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June 30, 2022updated 02 Aug 2022 12:46pm

Comparing the big French banks’ carbon targets

The four largest French banks by assets are taking steps to cut their exposure to oil and gas, but data gaps make it hard to determine what their climate targets actually tell us.

By Virginia Furness

offshore oil rig
Oil exploration under pressure: Lenders are pledging to reduce their upstream fossil fuel exposure. (Photo by curraheeshutter from iStock / Getty Images Plus)
  • Natixis sets the clearest decarbonisation target for the oil and gas sector of the four biggest French banks.
  • Data gaps in reporting by Credit Agricole, Societe Generale and BNP Paribas make it difficult to assess the ambition of their objectives.
  • Between them, Credit Agricole, BNP Paribas, Societe Generale and Natixis report nearly $100bn of exposure to oil and gas.

The UN-backed Race to Zero campaign this month laid out its strictest set of criteria yet for financial institutions, calling for members to phase down – and ultimately out – all unabated fossil fuels as part of a just transition. Under rising stakeholder pressure and public scrutiny, investment banks are working to set carbon-cutting targets for the most polluting sectors.

With $99bn of exposure to the oil and gas sector as of December 2021, the four largest French investment banks are already making progress in setting targets to both reduce exposure and the carbon emissions linked to their portfolios. But it is hard both to compare objectives set with emissions reduced and to understand how much impact these targets will have on capital allocation.

But there are concerns among non-governmental organisations (NGOs) such as Reclaim Finance that banks can achieve their emissions reduction targets – net zero by 2050 – by using metrics such as carbon intensity rather than overall emissions while still financing companies that are developing new oil and gas projects.

That’s not to mention the fact that numerous banks and other financial firms that have made net-zero emissions pledges are members of organisations that are lobbying against policies designed to tackle climate change.

Shortfall in carbon target data

Certainly, many of the policies and targets set by banks and analysed by Capital Monitor are littered with omissions or exclusions, making it hard to determine the level of ambition of the targets. (We carried out a similar exercise in March, comparing Barclays’ targets against Citi, HSBC and JP Morgan.)

In the banks’ defence, there is as yet no right or – perhaps more importantly – regulated way to set sector decarbonisation targets. It is also hard to use the data available to determine which targets are the most ambitious or will have the most impact.

What we can say is that there is a wide variance in the level of transparency with which banks set targets, ranging from decent to poor.

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Starting with the biggest, the table below presents a crude assessment of how France’s four largest investment banks – BNP Paribas, Credit Agricole, Societe Generale and Natixis, which is part of Group PBCE – report their decarbonisation or exposure targets for oil and gas companies. This is the most complete data set of all the carbon-heavy sectors for which the banks set such targets.

The lenders have also set comprehensive targets for other industries: coal (all four), automotive (BNP Paribas and Credit Agricole), shipping (Societe Generale) and power (BNP Paribas and Societe Generale).

Capital Monitor decided that, to provide a true picture of the ambition and potential impact of a bank’s pledge, the target needed a baseline – whether carbon intensity, total financed emissions or total amount of finance extended – and the amount by which the bank plans to reduce that figure. Only Natixis provides all this information.

Natixis sets pace on carbon target transparency

Natixis has the most straightforward and transparent oil and gas decarbonisation targets. The bank has committed to cutting its €5.8bn of exposure to hydrocarbon exploration and production activities by 15% (€0.87bn) by 2024 from a 2020 baseline.

The bank does not publish its exposure to the whole oil and gas value chain but uses the portion of exploration production relative to the whole business to calculate its exposure to upstream oil and gas. Where this data is not available, it assumes upstream oil and gas amounts to 33% of diversified business models. The target means it can continue to invest in downstream oil and gas activities.

In 2018, Natixis started work on what became its Green Weighting Factor tool, an in-house mechanism to designate the positive or negative impact of its financing. By last year this enabled the bank to measure both the carbon intensity and temperature trajectory of its financing.

For 2020, the carbon intensity of Natixis’s financing activities stood at 920 tonnes of CO2 equivalent per million euros, while its implied temperature rise was 3.2°C, according to its Task Force on Climate-Related Financial Disclosures report. The bank has committed to align its banking portfolio with a 1.5°C trajectory by 2050, with intermediate targets in line with 2.5°C by 2024 and 2.2°C by 2030.

The bank has also pledged to stop financing projects and companies with a share of unconventional hydrocarbons in exploration and production (shale oil, shale gas and tar sands) that is greater than 25% of their revenues.

More clarity required on targets

For the other banks, it is difficult to draw clear conclusions about the ambition of their targets due to patchier disclosure.

Credit Agricole joined the list of banks to have committed to a gradual withdrawal from the oil and gas sector. The lender said it planned to reduce by 30% its financed carbon emissions, but has not made public the volume of emissions attributed to its oil and gas portfolio, so it is impossible to assess the precise impact of this pledge.

It will likely be sizeable, though, given that Credit Agricole’s oil and gas exposure stood at €33.85bn as of 31 December, the largest among the four French banks.

BNP Paribas has also set its target against financed emissions intensity for the oil and gas sector, which the bank plans to reduce by 10% in respect of its upstream oil and gas refining portfolio from 68 grammes of carbon dioxide equivalent per megajoule of energy.

But is unclear what impact this plan will have on the bank’s capital allocation. BNP Paribas said it planned to reduce its credit exposure to the upstream oil and gas industry by 12% and its credit exposure to the upstream oil industry by 25% by 2025 (from a 2020 baseline) but does not disclose the portion of its €36.1bn of exposure to the sector it attributed to these parts of the industry.

Societe Generale’s targets are the hardest to draw clear conclusions from. The bank plans to reduce its exposure to the oil and gas extraction sector by 10% by 2025. As of 31 December, 6% of its €339bn corporate portfolio was in oil and gas, amounting to €20.34bn. But it does not say how much of this is in the upstream or extraction part of the industry.

To reiterate, the gaps in the data make it difficult to draw any real conclusions about the ambitions of the targets. Even collecting uniform data on each bank’s exposure to the oil and gas sector was a challenge, with some groups reporting figures for 2021, others for 2020, and Natixis for only a portion of the oil and gas value chain.

The most comprehensive and comparable data points come from the banks’ Pillar 3 disclosure, which requires them to disclose the gross carrying amount of loans and advances provided to non-financial corporates, classified by NACE (the European standard classification of productive economic activities) sector codes (see chart below). While not perfect, as it includes a broad sweep of related industries within two single sectors – mining and quarrying, and electricity, gas, steam and air conditioning supply – it does represent a regulated set of data that captures the banks’ exposure to fossil fuels.

Capital Monitor is hosting the Webinar series, Making Sense of Net Zero. Find out more information on

Read more: How investors are stepping up scrutiny of climate plans

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