CLIMATE REPORT

Strategy, risks & opportunities,
net zero commitments

May 2024

The bank
for a changing
world

III

TABLE OF CONTENTSRISK MANAGEMENT

1. Detailed exposures per sector
1.1. BNP Paribas reported its exposures towards sectors that highly contribute to climate changeI1.2. BNP Paribas reported its potentially sensitive exposures to physicalclimate risks

STRATEGY: A RESILIENT BUSINESSMODEL TO FACE CLIMATE CHANGE

2. How climate risks are identified, measured, and monitored
2.1 Insertion of climate risk management in the risk framework of the Group
2.2. Identifying the climate-related risk events
2.3 Assessing potential impacts of climate risks through climate scenario
analyses and stress testing

1. BNP Paribas embeds climate and transition towards carbon neutrality at
the core of its strategy

2.4 New tools to further assess and monitor climate risks

1.1. On track for sustainability within the 2025 Strategic Plan

3.

1.2. BNP Paribas’ strong commitments to combat climate change

Focus on key risks
3.1 Credit Risk: ESG Assessment, clients'environment and climate performance, review and challenge during the credit process

1.3 Committed to a net zero economy by 2050: BNP Paribas monitors its
financing and investment activities

3.2. Operational Risk

1.4 BNP Paribas reduces its own operational emissions

3.3 Market Risk

2. BNP Paribas identifies primary climate-related risks and opportunities
2.1 Climate change and its consequences are identified as risk drivers for
BNP Paribas
2.2. The energy transition also represents opportunities for BNP Paribas

3. BNP Paribas' business model is resilient to various climate scenarios

II

GOVERNANCE AND
IMPLEMENTATION: A GROWINGMOBILISATION TO ACCELERATETHE ENERGY TRANSITION

1. BNP Paribas has a strong climate governance
1.1 The Board of Directors oversees the management of climate-related
issues
1.2 The management proposes and implements the Group’s climate
strategy

2. Tools, processes, and set-ups strengthened to address climatechange2.1.Further accelerating the transformation of the whole Group
2.2.Upskilling all employees on climate knowledge and structuring
a network of referent experts

3. BNP Paribas supports the low-carbon transition of all its clientsIV

METRICS, TARGETS &ALIGNMENT PROGRESS:MONITORING THE
ACCELERATION TO NET
ZERO BY 2050

1. Net zero alignment update of credit portfolio
1.1 Introduction
1.2 Alignment progress update on the 2022 and 2023
commitments
1.3 2024 new portfolio alignment approaches and targets
2. Overview of BNP Paribas' main climate-related metrics,

targets, and alignment progress

Appendix: TCFD index
Glossary
Disclaimer

BNP PARIBAS EMBEDS CLIMATE AND TRANSITION TOWARDSCARBON NEUTRALITY AT THE CORE OF ITS STRATEGYI

1STRATEGY:

1.1 On track for sustainability within the 2025 Strategic Plan

A RESILIENT BUSINESS MODEL TO
FACE CLIMATE CHANGE

align with its clients’ objectives and with the United Nations'Sustainable Development Goals (UN SDG). While the climate is
obviously central to the priority theme “Transitioning towards
carbon nautrality”, it is also deeply connected to the others,
such as “Circular economy” (e.g. via the reduction of resource
consumption and the decrease in associated energy) or "Natural
capital & biodiversity” (e.g. via the fight against deforestation)
or “Sustainable savings, investments and financing” (e.g. via
green bonds issuance, reducing carbon footprint of investment
portfolio, etc.).

In 2021, BNP Paribas published its company purpose1 “We areat the service of our clients and the world we live in”. To thisend, the Group engages continuously with its clients to createa sustainable low-carbon future, mobilises resources in favourof projects that will have a positive impact and innovates to bea leader in sustainable finance.
In line with its company purpose, BNP Paribas’ 2025 strategicplan, named “Growth, Technology, Sustainability” (GTS),
places sustainability, including climate-related issues, at theheart of the Group's strategy. Within the Sustainability pillarof the plan, the Bank has defined five priority themes that

2025

GROWTHTECHNOLOGYSUSTAINABILITY

Sustainable savings &investments and financing

Transitioning towards
carbon neutrality

Foster sustainable savings
development and steering clients'
investment decisions towards
positive environmental and social impacts

Foster ou client's transition towards
low-carbon and more efficient energy systems
and addressing their massive financing
needs to capital markets

Circular economy

Natural capital &biodiversity

Encourage clients' transition to
circular models by financing
adaptation of supply chain &production models

Social inclusion

Orchestrale & promote development ofsolutions contributing to terrestrial &marine biodiversity conservation

Develop accessible financial services,
promote female entrepreneurship, apositive-impact economy, and equal job
opportunities for young people

The Group has defined three strategic areas to accelerate the implementation of its commitments in CSR and sustainable finance:
1. Aligning its portfolios with its objective for carbon neutrality (see Part IV. Metrics, targets and alignment progress).
2. Engaging with clients to support them in the transition towards a sustainable low-carbon economy (see Part II. Section 3.
BNP Paribas supports the low-carbon transition of all its clients).
3. Strengthening steering tools, processes and set-ups (see Part II. Section 2. Tools, processes, and set-ups strengthened toaddress climate change).

1

https://group.bnpparibas/en/group/about-us/company-purpose5I - STRATEGY: A RESILIENT BUSINESS MODEL TO FACE CLIMATE CHANGE

1.2 BNP Paribas’ strong commitments to combat climate change

TIMELINE 1

A long-standing commitment: landmark decisions and actions since 2010

2010
OIL – Stopped oil project financing

PACTA – Signed an agreement with other European
banks to implement a common methodology foraligning their credit portfolios with the objectives of
the Paris Agreement

2016
2017

SHALE OIL AND GAS - Ceased business with shale oiland gas and tar sands specialists2024

 LOW-CARBON FINANCING - EUR 200 billion
for the transition of our corporate clients to a
low-carbon economy
 OWN EMISSIONS - A maximum of 1.85 tCO2e
per full-time equivalent

2019

CCCA – Joined the UNEP’s Principles for Responsible
Banking (PRB) Collective Commitment to Climate
Action to share tools with other banks and aligntheir credit portfolio with the objectives of the Paris
Agreement
SHIPPING – Signed the Poseidon Principles

