**US-Led Political Backlash Fuels Banks’ ESG Shift: BNP Paribas to Emphasize Four Sustainable Finance Themes**
BNP Paribas is reevaluating its approach to sustainable finance, prioritizing profitable ventures and redefining its criteria for sustainability, according to a senior executive. This marks the bank’s move away from the ESG label amid a broader trend among financial institutions. Constance Chalchat, the chief sustainability officer of the corporate and institutional banking (CIB) division, stated that the bank aims to ensure that sustainable finance aligns with profitability.
Following initial enthusiasm for Environmental, Social, and Governance (ESG) investments, disappointing returns have led to a reevaluation across the sector. The political climate, particularly with the return of former President Donald Trump, has intensified scrutiny on ESG initiatives, with Trump criticizing major banks for their perceived lack of support for conservative values.
Chalchat emphasized the bank’s commitment to investments that contribute to a sustainable future and assist companies and communities in adapting to climate change, while also ensuring returns for investors. “We want to remain relevant for the long run, even for U.S. investors, and to realign profitability and sustainability,” she noted.
In light of political pressures, especially from conservative factions in the U.S., many large banks have reconsidered their climate finance strategies. Recent withdrawals from key climate coalitions by global banks have raised concerns among advocates about the industry’s commitment to addressing fossil fuel issues, although BNP Paribas continues to be a member of such coalitions.
The current sentiment contrasts sharply with the initial excitement surrounding ESG investments following the COVID-19 pandemic, when energy companies began shifting towards renewable investments. BNP Paribas has positioned itself as a leader in aligning its operations with the Paris Agreement, previously announcing a halt to bond deals in the oil and gas sector.
Moving forward, Chalchat indicated that BNP’s CIB division will concentrate on four key themes: adaptation, transition, conservation, and societal resilience. The bank aims to support companies and foster investment opportunities that promise both financial growth and positive environmental and social impacts. Additionally, it plans to expand its definition of sustainability to include efforts to decarbonize high-emission sectors like cement and steel, while increasing investments in water, agribusiness, and adaptation finance, and moving away from broad exclusionary practices that may hinder performance.
