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Integrated Report 2020

Enviromental responsibility

GRI:
TCFD:

Care for the natural environment is one of the key commitments of BNP Paribas Bank Polska S.A. We believe that great changes start with ourselves, therefore we attach great importance to actions for the benefit of our planet every day.

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Commitments of BNP Paribas Bank Polska S.A. under environmental responsibility – one of the four pillars of the CSR strategy and sustainability

  • Enabling our Clients to transition to a low-carbon economy respectful of the environment
  • Reducing the environmental impact of our operations
  • Advance awareness and sharing of best environmental practices

Key actions of BNP Paribas Bank Polska S.A. supporting the implementation of the environmental Sustainable Development Goals are: financing investments increasing access to renewable energy, promoting sustainable development of cities and communities and active participation in partnerships and initiatives for climate justice.

The Bank’s Sustainable Development Goals in the field of environmental responsibility:

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In 2011, The BNP Paribas Group has identified climate change prevention as a strategic priority and has committed itself to expanding its efforts to protect biodiversity, water, air and natural resources, as well as to support the development of the circular economy.

BNP Paribas Bank Polska S.A. has been making strenuous efforts to combat climate change for years. To this end, we (amongst others) limit financing of high-emission sectors, support the energy transition by offering „green” products and services, limit the negative impact of our operations on the environment, and promote environmentally friendly attitudes among our employees, Customers and Clients. An important part of our activities is establishing partnerships and promoting climate justice through industry initiatives and events.

After many years of intensive environmental efforts, in April 2019 we launched the Bank of Green Changes Program, which aggregates all of the organisation’s climate activities to date.

The Bank of Green Changes program consists of:

the development of the offer of pro-ecological products and services to support the energy transition;

reducing the negative impact of the functioning of our organization (so-called eco-improvements);

educational campaign aimed at employees in all areas of the Bank and external stakeholders.

Managing environmental responsibility

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  • TCFD Governance Disclosure A
  • TCFD Governance Disclosure B
  • TCFD Risk Management Disclosure A
  • TCFD Risk Management Disclosure B

BNP Paribas Bank Polska S.A. takes a number of climate measures. When reporting the data for 2020, we refer to the Climate Disclosure Guidelines: Task Force on Climate-related Financial Disclosures (TCFD).

The current Strategy for the functioning of BNP Paribas Bank Polska S.A. is the adopted by the Management Board and the Supervisory Board in May 2018 “Fast Forward” strategy for 2018-2021. The CSR and Sustainability Strategy, which consists of 12 commitments under four pillars of responsibility: economic responsibility, responsibility in the workplace, social responsibility and environmental responsibility. The CSR and Sustainability Strategy is consistent with the BNP Paribas Group’s strategy and takes into account the local circumstances. The Strategy’s implementation activities are the Bank’s contribution to achieving the UN Sustainable Development Goals. Focusing in its activity on environmental, social and governance aspects (E – environment, S – social, G – governance) and wanting to implement more efficiently the sustainable development mission, in October 2020, following the Management Board’s decision, BNP Paribas Bank Polska S.A. appointed a new function in the organisation – Chief Sustainability Officer, who became the head of the Sustainability Council. The Chief Sustainability Officer’s main responsibilities include defining and monitoring the ESG Strategy (which will be an integral part of the new Strategy of BNP Paribas Bank Polska S.A. for 2022-2024), supervising development of sustainable banking products and services and linking ESG initiatives undertaken in different business lines.

For more information, see the Management Foundations, ESG Management section.

Within the organizational structures of BNP Paribas Bank Polska S.A. there are units responsible for sustainability, ESG and climate actions.

responsible for coordinating CSR and Sustainability Strategy. As a part of its environmental responsibility, the Bureau oversees:

  • the Bank of Green Changes program, which aggregates all of the organization’s efforts to support pro-climate actions;
  • cooperation with business lines in the development of green products and services with positive environmental impact;
  • inspiring and coordinating the implementation of eco-improvements in the functioning of the organisation;
  • promoting responsible and green attitudes among employees, their loved ones and other stakeholders;
  • partnership with external expert organizations working to combat climate change;
  • implementing and coordinating CSR Policies in sectors deemed sensitive and monitoring Clients in social, environmental and corporate governance areas;
  • non-financial reporting on the local market and to the BNP Paribas Group;
  • supervision of the implementation of solutions supporting the „Idea of Engagement of the BNP Paribas Group”,
  • supporting the implementation of the Sustainable Development Goals (SDGs) throughout the organisation.
  • The aim of the unit is to analyse and develop programs that optimally support investments made by the Bank’s Clients from different market segments, especially in the areas of energy efficiency, the use of renewable energy sources, electro mobility and environmental protection.
  • The Bureau cooperates with the European Investment Bank and the Bank Gospodarstwa Krajowego and other national and European public institutions.
  • It is the internal competence center for sustainable finance and consolidates all the Bank’s projects in this area.
  • The programs implemented by the Bureau are aimed at all market segments: individual Clients, individual farmers, housing communities, micro, small, medium-sized and large companies.
  • The aim of the unit is to expand and strengthen internal competences in the field of sustainable development and to obtain funding for ecological projects in the form of credit lines, grants or guarantees, and to provide technical assistance and promotion of ecological attitudes to Clients.