2020

2021

GFANZ – Joined net zero alliances of the Glasgow
Financial Alliance for Net Zero: Net Zero Banking
Alliance (NZBA), Net Zero Asset Owner Alliance(NZAOA) and Net Zero Asset Managers initiative(NZAM)2025

NZAOA - Decrease of at least 23% of carbon footprint(scopes 1 and 2) of equity and corporate bond portfolios
held directly by BNP Paribas Cardif and achieve anemission intensity of under 125 gCO2/kWh for the Power
Generation

 NZAM 2025 Investments 100 % net zeroalignedLOW CARBON FINANCING - representing 90% of thefinanced energy mix

2030
COAL - Full exit of the thermal coal value chain
worldwide (investment and financing)
NZAM - target of reducing by 60% the carbon
footprint (scopes 1 and 2) of the invesmtents
concerned

TARGETS: Full exit of the thermal coal value chain in OECD and
EU countries (investment and financing) -80% financing to upstream Oil vs. September 2022
 -30% financing to upstream Gas vs. September 2022
 NZBA intensity emissions targets for six sectors: Steel,
Aluminium, Cement, Aviation, Shipping, Commercial
Real Estate, and absolute target for Oil & Gas

2040

 NZAM - target of reducing the carbon footprint of
selected investments by 50% (scopes 1 & 2) vs. 2019

LOW-CARBON TRANSITION GROUP - Created a
dedicated structure to bring together over 250
professionals worldwide by 2025 to support large
clients’ transition to a low-carbon economy

GTS 2025 – Published climate-related businesstargets in the 2025 “Growth, Technology,
Sustainability” strategic plan, including 200 billion
for the transition of our corporate clients to a lowcarbon economy by 2025

CLIMATE REPORT – Publication of emission intensity
reduction targets for three additional sectors: Aviation,
Shipping, Commercial Real Estate, and the baselines ofresidential real estate emission portfolio as well as ouranalysis of agriculture
LOW-CARBON FINANCING - Update: 90% of low carbon
energy in the financed energy mix in 2030

2018

PACTA – Published with four other European banks
the first report on the application of the PACTA
methodology to measure the alignment of their
credit portfolios

OIL AND GAS - Restricted the support to energy
companies involved in the Arctic and Amazon
regions, and committed to reduce its financing to
upstream oil and gas by 12% between 2020 and
2025, and by 25% for upstream oil

Accelerating the pathway to net zero: ambitious commitments to pave the way to global carbon
neutrality by 2050

 NZBA 2025 intensity emission targets for two
sectors: Power Generation, Automotive

COAL - Committed to cease financing the thermal
coal sector value chain by 2030 in the EU and OECD
countries and by 2040 in the rest of the world
TCFD – Published its first Task force on Climaterelated Financial Disclosures (TCFD) report

COAL - First coal-related restrictive financing andinvestment policy

TIMELINE 2

2050

 Net zero target

OIL AND GAS - Committed to reduce its financing to
upstream oil and gas by 10% between 2020 and 2025

FOCUS | Joining forces

2022
2023

ALIGNMENT REPORT – Published the first Climate
Analytics and Alignment report with CO2 emission
intensity reduction targets for three sectors: Power
Generation, Oil and Gas, Automotive

CLIMATE REPORT – first integrated Climate report(TCFD + portofolio alignment) published​withemission intensity targets for three additional
sectors: Steel, Aluminium, Cement
OIL & GAS - BNP Paribas stopped all financing for
new Oil and Gas fields, and commits to decreaseby 80% its upstream Oil exposure and by 30% its
upstream Gas exposure by 2030​​

NZAM / NZAOA – BNP Paribas Asset Management
and BNP Paribas Cardif published their net zerocommitments and reinforced their stewardshippolicyLOW-CARBON FINANCING - represented 65% of thefinanced energy mix with the objective to reach 80%
by 2030

6tive Commitment to Climate Action (CCCA) in 2019 andthe Financial Services Task Force (FSTF) of the Sustainable Market Initiative (SMI) in 2021.

Since the Paris Climate Agreement in December 2015,
which aims at keeping the global temperature rise well
below 2°C above pre-industrial levels and at pursuing efforts to limit the temperature increase further to 1.5°C,
BNP Paribas has committed to gradually aligning its credit and investment portfolio with these objectives.

In September 2020, BNP Paribas and four other European
banks published a report on the application of the PACTA(Paris Agreement Capital Transition Assessment) methodology to measure the alignment of their credit portfolios.
In 2021, this ambition was reinforced by the Group’s decision to join the net zero alliances (NZBA, NZAOA, NZAM)
of the Glasgow Financial Alliance for Net Zero (GFANZ)
launched by the UNEP Finance Initiative.

BNP Paribas is convinced that achieving these objectives
requires the mobilisation of the entire financial system.
The Group has therefore joined several initiatives such as
United Nations Environment Programme (UNEP)’s Collec-

7

I - STRATEGY: A RESILIENT BUSINESS MODEL TO FACE CLIMATE CHANGE

1.3 Committed to a net zero economy by 2050: BNP Paribas monitors its financing andinvestment activities
SECTOR FINANCING AND INVESTMENT POLICIESACTIVITY MONITORING AND EXCLUSION LIST

Since 2010, as part of the implementation of its strategy tocombat climate change, BNP Paribas has developed ESG
financing and investment sector policies covering eightsectors2, including the energy sectors with the largest impact
on climate change. These restrictive policies lay down strict
ESG criteria, including some related to climate. The policies
are regularly updated: for instance, in 2023, the Groupexcluded all financing for projects related to the extraction of
the metallurgical coal.

To identify the companies with the highest environmental
risks, in addition to sector financing and investment policies,
BNP Paribas manages an activity monitoring and exclusion list.
The clients under monitoring are subject to close supervision
to ensure that they are transitioning their activities toward
lower emitting business practices. The Group prohibits any
new business relationship with companies under exclusion. At
the end of 2023, the number of companies under monitoringwas 286, while the number under exclusion reached 1,432.

Regarding the energy sector, following the announcement in2020 of a strategy for a full exit from the thermal coal value
chain by 2030 in the European Union and OECD countries, andby 2040 in the rest of the world, BNP Paribas conducted acomprehensive analysis of its clients portfolio.

