LONDON (Reuters) – BNP Paribas is reconsidering its strategy in sustainable finance to focus on profitable transactions and redefine the contours of its activity in the field, Constance Chalchat, head of sustainable development at the finance bank, told Reuters and investment (BFI) of the French bank.

This change, which echoes the distancing of other banks from the ESG label, aims to ensure that sustainable finance does not come at the expense of profitability, explained the manager.

Poor returns on environmental, social and governance (ESG) investments have sparked widespread questioning after a period of market enthusiasm.

Critics of ESG are also encouraged by the return of Donald Trump to the White House, the American president having increased attacks against the criteria concerned.

According to Constance Chalchat, BNP Paribas wants to stick to investments linked to a sustainable future and help businesses and societies adapt to climate change, but the bank must guarantee an attractive return for investors.

“We want to remain relevant in the long term, even for US investors, and realign profitability and sustainability,” she said.

ABANDONED GENERIC EXCLUSION FRAMEWORKS

Several major banks have reassessed their approach to sustainable finance in the face of political pressure, particularly from conservative forces in the United States, and the need for energy security following Russia’s invasion of Ukraine.

The current mood contrasts with the enthusiasm for ESG in the wake of the COVID-19 pandemic, when oil prices were hit by falling demand and major companies in the oil sector energy have turned to investments in renewable energy.

If BNP Paribas remains a member of the banking sector’s main global climate coalition, several large American banks have recently left it, to the great dismay of activists fearing that the sector will lose its determination on the subject.

BNP Paribas has sought to be a leader in aligning its activities with the goals of the Paris Agreement and said last year it would stop arranging bond transactions in the securities sector. oil and gas.

In the future, BNP Paribas’ BFI activities should focus on four themes: adaptation to climate change, ecological transition, environmental preservation and societal resilience, Constance Chalchat told Reuters.

The bank will encourage investment opportunities where it sees both future financial growth and positive contributions to the planet and society, she said.

It will also expand the definition of sustainability to encompass efforts to decarbonize high-emitting sectors, such as cement and steel.

This means increasing investment in areas such as water and agribusiness while abandoning generic exclusion frameworks that exclude entire industries and risk underperformance, he said. -she explained.

“We believe that these measures can really generate financial performance beyond that necessary for the resilience of the planet.”

(Written by Virginia Furness; Bertrand De Meyer, edited by Blandine Hénault)

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