year – “without waiting for the regulation to evolve”.

It is designed to factor in environmental risks and thereby favor the “most virtuous financings from a transition standpoint relative to other financings”.

The practical details will be specified after an impact study based on existing market taxonomies.

It is hoped it will improve the ability to factor in physical and transition-related risks and lead to changes in the metrics used to allocate capital.

Natixis said: “It will improve internal ROE [return on equity] on projects impacting positively on the climate and the environment.” It added it is willing to collaborate with other financial institutions on the issue.

It also said that for new life insurance policies, it would integrate (by the end of 2018) a unit-linked product into its range, which will have an ESG and/or Climate label.

Meanwhile, SocGen said it would raise €100bn in financing for the energy transition by 2020 and that it would “disengage” from oil sands anywhere in the world and from Arctic oil. It would also be a “driving force” in the sustainable and low carbon development of Africa.

It said it aims to direct (or co-direct) Green Bond issues for a nominal amount of approximately €85bn.

It would also provide its support only to companies using hydraulic fracturing (fracking) techniques that implement, or commit to implement, the best Environmental & Social practices, in line with the IEA Golden Rules.It comes as green campaign groups have accused many of the world’s biggest largest banks of undermining the Paris climate accord by investing billions of dollars into coal plant developers.

In a separate report last week, ShareAction said French banks were leading the fight against climate change, according to its ranking of the 15 largest European banks’ response to climate change. BNP Paribas topped the list, with compatriots Crédit Agricole and Société Générale named in the top five behind UK-based HSBC and Swiss-based UBS.

The report found France’s pioneering Article 173 climate legislation was a “key reason” behind the prevalence of French financial institutions’ at the top of the rankings. It argues that this serves as important lesson for policymakers and regulators across Europe.

Elsewhere, BNP Paribas Securities Services has said it would launch a platform in mid-2018 designed to facilitate the voluntary offsetting of carbon emissions. The new offering, called ClimateSeed will act as a centralised platform where investors and companies looking to invest in voluntary carbon offsetting projects will be able to connect easily to projects carriers looking for funding.

And, in other news coming out of the summit, a group of 54 businesses – coordinated by CDP and the Prince of Wales’ Corporate Leaders Group and others – has issued a declaration on decarbonisation that calls on the G20 to act as a forum on climate action.

It calls for the G20 to:

  • Develop and implement long-term decarbonisation strategies. All countries should submit their strategies to the UN Framework Convention on Climate Change by 2020.
  • Phase-out of fossil subsidies by 2025, making way for increased investments in the low-carbon economy.
  • Put a price on carbon that provides direction to investors and businesses.