Since the adoption of the French Duty of Care Law in 2017,
BNP Paribas is implementing a vigilance plan to identify andprevent the risks of serious violations to human rights andfundamental freedoms, harm to human health and safety, andharm to the environment. It applies to all employees, activities,
subsidiaries controlled by the Group, including suppliers andsubcontractors, and is published in the Group's Universal
Registration Document each year.
In BNP Paribas' vigilance plan2, climate change and energy
transition stood out in the materiality matrix that classifies
around a hundred extra-financial topics according to theirrelevance for the Group’s internal and external stakeholders.
The Group's vigilance approach includes the risk of harm to
the environment, considering climate physical and transition
risks, and GHG emissions (CO2, methane, and others).

In 2023, the Group accelerated again its exit from fossil fuels:
BNP Paribas no longer grants financing for the developmentof new oil or gas projects, regardless of the financing terms(project financing, reserve-based lending, FPSO), nor to nondiversified players in oil exploration and production.

As of now, the broader low-carbon ecosystem (renewable
manufacturers, hydrogen, storage, etc.) is not taken into
account.

As of 30 September 2023, BNP Paribas’ financing of
low-carbon energies had reached EUR 32 billion, representing a total of 65% of the Group’s financing to energy
production. Within the financing for low-carbon energy,
renewables accounted for EUR 28.8 billion, an increase of
EUR 4 billion in one year due to an increase in financing of
renewables across all client segments (utilities, non powercompanies, households). Exposure to nuclear and biofuelsremained stable over the last year. By 2030, the Groupnow targets 90% of its energy financing towards low-carbon.

Additionally BNP Paribas has already implemented or initiated an exit trajectory for each of the fossil energies: An already very advanced exit from thermal coal, definitive by 2030 in the European Union and the OECD, andby 2040 in the rest of the world.
 A fully completed exit from non-conventional hydrocarbon specialists: in 2017, BNP Paribas stopped supporting companies whose primary business is exploration,
production and export of gas or oil from shale oil andgas and from tar sands specialists. In 2022, BNP Paribas
also tightened its financing restrictions in particularly
sensitive ecosystems such as the Arctic and the Amazon4.

This low-carbon exposure covers drawn and committed
undrawn amounts. It has been built as an addition of fiveexposures:

VIGILANCE PLAN

In 2017, BNP Paribas stopped supporting companies whose
primary business is exploration, production and export ofgas/oil from shale oil, from tar sands or gas/oil production in
the Arctic. In 2022, BNP Paribas also tightened its financing
restrictions in particularly sensitive ecosystems such as the
Arctic and the Amazon.

FOCUS | Accelerating in the financing of the energy
transition

In the oil sector, BNP Paribas will reduce its financing ofoil exploration and production by 80% by 2030, compared
to end of September 2022, as follows: Exposure to renewable power generation from power
generation actors: this computation is based on the renewable share in the power generation capacity mix ofeach legal entity as provided by the data provider Asset
Impact.

 The end of financing purely dedicated to the development of new oil fields regardless of the financing methods (project financing, reserve-based lending, FPSO).

 Exposure to nuclear power generation from power generation actors (utilities, renewable developers and operators): this computation is based on the nuclear sharein the power generation capacity mix of each legal entity as provided by the data provider Asset Impact.

 The phasing out of financing for non-diversified oil
upstream players (independent oil companies) and intended to support oil production (corporate financing
or reserve-based lending).
 The reduction of general purpose lending allocated tooil upstream.

 Exposure to renewable power generation: some transaction can come from non-power generation actors suchas supermarkets, IT companies, etc. when such companies are developing a renewable project, the transaction is identified and included in the calculation.

As regards gas exploration and production, BNP Paribas
also excludes all financing dedicated to the developmentof new capacities. The amount of financing for gas
exploration and production will be reduced by more than
30% by 2030 compared to the end of September 2022. The
Group may contribute to the financing of new-generation
thermal power plants with low emission rates as well as,
if necessary, of the infrastructure needed for security ofsupply (gas terminals, gas transportation fleet, etc.), totake into account current geopolitical factors.

 Exposure to renewable power generation fromhouseholds: it is based on identified renewable transactions in the Bank’s internal systems.
 Exposure to biofuels: it is based on biofuels' industrycode in the Bank’s internal systems.

Financing for low-carbon energy and fossil fuels

Credit facilities + contingent liabilities + securities on balance sheet, in billions of euros, at 30 September 2022 and 30 September 2023.

54%
28.2

35
30
25

24.8

20
15
10
5
0

2
3

https://group.bnpparibas/en/our-commitments/transitions/financing-and-investment-policies
BNP Paribas Universal Registration Document and Annual Financial report 2023, page 704

4

8

0.3

3.1

Low-carbon

2022

46%

65%

32.0

35

23.7

Fossil fuels

35%

30
25

12.1
5.3
5.0

2023

28.8

20
15
10

1.3

5
0

0.2

See our oil and gas policy: https://group.bnpparibas/uploads/file/bnpparibas_csr_sector_policy_oil_gas.pdf

9

17.3

Renewables
Biofuels
Nuclear

9.0

3.0

4.3
3.6

Low-carbon

Fossil fuels

0.4

Reﬁning
Upstream Gas
Upstream Oil
CoalI - STRATEGY: A RESILIENT BUSINESS MODEL TO FACE CLIMATE CHANGE

Weight of fossil fuels and low-carbon energies
in BNP Paribas credit exposure for energy production*
90%

54%

46%

10%

2012

65%

20%

35%

2022 2023
Fossil fuels

6.5% average annual reduction between 2012 and 2022
17.4% average annual reduction projected between 2022 and 2030

*

80%

2028

Low-carbon energies

90%

10%

and investors, including liability risks, as a subset of physicaland transition risks.

Furthermore, the consequences in terms of liability may arise
from these two risk factors. They could result in to potential
disputes, claims for compensation, or legal proceedings
brought against a company, a State or a financial institutionthat could be held liable by any stakeholder or citizen who
has suffered from climate change. In line with international
work and in particular that of the Network of Supervisors
and Central Banks for Greening the Financial System (NGFS),
BNP Paribas considers the risks associated with the emergenceof legal proceedings related to climate change for companies

More specifically, the consequences of climate change on theGroup's activity are considered in the risk identification framework
as risk drivers and integrated in the Group’s risk management
scheme. The potential impact of these risk drivers is monitored by
BNP Paribas as it conducts its own business and that ofits counterparties, and in its proprietary and third-party
investments.