More information on the activities of the Sustainable Growth Programmes Bureau can be found later in the chapter.

BNP Paribas Bank Polska S.A. analyses the possible impact of climate change trends by identifying opportunities and risks to its activities and development prospects. To this end, it distinguished climate risks and opportunities in the short, medium and long term.

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  • TCFD Strategy Disclosure A
  • TCFD Strategy Disclosure B

Key climate risks related to Customers' activities and affecting the development of products and services, identified by the organization:

  • The energy consumption of Polish industry based on the coal-based energy mix (more than 70% of the energy produced comes from coal) will reduce its competitiveness against the economies of other countries.
  • An outdated and energy-intensive building stock in Poland generating high energy demand.
  • The rising energy prices leading to a lower competitiveness of the economy and a decline in living standards.
  • Climate change (droughts) disrupting businesses.
  • Part of the Bank’s Client portfolio consists of climate change-sensitive entities, e.g. rising energy prices (energy-intensive companies) or droughts significantly affecting the agri-food sector.
  • Exposure of the agri-food part of the portfolio to water stress.
  • Exposure to the economically disadvantageous effects of climate regulation for the Bank’s Clients (especially in the short and medium term).
  • Regulatory uncertainty in the context of possible future mechanisms introduced by regulators which would affect companies' operations (e.g., emission fees, waste management, additional taxes).

Risks identified by BNP Paribas Bank Polska S.A.:

  • new global/EU/local regulations which generate the necessity of the implementation of systems to assess and report on the climate activities of the Bank and its Clients (cost of structures),
  • a new risk of loss of market share in the event of clearly stricter requirements for the Bank in relation to competition,
  • operational risk of investment projects involving modern environmentally beneficial solutions related to the relatively early stage of development of the implemented technologies.
  • Agro Customer segment is one of the industries most exposed to climate risks, which translates into credit risk on the Bank’s side,
  • disruption of Clients' activities and liquidity in the corporate segment, due to climate change and high temperatures, the need to limit exposure to all carbon-intensive industries (also indirectly), as rising prices of CO2 emission packages will increasingly hit the financial health of companies.

BNP Paribas Bank Polska S.A. assumed for the purposes of this analysis that the short-term perspective is up to 1 year, the medium-term is 1 – 5 years, and the long-term perspective is more than 5 years.

Key climate opportunities for Customer activity, affecting the development of products and services, identified by the organization:

  • Moderate increase in demand (companies, individuals) for energy transition investments. In the medium- and long-term, this demand is likely to increase in the wake of rising energy prices and the need to switch to cheaper energy sources and improve energy efficiency. Commercial Banks will be the party substantially financing these investments.
  • Enhance the role of financial institutions in the transfer of national and EU funds to support the energy transition. The Bank’s experts estimate that around 30% of national and EU funds will pass through financial institutions including commercial Banks in the form of credit lines, guarantees, subsidies.
  • Implementation of the European Union’s “Farm to Fork” policy and supporting instruments to assist the transformation of the food production sector to operate in a sustainable manner.

Chances for the Bank:

Strengthening the Bank’s reputation and brand and using advanced climate engagement as a differentiator in the market.

Offering new green products by gaining a strong position as beneficiary and intermediary of EU funds for energy transition and climate change.

An opportunity to grow business and lead in positive changes in the economy, while maintaining profitability and improving the Bank’s image.

Climate risk management

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  • TCFD Metrics and Targets Disclosure A
  • TCFD Metrics and Targets Disclosure C

The BNP Paribas Group is committed to aligning its loan portfolio with global climate objectives by supporting the objective described in Article 21(c) of the Paris Agreement: „Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”.

BNP Paribas Bank Polska S.A. monitors the level of environmental, social and governance (ESG) risks within all of its Corporate Clients. Additionally, as a part of the BNP Paribas Group, the Bank pays special attention to financing sectors considered sensitive in terms of ESG risk.

