After the Second World War, finance helped the middle classes in the West access modern comforts, housing, and infrastructure. Starting in the 1980s, it accompanied globalisation, the emergence of new economic powers, and the development of a digital economy. Today, the principal challenge facing financial actors is helping humanity preserve these gains while avoiding the disasters that would result from global warming, increased inequality, and regional divisions.
Antoine Sire, Head of Company Engagement at BNP Paribas, on how banks and investors could support in achieving the UN Sustainable Development Goals.
In 2015, the UN published 17 Sustainable Development Goals that constitute a "compass" to assist States and businesses in bringing about the new and positive economy our world needs. According to analyses, cited by Antonio Guterres, the Secretary-General of the UN, achieving such goals would require between $5 and $7 trillion in public and private funds every year through 2030!
Banks could contribute to this, but their ability to finance large long-term transformative projects is limited, in particular by regulation. In addition, the majority of capital available today is not held by banks but by investors – asset managers, pension funds, and insurance companies – who manage the considerable amounts invested by the citizens of the developed world in preparation for their retirement. If banks do have a major role to play in the implementation of the Sustainable Development Goals, this is primarily because their position at the crossroads of financial markets provides them with plenty of opportunities to take action. T
hey disseminate throughout the world high standards in terms of ecology and respect for human rights, by incorporating social and environmental responsibility considerations into their criteria for granting loans to businesses. They develop and structure new tools specifically designed to promote more ecological and inclusive growth: green bonds, positive incentive loans, and social impact loans. Lastly, they seek to identify new solutions alongside international organisations, multilateral development banks, governments, NGOs, and investors, in order to offset the public sector's inability to finance alone the large-scale and common-good projects that our world needs.
"If banks do have a major role to play in the implementation of the Sustainable Development Goals, this is primarily because their position at the crossroads of financial markets provides them with plenty of opportunities to take action. "
BNP Paribas, which was named the 2018 World's Best Bank for Sustainable Finance by Euromoney magazine, incorporated the 17 Sustainable Development Goals into its business plan, and it drew up indicators to assess the percentage of its loans that contribute directly to these Goals, as well as a method for increasing such percentages. In a few years our Group became the global leader in green bonds and supported the significant growth of positive incentive loans, under which the rate of interest payable by clients – who include Danone and Accor – is linked to their achievement of the Sustainable Development Goals.
At the same time, BNP Paribas exited certain sectors such as coal, non-conventional hydro carbons, and tobacco, while deciding to increase the financing provided to renewable energy sectors to €15 billion by 2020, and by becoming a member of the Breakthrough Energy Coalition led by Bill Gates in order to promote the innovations that will make an ecological difference. BNP Paribas also entered into a partnership with the Environment Programme of the United Nations, the objective of which is to ensure financing by investors of large projects designed with NGOs capable of being transformative at a national level, in which the restoration of biodiversity and the fight against poverty go hand in hand.
The Group's businesses specialising in insurance and asset management put in place focused policies to ensure that socially responsible investment becomes the norm. All of these commitments are of fundamental importance to us, because we see in them an essential component of our business model for tomorrow and because we want to create a bank about which we can speak to our children with pride.
This article was originally published in a special Sustainable Finance feature of L'Opinion Magazine.