2030*Source: internal management ﬁgures – 2012-2022 illustrative trajectory; The scope of low-carbon energies could evolve as technologies mature.

1.4 BNP Paribas reduces its own operational emissions
Since 2012, BNP Paribas has implemented a strategy tothan the maximum target set for 2025. This figure also

reduce the environmental impacts of its operations i.e. its

represents a reduction of 10% compared to 2022 and more

direct emissions (scope 1), its indirect emissions related tothan 38% compared to 2019, the pre-Covid-19 referenceenergy purchases (scope 2) and its indirect emissions related

year. Additionally, since 2017, the Group annually purchases

to business travel (scope 3, cat. 6) increasing the share ofvoluntary carbon credits for an amount equivalent to the

low-carbon electricity used. At end 2023, the carbon footprint

residual greenhouse gas emissions emitted the previous year

per Full Time Equivalent was 1.56 tCO2e, being already lower

within its operating scope.

2

BNP PARIBAS IDENTIFIES PRIMARY CLIMATE-RELATED RISKSAND OPPORTUNITIES

2.1 Climate change and its consequences are identified as risk drivers for BNP Paribas
Climate change and its consequences are identified as risk
drivers for BNP Paribas, and recognised as such in its Universal
Registration Document (URD). In particular, the chapter 5
meets legal and regulatory requirements related to risks of the
BNP Paribas Group5.

 PHYSICAL RISKS: resulting from the direct impact of climatechange on people and assets due to extreme weather events orlong-term shifts in climate patterns such as rising sea levels
or rising temperatures.
 TRANSITION RISKS: resulting from a change in the
behaviour of economic and financial agents in response to
the implementation of energy policies, change in regulation,technological innovations or changes in consumer preferences.

Environmental risks and, more particularly, those associatedwith climate change are likely to translate into financial risks
for the Group. It is exposed to risks related to climate change,
either directly through its own operations or of its assets,
or indirectly through its financing and investment activities.
The main typical risk factors related to climate change are as
follows.
5

Chapter 5 - Pillar 3 of the 2023 URD, page 526.

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I - STRATEGY: A RESILIENT BUSINESS MODEL TO FACE CLIMATE CHANGE

2.2 The energy transition also represents opportunities for BNP Paribas

 Examples of potential impacts of transition risks

TYPE OF RISKBusiness and Strategic Risk

Legal and Regulatory Risk

Credit, Counterparty andSettlement Risk

Reputational Risk

Liquidity Risk

Market Risk

Operational Risk

BUSINESSAFFECTEDDESCRIPTIONTIME HORIZON
TO MATERIALIZE(ST, MT, LT)

Decreasing revenues and loss of market share

All activities

MT

Stranded assets*

All activities

ST/MT

Judicial proceeds, for instance linked to infringement of
Duty of Care obligations

Financing activities

ST

Clients’ default

Financing activities

MT

Fall in value and inability to rent certain properties

Real Estate

ST/MT

Shift in consumer preferences

All activities

ST/MT

External perception of BNP Paribas as insufficiently “green”,
generating negative externalities

All activities

ST

In asset management activities, suspected greenwashingfor unduly labelling sustainable funds

Asset Management

ST

Behavioural changes

All activities

MT

Regulatory changes

All activities

MT

Impact of carbon prices and/or a carbon tax, repricing ofcarbon-intensive assets

Market activities

ST/MT

Decrease in the value of funds

Asset Management

MT

Rise in carbon prices (tax or quotas)

Internal

MT

Call for additional investments

InternalMT

As indicated by the International Energy Agency (IEA) in the2023 update of its Net Zero Roadmap6, getting on track for
the NZE (Net Zero Emissions) scenario by 2050 will requirea tripling of investments on clean energy and infrastructure
by 2030. It estimates that annual investments in low-carbon
energy needs to climb from USD 1.8 trillion in 2023 to around
USD 4.5 trillion a year by the early 2030s to enable alternatives
to fossil fuels for companies and individuals. Among the key
milestones on the pathway to net zero emissions by 2050,
the IEA NZE scenario shows that electricity produced fromrenewables should grow from 30% in 2022 to nearly 60% in
2030 and more than 75% in 2035. In addition, the IEA estimatesthat the electric vehicles sales recent growth put them on
track to account for two-thirds of new car sales by 2030 – acritical milestone to reach net zero CO2 emissions by 2050.

Addressing these challenges and implementing these changes
require massive investments by corporates, institutions, andthe public sector. The in-depth transformation of businessmodels, in terms of technology, human resources, infrastructure
and organization, represents many business opportunities for
BNP Paribas. The transition is a historic opportunity for
growth, job creation, innovation, and a sizeable market
for entrepreneurs and innovators that provide solutions
to scale. By enabling all its clients to transition to a lowcarbon economy, BNP Paribas believes that it will help create
positive environmental impact worldwide and contribute to asustainable economy with long-term and durable performance.

 Examples of potential climate-related opportunities for BNP Paribas

MAIN BUSINESS LINE
AFFECTED* Stranded assets are assets that have suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities.

