Key facts and figure
Although greenhouse gas emissions are estimated to have fallen by around 6% in 2020 due to travel bans and economic slowdowns resulting from the COVID-19 pandemic, this improvement is only of temporary nature. Climate change does not pause. It affects every country on every continent. As soon as the global economy begins to recover from the pandemic, emissions are expected to rise again to higher levels.
From 1880 to 2012, the average global temperature increased by 0.85°C. To put this into perspective, for every +1 degree Celsius rise in temperature, grain yields fall by about 5%. The oceans have warmed, snow and ice levels have decreased and sea levels have risen. From 1901 to 2010, global average sea levels rose by 19 cm as global warming caused an increase in ice melt. The Arctic sea ice volume has shrunk by 1.07 million km² in each successive decade since 1979.
How is the challenge addressed by the financial industry?
· The acknowledgement of a link between the environment and financial stability
The Task Force for Climate-related Financial Disclosures (TCFD) set up in 2015 by the G20 Financial Stability Board improves climate related financial reporting. According to the TCFD, two categories of risk stand out as being linked to economic stability :
Climate-Related Risks, Opportunities, and financial Impact
(Source: Recommendations of the Task Force on Climate-related Financial Disclosures, TCFD, June 2017)
· The long-term transformation of the financial industry, driven by EU legislation
In order to become the world’s first climate-neutral continent by 2050, the EU Commission has launched the EU Green Deal. Several regulations are thus currently being implemented, forcing every financial actor to position itself towards sustainability and to bring standardized evidence for its self-claimed positive environmental or social impact.
This initiative has already started to transform the industry over the long term.
How does BNP Paribas address the issue?
Management of climate related risks is integrated into BNP Paribas' risk management framework.
- The Group has been strongly involved in the fight against climate change since 2011, with the ambition of aligning its business activities with the goals of the Paris Agreement.
- In 2021, BNP Paribas reinforced its commitment by joining the Net-Zero Banking Alliance launched by the UN Environment Programme Finance Initiative (UNEP-FI) ahead of COP26.
- In this framework, BNP Paribas commits to align greenhouse gas emissions arising from its credit and investment for own account activities with the path required to achieve carbon neutrality in 2050.
- In terms of asset management, green funds managed by BNP Paribas Asset Management totaled €18.4 bn, green investments by BNP Paribas Cardif totaled €8.1 bn, and green funds managed by BNP Paribas Wealth Management totaled €6.7 bn in May 2021.
For more information on this topic, please refer to the BNP Paribas second financial report related to climate: https://cdn-group.bnpparibas.com/uploads/file/tcfd_2020_bnpparibas_en.pdf
Discover our other episodes throughout the summer. Around the theme of sustainability, they address the role of the financial sector in different Sustainable Development Goals, and allow you to identify how you, as an investor, can act for a better and more sustainable future.