In the process of risk materiality assessment, on the basis of identified risk factors, the Bank assessed ESG risk as material. In consequence, the catalogue of material risks was supplemented.

The Bank has introduced an ESG risk definition into its Risk Management Strategy. As a next step, in order to reduce and control risk, the Bank developed rules for measuring ESG risk in the Bank’s internal capital adequacy assessment process (ICAAP). The capital plan of BNP Paribas Bank Polska S.A. for the years 2021-2023 was supplemented with limits for ESG risk coverage determined on the basis of risk measurement.

BNP Paribas Bank Polska S.A. distinguishes nine sectors that are particularly vulnerable due to environmental, social and corporate governance risks:

  • coal-based energy
    (coal exit 2030)
  • mining
    (coal exit 2030)
  • defence and security
  • forestry – wood pulp
  • forestry – palm oil
  • nuclear
  • agri-food
  • fuel – in terms of unconventional oil and gas resources
  • tobacco

In each of these sectors, the Bank implements CSR Policies and Principles for Clients operating within them. In order to become the Bank’s Client or obtain financing, an entity must meet a number of requirements governed by the sector-specific Policy. In the case of sectors that are particularly harmful from the point of view of sustainability, the Bank makes strategic decisions to withdraw from serving Clients belonging to these sectors. Such sectors include the tobacco sector, from which the BNP Paribas Group announced its exit as early as back in 2017.

Another is the coal-based energy sector. Since 2015, the Bank has withdrawn from financing the coal-based energy sector and does not provide new financing to energy groups based on coal-based energy. By successively tightening the regulations in this area, in 2017 a decision was made to stop financing all projects for the construction of new coal power plants and thermal coal mines, and to support only those coal-based energy companies that are actively involved in switching to other energy sources.

In 2019, The BNP Paribas Group has adopted deadlines (2030 for the European Union and the OECD and 2040 for the rest of the world) after which BNP Paribas Customers engaged in coal power, mining or coal infrastructure, wishing to remain in a relationship with the Bank, will no longer be able to use coal.

BNP Paribas has pledged that it will not enter into cooperation with new Customers if coal-related activities generate more than 25% of their revenues.

In addition, BNP Paribas Group maintains its commitment to terminate cooperation with any Client that builds new coal-based generation capacity. Moreover, all current and potential Customers of the Bank operating in the mentioned industries are informed about the CSR Policies and receive an explanation of the analysis process.

For more information on CSR policies, see The Responsible Finance section in the Economy chapter.

In addition to the cyclical risk analysis in the vulnerable sectors, ESG risk assessment is carried out as part of the credit analysis process for corporate Clients. In 2019, a so-called second CSR control line was established in the Risk Department of CIB and Corporate Clients, which pays special attention to the occurrence of ESG risks in the activities of current and potential Clients, including this aspect in the overall risk analysis of the Client’s business activities. If a high level of ESG risk is identified, it is possible to downgrade the Client’s rating.

An important aspect for BNP Paribas Bank Polska S.A. is also regulatory risk, which results from changes in the legal environment related to the ESG strategy.

The Bank monitors on a current basis the work of supervisory authorities and legislative proposals in the financial sector to ensure adequate risk management and control.

The Bank recognizes changes in the ESG area and accepts that they will have a real impact on its operations.

For more information on Risk Management and aspects of the ESG, see Management Foundations.

BNP Paribas Bank Polska S.A. is aware that the European Union and the world as a whole are increasingly facing the disastrous and unpredictable effects of climate change, the depletion of natural resources and other sustainability issues. This will mean that radical actions will have to be undertaken, inter alia, through entities in the financial services sector. According to the Bank, sustainable development is the foundation for building a low-carbon economy, and the role of financial institutions in this process is special.

At the UN Climate Summit – COP24 in Katowice in December 2018, five leading Banks including BNP Paribas made a joint commitment, reaffirming the commitments under the Paris Agreement and confirming the adjustment of their loan portfolios to the global climate objectives. As a result of the commitment, the BNP Paribas Group implements the Paris Agreement Capital Transition Assessment (PACTA) methodology, which aims to align the Bank’s portfolio with the objectives of the Paris Agreement by reorienting financial flows.

In May 2020, the independent UK NGO ShareAction named BNP Paribas the best European Bank in terms of contribution to climate risk management. This is the second time we have been ranked among the top Banks for sustainability.