TIME HORIZON
TO MATERIALIZEOPPORTUNITY(ST, MT, LT)

Financing the energy transition and low-carbon energy production

 Examples of potential impacts of physical risks

TYPE OF RISK

Corporate and Institutional
Banking (CIB)
BUSINESSAFFECTEDDESCRIPTION

Business and Strategic Risk

Lower revenues because of value chain impacts andbusiness disruption
Stranded assets and fall in value
Under-performance of fundCredit, Counterparty andSettlement Risk

Credit losses
Increased demand for liquidity
Increased capital and insurance costs to cover damages

Financing activities

Market Risk

Sharp fall in prices or revaluation of financial assets andcommodities

Market activities & AssetManagement

Operational Risk

Supply chain disruption
Partial or total destruction of a critical buildings(including data centers)
Decrease in worker productivity

TIME HORIZON
TO MATERIALIZE(ST, MT, LT)

All activities

MT/LT

Commercial, Personal Banking& Services (CPBS)

MT/LT

Internal

MT/LT

Investment and Protection
Services (IPS)MT/LTOperational Scope

Supporting corporate clients in their low-carbon transition through the Low-Carbon
Transition GroupST

Expanding the offers to support the energy renovation of individual homes (green
mortgage loans, special consumer loans,etc.) and SME properties

ST/MT

Developing affordable sustainable mobility offers for individuals, SMEs and midcaps

ST/MT

Supporting SMEs and midcaps clients in their low-carbon transition through the
Low-Carbon Transition for Midcaps & SMEs initiative

ST/MT

Developing more energy efficient and less GHG-emitting leasing products

ST/MT

Engaging with companies to encourage their energy transition

ST/MT

Expanding the range and volume of sustainable investments’ solutions

ST/MT

Developing low-carbon products (positive energy buildings, climate and green
indices, green investments via retail funds, etc.)

ST/MT

Reducing own operational emissions through the decrease of energy consumption in
BNP Paribas’ buildings, the optimization of professional travels and the increase of
low-carbon electricity use

Legend: Short term (ST) is within two years, medium term (MT) is between three to five years, and long term (LT) is after five years.

12

ST/MT

Expanding the range and volume of sustainable financing solutions factoringclimate-related criteria (green bonds and loans, sustainability-linked bonds andloans, etc.)

Legend: Short term (ST) is within two years, medium term (MT) is between three to five years, and long term (LT) is after five years.

6ST

https://www.iea.org/reports/net-zero-roadmap-a-global-pathway-to-keep-the-15-0c-goal-in-reach13STI - STRATEGY: A RESILIENT BUSINESS MODEL TO FACE CLIMATE CHANGE

3

BNP PARIBAS’ BUSINESS MODEL IS RESILIENTTO VARIOUS CLIMATE SCENARIOS
To mitigate these risks and to seize these opportunities,
BNP Paribas embeds climate and transition towards carbon
neutrality at the core of its strategy. This involves expanding
teams dedicated to the support of clients in their transition(Low-Carbon Transition Group), training all employees on these
topics through its Sustainability Academy, developping robust
tools to be used during the decision-making process (Risk ID,
ESG Assessment, etc. see Part III. Section 2. How climate risks
are identified, measured and monitored).

As presented in the previous section, BNP Paribas identifies andanalyses the different climate-related risks and opportunities
that may impact its strategy and business.
Various climate scenarios, published by recognised
international bodies (e.g. IEA, NGFS), are used to investigate
their consequences for the Group. In particular, the Groupassesses the compatibility of its risks’ exposure with a carbon
neutral trajectory, and the extent to which the Bank cancontribute to financing the low-carbon transition while keeping
a very strong resilience. Several climate scenarios were also
used for the European Central Bank (ECB)’s 2022 climate stresstest. These risk and opportunity analyses provide key elements
for the strategy of the Group.

BNP Paribas’ strong commitments on climate can havedifferent impacts on its business relationships with some of its
clients, and on associated business opportunities (see Part II.
Section 3. BNP Paribas supports the low-carbon transition of
all its clients):

These analyses in combination with its transformation
contribute to the Group’s resilience to the environment andclimate, which is made possible by two key elements:

 BNP Paribas supports its clients in their own energy
transition, helping them finance the necessary changes intheir business models and activities.

 Climate risks may vary depending on business lines,
geographical areas, and economic sectors. BNP Paribas’
diversified and integrated business model, the diversity of
the Group’s business lines, sectors and geographies in which
it operates are therefore key assets to mitigate risks of all
kinds, especially climate risks.

 The energy transition provides new financing opportunities(renewable energies, low-carbon hydrogen, energy
renovation, electric mobility, etc.).
Climate-related opportunities are expected to be significantly
more important than the decrease in business resulting fromclimate mitigation. This reflected in the Group’s KPI on the
support for the transition of its corporate clients to a lowcarbon economy, for which BNP Paribas set a target of EUR
200 billion by 2025.

 Sustainability is at the core of the 2025 GTS strategic planand is reinforced by the commitment of BNP Paribas toalign its activities with a carbon neutrality trajectory by
2050. This Group level commitment supports the reductionof BNP Paribas’ exposure to economic players responsible
for generating the highest GHG emissions, and thus of its
exposure to transition risks.

14

II
GOVERNANCE AND
IMPLEMENTATION:A GROWING MOBILISATION TO
ACCELERATE THE ENERGY TRANSITIONII - GOVERNANCE AND IMPLEMENTATION: A GROWING MOBILISATION TO ACCELERATE THE ENERGY TRANSITION

1BNP PARIBAS HAS A STRONG CLIMATE GOVERNANCE

2TOOLS, PROCESSES, AND SET-UPS STRENGTHENED TO ADDRESSCLIMATE CHANGE

1.1 The Board of directors oversees the management of climate-related issues

2.1 Further accelerating the transformation of the whole Group

The Board of directors approves the Group’s CSR strategy. It validates the climate-related metrics, policies and undertakingspresented in the Universal Registration Document (URD) and approves the variable compensation granted to corporate officers,
partially based on the Group’s CSR performance (including climate-related). The Board is regularly informed of the progress madein the implementation of the Group’s CSR strategy. In 2023, it addressed ESG topics 29 times, including the financing of the energy
transition and BNP Paribas’ netzero trajectory, as well as the preliminary analyses of the corporate loan portfolio with regard to ESG
risk factors.

In addition to the appropriate governance described in theprevious section, the effective implementation of BNP Paribas'
agenda to tackle climate change requires a transformation
at all levels of the company. The Group deploys verysignificant resources and efforts into further accelerating its
transformation and developing the right tools, processes andset-ups to support the low-carbon transition of all its clients.
Since 2010, BNP Paribas has gradually deepened and broadened
the integration of its climate agenda and commitments inthe whole Group, from Functions (Finance, RISK, IT, Human
Resources, LEGAL, Publics Affairs, etc.) to business lines. In
particular, the ESG Assessment (Part III. Section 3. Focus on
key risks) is an in-house dedicated tool that allows the Groupto reinforce the strategic dialogue with clients on ESG matters,
including climate issues. More than 3,000 large and very large
corporate clients were evaluated using this tool by the end of2023, representing almost the entirety of the Group’s clientsin these segments. The tool has also been adapted to cover
mid-size clients (with an annual turnover greater than EUR 50
million) and financial institutions throughout 2024.

