Clearing the Air: What's behind Bank of the West's green marketing campaign?
Sorting through bank financial disclosures is tedious and confusing. Tedious and confusing also happens to be my middle name.
Front and center on its website, Bank of the West (BOTW) says it is “committed to sustainable finance along with our parent company BNP Paribas.” In fact, sustainability is one of its core recurring themes, which makes this review particularly relevant.
While they may have an unpublished track record, there is no publicly available information indicating that BOTW had supported sustainability initiatives in any meaningful way prior to 2018. In 2018, BOTW made a five-year pledge to dedicate $1 billion ($200M/year) to finance clean, efficient, and renewable energy, consisting of:
- $500 million in new financing for renewable and clean energy to support, for example, the financing of hydroelectric, solar, and wind power sources;
- $300 million in loans to help individuals transition to EV/zero emission vehicles;
- $200 million in investments and loans directed toward cities' infrastructure and housing projects that are LEED-certified or support energy efficiency or energy conservation.
As of 12/31/19, BOTW reported $62.6 billion of loans and $92.9 billion of assets. While there is no publicly available information regarding the bank’s progress towards its pledge either, which is a potential red flag, $200M/year represents a meager shift of 0.32% of the loan portfolio and 0.20% of assets. BOTW does not publish specific information about underlying sectors served or its carbon exposure/liability.
Meanwhile, BOTW is a subsidiary of BNP Paribas (BNP), so it would be highly misleading to look at the actions of BOTW without also considering the deeds of its parent company. Last updated in 2017, BNP’s sector policy indicates it will not provide financial products or services to greenfield (new build) or brownfield (re-build) projects for E&P of unconventional oil and gas (shale oil or gas, oil sands, oil and gas resources located in the Arctic region), pipelines of unconventional oil and gas, or LNG export terminals supplied by a significant volume of unconventional gas without first performing enhanced due diligence measures. Enhanced DD consists of a variety of unspecified check-the-box corporate polices. BNP maintains a similar program related to coal-fired power projects, where it’s threshold for business is simply the plant’s capacity to obtain a permit in the country in which its built.
According to the Rainforest Action Network’s bank report card, BNP had over $30 billion in exposure to extreme fossil fuels in 2019, up from approximately $18 billion in 2018, 2017 and 2016. While it’s aggregate commitment of renewable energy sector financing of €15 billion through 2020 is meaningful, BNP’s annual commitment to the extreme fossil fuel driven energy sector still dwarfs that of renewables. It’s dramatically increased investment in 2019 and board composition suggests a broad allegiance towards fossil fuels over the near- and intermediate-term.
Ultimately, BOTW has a long way to go before they live up to the sustainability alignment they allege. Published progress towards larger goals would be a good start, as would the climate impact of its largely unaligned loan portfolio. Green-washing damages industry credibility and severely inhibits meaningful change towards positive climate outcomes.