Evaluating a company's impact (the case of BNP Paribas)

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You are reading Green Digest Impact, a weekly newsletter that provides in-depth analyses of companies’ environmental and social impact.

OUR APPROACH

Central to our narrative is the principle of double-materiality, which recognizes that a company's impact is twofold: it affects both the environment and society at large, and in turn, these external factors influence the company's financial and operational performance.

While traditional ESG assessments focus on the latter, we aim to examine companies' direct impacts on these factors. In pursuit of this, we introduce a unique scoring system that quantifies a company's impact.

The insights and analyses presented in Green Digest Impact are brought to you by a partnership between Green Digest and Impaakt, a Swiss-based impact data provider. Contact Impaakt here to explore how they can assist you.

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THIS WEEK’S COMPANY

BNP Paribas

This week we dive deep into BNP Paribas’s environmental and social impact.

BNP Paribas is a leading European and global bank. It provides a wide range of financial services, including corporate and institutional banking, retail banking, and investment solutions.

Some interesting facts:

• BNP Paribas’ origins date back to the 19th century, with the founding of Banque Nationale de Paris in 1848 and Paribas (originally Banque de Paris et des Pays-Bas) in 1872.

• The bank has a strong commitment to supporting art and culture. Each year, it sponsors many cultural events, including film festivals, contemporary art exhibitions, and classical music concerts.

COMPANY’S IMPACT

BNP Paribas’ overall impact score

BNP Paribas has a general impact score of +1.79 (on a scale from -5 to +5). Its impact is spread across 10 UN Sustainable Development Goals (SDGs) and 7 topics, split between positive and negative analyses.

In the socio-economic sphere,

BNP Paribas is ranked eighth among the largest global banks, with $2.931 trillion in assets and a presence in 63 countries. In 2023, the bank provided approximately €633 billion in loans and had €563 billion in deposits. Serving more than 29 million retail customers and 18,000 corporate and institutional clients, BNP Paribas holds the top position in the European corporate loan market, playing a significant role in financing the economy. Additionally, the bank finances thousands of mortgage loans annually, enhancing access to property, and additionally, in 2023, it issued €67 billion in sustainable bonds.

BNP Paribas also supports microfinance institutions in 13 countries, including seven emerging markets, allocating €333 million in 2022 to directly finance 21 institutions. An assessment of these microfinance institutions shows that 12 million people, 63% of whom are in rural underserved areas, benefited from their services, while also enabling the creation of about 1.3 million jobs. By employing 183,000 people, the bank fosters economic growth and social stability, while also offering salaries above the industry and country average. The company has achieved gender parity in its workforce and at the board of directors level but has yet to reach it at other levels.

Environmentally,

BNP Paribas emits an estimated 1.2 million tonnes of CO₂ equivalent annually (including indirect emissions), equal to the emissions of over 236,000 homes’ electricity use for a year. The banks’ cards and ATMs also produced an estimated 470 tonnes of end-of-life waste annually.

Further, BNP Paribas ranked 13th globally among banks funding fossil fuels, providing nearly $187 billion to fossil fuel projects from 2016 to 2023. However, by 2023, the bank had shifted towards low-carbon energies, increasing its low-carbon financing by 13%, amounting to €32 billion by the end of September 2023, or 65% of its energy production financing. Simultaneously, BNP Paribas reduced its fossil fuel financing by 27%, which totaled €17.3 billion by the end of September 2023, representing 35% of its energy production financing.

_{*The impact score is current as of August 2024 and may be subject to changes as it is continuously updated.
**You can find details about the scoring methodology here and the information sources here.}

ESG VS IMPACT SCORE

What is BNP Paribas’ ESG rating?

For comparison, BNP Paribas has an AA rating in MSCI's ESG evaluation.

However, ESG Ratings from MSCI ESG Research are designed to measure a company’s resilience to financially material ESG risks and they provide a window into one facet of risk to financial performance. They measure how effectively companies manage ESG risks, not their impact on these factors.

SCORES BY SDG

BNP Paribas’ impact scores by SDG

Now, back to BNP Paribas’ impact score:

Positively (and by weight), the company scores the highest in Decent Work and Economic Growth SDG (+3.40), followed by Sustainable Cities and Communities (+3.02), and No Poverty (+3.39).

Negatively, the company scores the worst in Industry, Innovation, and Infrastructure SDG (-2.49), followed by Climate Action (-3.74), and Reduced Inequalities (-2.48).

*the analysis takes into account the weight of the SDGs

CONCLUSION

Final words

So, BNP Paribas’ key social and environmental impact lies in …

its role in financing the economy, enhancing access to property, increasing access to banking for underserved communities, and funding sustainable projects, among others. The bank serves millions of individuals, businesses, and institutions, thus having a significant positive impact on the economy and people’s lives.

Conversely, the bank produces a substantial amount of GHG emissions and plastic and lacks transparency in disclosing its other environmental metrics. It is also ranked 13th among global banks that have funded fossil fuels with billions since the 2015 Paris Agreement, thus contributing to climate change.

Its positive +1.79 score is a balance of all of these factors and topics.

If you’d like to delve deeper into BNP Paribas’ impact, you can explore it here.

Next week, we will analyze the impact of one of the world’s largest aerospace companies, Boeing. 🛩️

If you'd like to learn more about the scoring methodology, you can do so here.

Do you have a specific company you'd like us to cover? Send your suggestions to [email protected]