Can we finance multinational champions of oil and gas while proclaiming that we have stopped supporting the expansion of fossil extraction projects? Yes, at least in the paradoxical world of banks’ climate commitments.
Put under pressure by environmental NGOs and civil society, major French banks have increased their promises in recent months to reduce their financing granted to the extraction of fossil resources, one of the sectors that emits the most greenhouse gases. , responsible for climate change. But when we look in detail, these commitments actually only cover a tiny part of the problem.
When a bank wants to finance the fossil sector, it has two options: project financing, which consists of directly financing an infrastructure (oil field, gas terminal, etc.), and financing corporatewhich amounts to financing the company which develops the project.
However, bank support for the fossil sector essentially involves financing corporate, according to the NGO Reclaim Finance, which compiles data on the subject every year as part of its reference report “Banking on Climate Chaos ”, based on financial data from Bloomberg. Project financing represents on average only 4% of financial flows. This is particularly true for French banks, where it is between 2.5% and 3.6% of financing granted in 2022.
So when, at the end of 2022, Crédit Agricole announced the end of “new financing of oil extraction projects”that only applied to project financing. Among the funds granted that year to companies in the fossil sector, 97.5% were not affected by this promise.
The same reservation applies to BNP Paribas, which promised, in spring 2023, that it would no longer finance THE “development of new oil or gas fields”. In reality, 96.4% of its financing in 2022 remains excluded from the equation. For Société Générale, which made the same commitment in September, 97.5% of financing remains out of scope.
Unmarked funds
Concretely, BNP and Société Générale can no longer provide direct support to projects like Mozambique LNG or Arctic LNG 2, giant liquefaction terminals backed by underwater gas fields. But nothing prevents them from continuing to finance TotalEnergies, the company which is developing these two “carbon bombs”. As the funds are not generally earmarked, the French multinational can use them as it sees fit, including to finance new fossil fuel projects.
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