French campaigners are suing one of Europe’s largest financial institutions for financing fossil fuels in the first climate-related lawsuit against a commercial bank.
Oxfam France, Friends of the Earth France and Notre Affaire à Tous accuse BNP Paribas of supporting companies that aggressively develop new oil and gas fields and infrastructure, despite repeated calls by scientists to stop investment in fossil fuels.
Their lawsuit was filed in a Paris court on Thursday under France’s corporate duty of vigilance law, which requires all large businesses headquartered in France and international corporations with a significant presence there to set out clear measures to prevent human rights violations and environmental damage.
BNP Paribas is the EU’s largest funder of fossil fuel expansion. Campaigners are particularly concerned about the huge carbon majors it has as clients, including Total, Chevron, ExxonMobil, Shell, BP, ENI, Repsol and Equinor. These companies are involved in more than 200 new fossil fuel projects scheduled for approval by 2025, which would collectively produce about 8.6bn tonnes of carbon dioxide.
The bank began planning an exit from coal in 2019 and now says its remaining thermal coal exposure is “only residual”. In 2021, it joined the UN’s Net Zero Banking Alliance.
But it has been slower to act on oil and gas. The bank has been in the spotlight recently as one of several banks to loan money to TotalEnergies for the East African Crude Oil Pipeline (EACOP), despite deciding not to finance the hugely controversial project in 2021. EACOP would emit vast amounts of carbon and have a huge impact on the people living along its path.
Lorette Philippot, the campaigner at Friends of the Earth France, accused BNP Paribas of “ignoring scientific truths”.
“The urgent warning professed by the scientific community and the International Energy Agency has recently been reiterated through repeated statements from the United Nations: a bank cannot claim to be committed to net zero while supporting new oil and gas projects.”
BNP Paribas had been served notice that the NGOs were prepared to take legal action last year if it did not change its policies, and in January the bank promised to cut financing for the extraction and production of oil by 80% and gas by 30% by 2030. It said it would focus on supply and low-emission gas power plants, in line with EU investment rules that are themselves subject to legal action.
But campaigners were not satisfied. “At this stage, the bank still does not require its clients active in the oil and gas industry to immediately stop developing new fossil fuel projects and engage in a progressive exit from the sector,” said Philippot. “It even underlines in its announcements its intention to bet on new gas infrastructures and power plants.”
In a statement, BNP Paribas said it regretted that the NGOs had chosen to engage in litigation rather than dialogue.
“BNP Paribas, like other major international banks, is a longstanding financier of energy production. Approximately 10 years ago, 95% of our outstanding financing for energy production financed fossil energy projects. Today, already more than half of our financing for energy production is oriented towards low-carbon energies.”
With many banks and finance institutions still investing heavily in fossil fuels despite commitments to net zero, the financial sector has become a growing target of legal action.
Earlier in the month litigious environmental law firm ClientEarth lodged a complaint against the UK’s Financial Conduct Authority (FCA) over its approval of Ithaca Energy’s initial public offering. It wants a judge to examine whether Ithaca’s prospectus provided adequate information about the company’s exposure to climate-related risks, and whether the FCA should have signed off on it.
In Brazil, the courts are soon expected to rule on the first case against a national development bank. Brazilian NGO Conectas Direitos Humanos wants the country’s national development bank (BNDES) and its investment arm BNDESPar to develop a greenhouse gas emissions reduction plan to guide their investments.
Maria Cronin, a partner at the law firm Peters & Peters, says there have been a number of warning signs that the financial sector is vulnerable to climate litigation and enforcement. “Civil society actors are increasingly pursuing novel legal avenues to hasten the progress of the financial sector and businesses to net zero. While these cases are still very much in their infancy, courts may well be willing to interpret the law in previously unexpected ways.”