 Two specialized committees within the Board of directors

1

Corporate Governance, Ethics, Nominations
and CSR Committee (CGEN)

2

Internal Control, Risk Management andCompliance Committee (CCIRC)

This committee advises the Board of directors on the suitability of BNP Paribas’ overall strategy and tolerance forrisks, including climate-related risks, both current and future. It also performs assessment over the achievementof the Group’s risk policy, in coordination with the RISK
Function and in accordance with regulatory requirements.

This committee oversees issues relating to social andenvironmental responsibility. It ensures that the Group
contributes to sustainable and responsible economic development, including climate action.

strengthening the integration of CSR and climate issues into
the Group's strategy and within each of its entities. Amongthem, the Sustainable Finance Strategic Committee chairedby BNP Paribas’ CEO, takes decisions on the Group’s net zerocommitments. It also analyses the impacts and implementationof new regulations related to sustainable finance and the
expectations of the ECB (European Central Bank) regarding
climate and environmental risks.

FOCUS | ESG data as a key lever
A comprehensive combination of ESG data, sophisticatedanalytics, and advanced technology is key to tackle theclimate challenge. BNP Paribas is thus committed todeveloping the right tools to measure its impact on
climate and support material transition of its clients. Oneof the main challenges for BNP Paribas remains theexternal data quality of the environmental climaterelated information.

Since 2021, high level committees have been working on

2.2 Upskilling all employees on climate knowledge and structuring
a network of referent experts

1.2 The management proposes and implements the Group’s climate strategy
For climate-related risks and opportunities, the Chief Executive Officer and the Chief Operating Officers submit a strategy proposal to
the Board of Directors. Jean-Laurent Bonnafé, Chief Executive Officer, is responsible for the climate strategy, managed by the Head ofCompany Engagement. The latter, also a member of the Executive Committee, supervises the CSR Department which is responsible
for operational implementation of the Group’s climate strategy alongside the operational entities.

FOCUS | Share of compensation linked to CSR performance
In the framework of its 2025 GTS plan, BNP Paribas has set a CSR policy management dashboard with 10 specific KPIs ,two of which are climate-related (see Part IV. Section 2. Overview of BNP Paribas' main climate-related metrics, targets,and alignment progress). This CSR dashboard is monitored on an annual basis by the Group's Executive Committee. The
achievement of these CSR objectives determines the payment of 20% of the amount of the loyalty plan awarded in 2023 tomore than 8,200 key Group employees. The achievement of the CSR objectives is also included for one third in the calculationof 15% of the variable compensation awarded for 2023 to the Group’s corporate officers.
7and streamline the integration of climate in all the Bank’s
activities:

For several years, BNP Paribas has been proactive in providing
training on climate-related issues, to all its employees andtailored to different audiences.

 The Low-Carbon Transition Group (LCTG) created in
2021 to support the low-carbon transition of institutionaland corporate clients (see Part II. Section 3. BNP Paribas
supports the low-carbon transition of all its clients).

In 2023, the Group continued rolling out the Climate Fresk (orClimate Collage), a three-hour workshop to understand theessentials of climate issues and take action. In total at end-Q1
2024, more than 25,000 employees had already attended thisworkshop, offered in over 20 countries.

 The Network of Experts in Sustainability Transitions (NEST)
created in 2021 to extend the knowledge of sustainablefinance including climate topics through a network of morethan 700 expert employees.

In addition, in 2022 BNP Paribas launched its Sustainability
Academy, an evolving platform to train its almost 190,000
employees on the issues of the ecological transition andbolster their skillsets in this field. Over a bit more than a year,
more than 100,000 individual employees took part in at least
one training on sustainable finance (1.7 hour and 4.3 training
modules on average by FTE at the end of 2023).

 The ESG Risks and Opportunities expert centre within GroupCSR to develop sector financing and investment policies andsupport business lines.
 The Climate Analytics and Alignment (C2A) team todevelop and implement sector alignment methodologies incoordination with business teams (see Part IV. Section 1: Netzero alignment update of credit portfolio).

Furthermore, communities of environmental and climate
expertise have been created within the Group to accelerate
7

See BNP Paribas 2023 Universal Registration Document, p. 626 for all 10 KPIs, objectives and definitions.

1617

II - GOVERNANCE AND IMPLEMENTATION: A GROWING MOBILISATION TO ACCELERATE THE ENERGY TRANSITION

3

BNP PARIBAS SUPPORTS THE LOW-CARBON TRANSITION
OF ALL ITS CLIENTSSELECTED EXAMPLES OF 2023 CLIMATE-RELATED BUSINESS CASESFINANCING LOW-CARBON ENERGIES

To support its clients in their transition towards global carbon neutrality, BNP Paribas leverages energy sobriety, energy efficiency,
low-carbon energies (primarily renewable) and sequestration of residual emissions. To offer products and services on each of theselevers, the Group mobilises all its expertise and the strength of its diversified and integrated model, including three operational
divisions (Corporate & Institutional Banking, Commercial, Personal Banking & Services, Investment & Protection Services) withspecialized businesses.

ReNew Power, a major Indian player in renewable electricity production, obtained a loan of USD 1 billion to financea portfolio of wind and solar projects of 1.3 GW, backed up
by batteries to provide an uninterrupted energy supply. It
is the most significant financing for a round-the-clock renewable energy project in India. The energy produced will
be sold to the Solar Energy Corporation of India (SECI).
BNP Paribas played the role of lead arranger and hedge bankin this transaction. Hybrid projects of this nature, combining
wind, solar and energy storage, make it possible to optimise
land resources and grid infrastructure, while generating a
reliable electricity supply day and night.

CPBF (Commercial & Personal Banking in France) co-led financing to Kallista, an independent renewable energy’ producer, in a corporate power purchase agreement securing
power supply for green and renewable hydrogen. Under along-term contract deal, Kallista Energy will sell wind-generated electricity to Lhyfe, one of the world’s pioneers in the
production of green and renewable hydrogen. For Lhyfe, thisCorporate Power Purchasing Agreement secures the power
supply needed for its future green hydrogen production
sites, thus consolidating its sustained growth. Kallista will
be able to repower a wind park through financing co-lead by
BNP Paribas and SaarLB.

