The first climate lawsuit against a commercial bank has been filed against Europe's largest bank BNP Paribas, a well-celebrated victory for environmental NGOs. Given the bank's status, it has raised doubts about greenwashing and how committed they are to reducing fossil fuel production.
BNP Paribas has been well regarded as one of the world’s leading investment banks for years, even earning recognition from the investment banking awards in 2022. However, the bank has now landed in hot water over its continued investment support for fossil fuel production companies, and for its substantial contribution to climate change. Friends of the Earth, Oxfam France, and Notre Affaire a Tous, three environmental NGOs, sent the bank the first warning last month that it needed to comply with their due diligence demands. Accordingly, the bank was asked to release a statement of its commitment to tackling climate change. As part of its attempt to protect its reputation, the bank announced that it would reduce its outstanding fossil fuel financing.
This proved to be not enough of a commitment for the groups. In its February statement, the investment bank failed to take a stand against its clients active in the oil and gas industry to immediately stop developing new fossil fuel projects and engage in a progressive exit from the sector. In a bold move, the opposing organisations filed a lawsuit at the Paris judicial court, with a summons issued as the bank has been recognised for failing to comply with the French Duty of Vigilance Law aimed at stopping the financing of fossil fuel expansion.
In their stand against the bank, the organisations have called to join 50,000 environmental groups who have signed the international petition against BNP Paribas. A statement from the bank highlighting its commitment to becoming net zero points out that by 2030 it will focus on supply and low-emission power plants to reduce its outstanding financing by more than 30%. In the opinion of environmental groups, if there is no change by October 2023, the investment bank’s low carbon transition targets will continue to conflict with the urgency of the climate crisis.
Similar pressure has been applied to Barclays Bank to scale back its fossil fuel financing by investors and environmental groups. Barclays Bank provided more than $46 billion to oil and gas expanders between 2016 and 2021, according to ShareAction. Despite the bank publishing its results for Q4 of 2022 and the new year, which details its commitment towards addressing climate change by reducing its operational emissions and financing its clients’ emissions in a three-part strategy, the bank continues to be rapped for its weak policies.
The bank has failed to set out a new exclusion policy on financing for companies that are active in oil sand extraction. It has consistently been the worst bank in Europe in terms of fossil fuel financing since the signing of the Paris Agreement. The bank was previously lauded for selecting oil sand companies and projects that reduced emissions intensity through their selection. This move has been viewed as a step backwards.
Alongside Barclays, Natwest is one of several big high-street banks in the UK that has continuously appeared in the Banking on Climate Chaos report of the top 60 banks for fossil fuel financing. Notably, Natwest was the UK's government finance partner for COP26, the highest level of corporate sponsorship available for the climate summit in 2021. According to their brief, the bank holds significant responsibility for leading the way towards a net zero carbon economy. A speech by Alison Rose in February reiterated the bank's commitment to climate change. They plan to release their transition plan for 2026 by mid-March.
Through the plan, Natwest will outline how it will halve emissions by 2030 by financing projects and businesses in each sector. Similarly to BNP Paribas, environmental organisations are accusing Natwest of greenwashing for taking over three years to implement its policy.
Banks finance climate change by providing loans, insurance, and other forms of financing to fossil fuel companies. This allows them to continue supporting companies that extract coal and burn oil, which pumps huge amounts of greenhouse gases into the atmosphere.
In light of BNP Paribas's involvement in this monumental case, the speed of events may serve as a wake-up call for Europe's largest banks. European banking giants such as Barclays, BNP Paribas, and Natwest have already received letters expressing concern over continuing to finance fossil fuel projects. Every major bank will have to stay alert or act soon to reserve financing for new oil and gas companies, or they will find themselves in court like BNP Paribas.