France's biggest bank BNP Paribas SA (BNPQY) said Wednesday, October 11, it will no longer finance companies or projects that predominantly operate in the fracking or tar sands sectors, claiming that the environmental harm from the operations was at odds with agreements to limit global warming.
The Paris-based bank also said that it would eschew involvement in any exploration or production projects in the Arctic region.
The ban will include "producers primarily engaged in the exploration and production of oil and gas from shale and/or oil from tar sands" and "business relations with clients primarily engaged in the distribution, marketing or trading of oil and gas from shale and/or oil from tar sands," said the bank.
BNP committed $154 million in financing to tar sands projects in 2016, according to a 2017 report by the Rainforest Action Network, a San Francisco-based environmental lobby group. The bank was also the biggest backer of Arctic drilling in 2016, funneling $227 million of funds into projects in the region, according to the same report.
That funding is unlikely to cease completely. The wording of BNP's pledge gives it plenty of wiggle room to continue financing companies that operate tar sands or shale gas extraction and transportation projects. Many of the world's biggest energy companies operate in both sectors, though the operations often account for a fraction of their total revenues and profits, meaning they would fall outside of BNP's guidelines.
BNP's CEO Jean-Laurent Bonnafe said the bank remained "committed to working with energy sector partners who have decided to make environmental issues a central part of their business policy."
The move away from shale and tar sands follows BNP's 2015 pledge to stop financing new coal mining projects and the construction of new coal-fired power plants. Other banks, including French rival Societe Generale SA (SCGLY) and U.S. lenders Bank of America Corp. (BAC) - Get Report and Morgan Stanley (MS) - Get Report , have also pledged to limit or pull funding from the coal sector.
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