BNP Paribas was coordinating lead arranger and bookrunner
for a USD 2.5 billion financing to support renewable energy generation projects from AES Corporation, an Americancompany specialised in the energy sector. This credit facility
will finance more than 3 GW of new clean energy construction (solar, wind and energy storage) in the United Statesover a 12-month period.

In Poland, BNP Paribas was a major player in the Baltic Powerproject led by Orlen and Northland Power. A loan of more than
EUR 4.4 billion will enable the construction of the first
offshore wind farm in Polish waters. It comprises 76 windturbines that will provide renewable energy to more than 1.5
million households from 2026. This was the largest offshore
wind project in Europe in 2023.

BNP Paribas supports the sustainable transition of the agriculture sector in many ways across Europe. For instance in Italy,
BNL has worked out a new credit policy aiming to facilitate the financing of the conversion of biogas to biomethane plants.
This initiative from BNL, that followed a decree from the Italian Ministry for the Ecological Transition issued in September 2022,
should allow the acceleration of the conversion of some of the 2.000 operating biogas plants in Italy, in order to produce sustainable fuel for cars and trucks.

FOCUS | The Low-Carbon Transition Groupmobility and industry sectors. In addition to renewableenergy and the battery sector, this platform is particularly
attentive to future technology projects, specifically greenhydrogen.
In addition, the Low-Carbon Transition for SMEs & MidCaps
initiative supports SMEs and mid-sized companies in thetransition to net zero emissions in the Group’s five main
Domestic Markets (France, Belgium, Italy, Luxembourg andPoland) through dedicated tools, advisory and financing
offers.

In 2021, BNP Paribas created the Low-Carbon Transition
Group, a strong platform made up of 200 bankers at end2023 (with a target of 250 specialized bankers by end-2025)
dedicated to supporting international clients, companies andinstitutional investors in accelerating their transition to asustainable and low-carbon economy. A continuum of banking
and non-banking solutions is therefore provided for the
decarbonisation of the economy, and particularly the energy,

1819

II - GOVERNANCE AND IMPLEMENTATION: A GROWING MOBILISATION TO ACCELERATE THE ENERGY TRANSITIONDEVELOPING LOW-CARBON MOBILITY
Arval and BNP Paribas Leasing Solutions announced a newoffering for both companies and individuals across Europethat tackles a key barrier to electric vehicle adoption:
convenient and affordable charging points at home and in
the workplace. At Arval, the package includes leasing anelectric vehicle for companies or individuals, and charging
station installation, maintenance, and even removal andre-use or recycling if needed. For corporate clients, optional employee home charging reimbursement adds further
value. Corporate fleet managers will be able to use “Leasing Solutions Charge & Lease” offer to roll-out and financea charging infrastructure package for their companies withvarious power levels, electric infrastructure, civil works,
signage, and installation support.

BNP Paribas is helping accelerate the development of thebattery sector in Europe, playing a key role in financing large
projects.
 BNP Paribas acted as joint sustainability structuring coordinator during the successful placement of the first EUR
1.25 billion green bond for Stellantis, whose funds will
be mainly dedicated to the design, development and manufacture of 100% electric vehicles and electric vehicles
fuel cells.
 AESC (Automotive Energy Supply Corporation), the world’s leading Japanese company in the design and production of batteries, was financed for an amount of morethan EUR 800 million for the planned construction of agigafactory in France. BNP Paribas acted as mandated
lead arranger. During the first phase of this large-scale
project, it is expected that 9 GWh of batteries will power
200,000 electric vehicles produced each year from 2025
by the manufacturer Renault.

In France, to meet the expansion of bicycle use,
BNP Paribas Personal Finance launched a new longterm rental offer for electric bicycles. The service isprovided as a monthly subscription, with different costlevels depending on the bike, the options chosen andthe length of the contract. Users can use a high-quality bike for a period of 24 or 36 months, which is covered by insurance (breakage, theft, etc.) and serviced annually by a professional. Corporate have access as wellto Arval bike leasing offer for their employees, a longterm rental solution of e-bikes, available in 14 countries, contributing to diversifying mobility means towards
low-carbon practice both for commuting and professional
journeys.

 Northvolt raised USD 5 billion for expansion of Europe's
first circular gigafactory. BNP Paribas acted as Exclusive
Senior Debt Advisor and Tier 1 Senior Mandated Lead
Arranger. This deal represents the largest non-recourse
green financing for a battery cell gigafactory in Europe.
The loan will facilitate the expansion of Northvolt Ett,
Europe's first homegrown gigafactory, as well as the realisation of Northvolt's ambitious plans for battery recycling. The facility recovers battery-grade metals with acarbon footprint that is 70% lower than mined raw materials, thereby enabling a fully integrated, circular battery
production setup that has not previously existed outsideof Asia.

20

FOSTERING ENERGY EFFICIENCYSUPPORTING ENERGY EFFICIENCY HOME ACQUISITIONSAND RENOVATIONSHeidelberg Materials launched inaugural EUR
750 million Sustainability-Linked Bond, for which
BNP Paribas acted as joint bookrunner. The 9-year
SLB has a coupon rate linked to the achievement of
two key performance indicators, namely to reduce
specific net CO2 emissions to 500 kg CO2 per tonneof cementitious material by 2026, and to 400 kg CO2
per tonne by 2030. At Group level, Heidelberg Materials aims to reach net zero carbon emissions by
2050 at the latest.

The energy footprint of housing is a major issue in the ecological transition both for customers and the bank. Across its European markets, BNP Paribas is accelerating and expanding
the support brought to individual customers. The Group offers
dedicated financing and beyond banking solutions to help increase comfort, reduce energy spending while decarbonizing
the residential real estate portfolio. The solutions launched by
CPBF in France, BNP Paribas Fortis in Belgium and BNL in Italy
are detailed in the residential real estate section of the report(See Section IV. Part 1. Net zero alignment update of credit
portfolio).