In the ShareAction 2020 survey, BNP Paribas Group came first with an overall rating of 63.2%, compared with an average of 39.9% for all Banks. BNP Paribas is one of two Banks that scored above 60%. The group achieved the best results (from 75% to 100%) for the dialogue with stakeholders and an overall climate action strategy. BNP Paribas is also distinguished in terms of a wide range of sectoral policies and leadership in the field of offered products and „green” services.

More information here

Approach to energy transition

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  • TCFD Metrics and Targets Disclosure C

As a responsible financial institution, BNP Paribas Bank Polska S.A. knowingly limits its participation in industries widely considered harmful and inconsistent with the principles of sustainable development, while supporting pro-ecological investments and financing renewable energy sources.

BNP Paribas Bank Polska S.A. actively cooperates with individual and business (micro, medium, large companies) Clients, as well as international corporations, to implement sustainable development practices.

The Bank supports its Clients who implement pro-ecological investments supporting the Sustainable Development Goals, in particular, Goal 13. Climate action.

The "green" financing granted in 2020 is PLN 993 million, and the total value of loans granted by BNP Paribas Bank Polska S.A. PLN 2.7 billion for financing projects supporting sustainable development

In 2020, the largest part of the “green” funding provided helped to achieve Objective 7. Clean and accessible energy. In 2020, BNP Paribas Bank Polska S.A. granted loans totalling PLN 784 million for the production of energy from renewable sources, of which over 231 million went to prosumers producing energy for their own needs. For initiatives supporting the construction of environmentally friendly buildings certified* as (for example) BREEAM or LEED (PLN 56 million) and thermo-modernization of facilities (PLN 60 million). The Bank is also promoting the transformation of transport to greener, and in 2020 it granted PLN 21 million in loans for this purpose.

According to the Bank’s analysts, prosumer photovoltaic installations alone avoided the consumption of 50,000 tonnes of coal, which means a reduction in CO2 emissions of around 100,000 tonnes. That’s the amount that more than 4.5 million fully-grown trees absorb every year.

Banking Competence Centre for the Development of Green Financing Programs

In 2018, we set up an The International Financial Institutions and Sustainable Growth Programmes Bureau. In 2020, The Bureau has changed its name to the Sustainable Development Programmes Bureau.

The unit’s objective is, among other things, to analyse and develop programs that will optimally support the investments made by the Bank’s Customers related to energy efficiency, the use of renewable energy sources, electromobility and environmental protection. In this field, the Bureau cooperates with national and international institutions, such as Bank Gospodarstwa Krajowego or the European Investment Bank. Programs are addressed to Clients from all market segments: Individual Clients, individual farmers, housing communities, micro-enterprises, small, medium and large companies. The Bureau is an internal competence center for sustainable financing and focuses all projects in this area. Its tasks also include providing technical assistance to Clients and promoting pro-ecological attitudes

  • Strengthening the energy transition project for housing communities – the Bank has signed an agreement with an external energy consultant whose role is to provide technical support to residential communities in the form of energy consultancy and energy audits to implement the thermo-modernization of multi-family residential buildings.
  • Introduction of the BiznesMax guarantee to the offer, which is used, among others, for financing projects in the so-called pro-ecological and innovative path.
  • Energy Transition Project for SMEs and Mid-Cap – establishing cooperation with an external energy consultant whose role is to provide entrepreneurs with technical support, expertise and energy audits to accelerate the implementation of investments in the field of energy efficiency of commercial buildings.
  • Establish a team of energy transition experts in the Bank to support companies in improving the energy efficiency of commercial buildings and on issues related to renewable energy installations integrated into buildings.
  • A project to increase access to green finance for individual Clients, farmers and housing communities by launching a risk-sharing instrument that has been implemented in cooperation with the European Investment Bank.
  • Improving energy transition financing competencies among the Bank’s employees.
  • Promoting and disseminating energy transition knowledge among entrepreneurs, housing communities and individuals.
  • Clean Air project, providing funding for individuals wishing to carry out thermo-modernization of residential buildings, including the replacement of heat sources for environmentally friendly ones – cooperation with The National Fund for Environmental Protection and Water Management on the inclusion of commercial Banks in financing and distribution.
  • development of new sustainable financing programs, including, but not limited to, a loan subsidy program to finance the purchase of electric cars,
  • cooperation with the government in developing the best models for financing the energy transition,
  • systematically increasing lending to finance the energy transition,
  • implementation of financing under the Clean Air Program into the Bank’s offer,
  • continuing to fund companies that invest in innovation,
  • promoting sustainable development with regard to energy efficiency and RES, among others, and sharing best practices in this area,
  • continuation of building expert knowledge in the field of energy transformation within the organization,
  • further analysis of the legislative environment and its planned changes.

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