European Banks Withdraw Capital from Energy Companies: What’s Happening?

European Banks Transition Away from Financing Fossil Fuels

French banks BNP Paribas and Credit Agricole, among the top three European banks in terms of asset size, have stopped supporting bond issuances for oil and gas development, marking a shift in financing policies for the sector in Europe.

In documents prepared for their respective annual general meetings, both banks highlighted their decision to halt bond issuances for companies operating in the hydrocarbon sector.
BNP Paribas specified that it will no longer participate in bond issuances for oil and gas companies.

Environmental group Reclaim Finance praised this move, encouraging BNP Paribas to formalize this policy within its climate approach and extend it to other financial services that could contribute to the expansion of the oil and gas sector.

BNP Paribas’s Commitment to Energy Transition

As of May 2023, BNP Paribas stated that it will cease any financing directed towards the development of new oil and gas fields, regardless of the financing methods used.
The bank also committed to an 80% reduction in financing for oil exploration and production by 2030 as part of its energy transition goals.

Similarly, Credit Agricole confirmed the cessation of bond issuances for the oil and gas sector.
CEO Philippe Brassac stated, “We no longer participate in issuances that are not clearly green, or at least do not fit within our green framework.”

European Banks’ Shift Towards Environmental Focus

Over the past few years, European banks have been limiting their exposure to the hydrocarbon sector.
Faced with pressure from ESG (Environmental, Social, Governance) trends and shareholders, major European banks have announced stricter rules for fossil fuel financing in the last two years.

British bank HSBC announced by the end of 2022 its discontinuation of financing for new oil and gas field developments and related infrastructures as part of a policy to support and finance a transition to net zero.

Barclays, based in the UK, revealed in February 2024 its decision to cut direct financing for new oil and gas projects, joining other major European banks in halting funding for fossil fuel expansion.
Barclays is also working to avoid greenwashing allegations with a new set of guidelines on what ‘transition finance’ entails and how its new transition finance team should apply it.

Focus on Climate Change Investing

According to the Robeco Global Climate Investing Survey 2024, in the next two years, Europe will be the continent where investors will place the most importance on climate change, while North America lags behind.

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