BNP Paribas Fortis acted as co-sustainability coordinator when negotiating a sustainability-linked
loan of EUR 400 million for Renewi, a waste recycling and recovery company. The interest margin on
the loan will depend on whether Renewi achieves
the objectives it has set itself, namely, to recycle
75% of its waste by 2025 and to reduce its scopes 1
and 2 carbon emissions.

BNP Paribas Polska Bank signed an agreement for up to EUR
100 million to support energy efficiency projects in Polandwith the European Investment Bank. Moreover, the EIB has
also signed with BNP Paribas Bank Polska a cooperationagreement under the European Local Energy Assistance Program, providing to housing associations with technical assistance and energy audits which are necessary in the phase of
the preparation of the investment projects.

CPBF (Commercial & Personal Banking in France)
financed a foundry sand regeneration installation
project for an amount of EUR 3.3 million, an innovative project enabling La Fonte Ardennaise, a major
player in the foundry industry worldwide, to recycle
90% of black moulding sand, and thus save natural
resources, stop the landfill of sand waste and reduce CO2 emissions by 20,000 tonnes per year.

BGL BNP Paribas customers, beside benefiting from preferential rates to buy a home with registered efficient Energy
Performance Certificates (EPC) label (or equivalent), are also
incentivised to carry out energy renovations when buying aproperty, and supported by renovation experts like Actif, providing advice on solutions to improve the energy quality andto optimize the energy performance certificates of their home.

21II - GOVERNANCE AND IMPLEMENTATION: A GROWING MOBILISATION TO ACCELERATE THE ENERGY TRANSITION

FOCUS | Investing in climate opportunities andsupporting the energy transition

BNP Paribas Asset Management updated it Global
Sustainability Strategy in 2023: it will continue to focus
on Energy transition, healthy Ecosystems, and greater
Equality in our societies – its 3Es. It published its own
climate reporting for its 2023 activities detailing theasset manager’s commitments and building on its Net
Zero Roadmap8. BNP Paribas Asset Management aims at
reducing the carbon footprint of its investment portfolios
for in-scope holdings from a 31 December 2019 baseline(91.72 tCO2/million EUR invested) by 30% in 2025 and
50% in 2030. It also aims to align its corporate
investments (equity and fixed income) with carbon
neutrality. It targets 60% investments in companies thatare achieving, aligned, or aligning to net zero9 by 2030
and 100% by 2040. This will enable BNP Paribas AssetManagement to achieve 100% net zero alignment of its
in-scope assets under management by 2050.

While the transition to a low-carbon economy createsrisks, it also generates significant opportunities, which
forward-looking investors may capture with the rightinvestment tools.
 BNP Paribas Asset Management
BNP Paribas Asset Management has a long history ofhelping its clients investing in the energy transition, since
its first climate focused strategy launched in 2002. It has
since brough to market a range of climate-focus products.
It ranks among the largest ESG passive managers in Europe
which reflects its long history in this class, starting withthe first low-carbon ETF in 2008. As of 31 December 2023,
it manages EUR 15.6 billion in Paris-Aligned Benchmarks
and Climate Transition Benchmarks passive strategies. In
2023, it created a new private assets business unit to bring
together its range of activities in this area and launched
the Climate Impact Infrastructure Debt fund. It allows
clients to invest in renewable energy, clean mobility, andcircular economy, including new sectors such as batteries,hydrogen, and carbon capture.

9

https://docfinder.bnpparibas-am.com/api/files/E6A84FBC-4DF0-4506-92A7-721F19394C99
BNP Paribas Asset Management uses a proprietary framework to measure the alignmentof its investments in corporates. This framework is largely inspired by the Paris Aligned
Investment Initiative (PAII) Net Zero Investment Framework. This triple-A (NZ: AAA)
framework is based on various sources: Transition Pathway Initiative (TPI), Science BasedIn addition, BNP Paribas Asset Management worked with agroup of institutional investors for nearly two years tolaunch Nature Action 100 (NA100). After being "softlaunched" in Montreal at the end of 2022, in tandem with
COP15 of the Convention on Biological Diversity, theinitiative was officially launch in 2023.

In addition, BNP Paribas Cardif has committed to allocate
at least EUR 800 million annually between now and 2025
to investments that contribute to the energy transition andinitiatives with an environmental theme. This commitment
encompasses investments in sectors that involve
environmental protection, including the energy transition,energy efficiency, waste recycling and the preservation of
biodiversity. In 2023, BNP Paribas Cardif allocated nearly
EUR 1.1 billion in investments that contribute to the energy
transition and positive impact on the environment, notably
through financing via green bonds and investing in funds
such as the Climate Impact Infrastructure Debt fundlaunched by BNP Paribas Asset Management in 2023.

22

BNP Paribas Real Estate also signed a partnership with
iQspot, a player in energy efficiency that collects andanalyses all of the buildings’ energy consumption data, andallows 16% of energy savings without any renovation.
BNP Paribas Real Estate Investment Management (REIM)
launched at the end of 2020 the European Impact Property
Fund (EIPF). It is the first European institutional real estate
fund that aims to meet the environmental objectives set
out by the Paris Agreement. In late 2023, the fund has
already acquired 10 assets through Europe and begun
deploying ambitious investments plan for improving theirclimate performance.
 BNP Paribas Wealth Management
BNP Paribas Wealth Management is mobilized to offer
climate-related investment solutions by selecting
investment opportunities focused on climate, low-carbon,
net zero, etc. and by incorporating clients’ sustainability
preferences in their investment advice activity and portfolio
management service.

In 2023, BNP Paribas Cardif voted in favour of two climate
resolutions such as “say on climate”. To choose how to
express its votes, BNP Paribas Cardif considers GHG
reduction objectives, the related action plans, and theestablished governance to deal with climate issues.

Through its C. Entrepreneurs fund (along with Cathay
Innovation), BNP Paribas Cardif invested in Beem Energy, aFrench startup promoting the adoption of solar selfconsumption through simple solutions to better understand,control and save the energy. The company has the ambition
to equip over 500,000 homes by 2030 and expand inEurope, particularly in Germany, Italy and the Netherlands.

Targets initiative (SBTi), Climate Action 100+ and Carbon Disclosure Project (CDP). Further
details on this frameowrk are available in BNP Paribas Asset Management's net zeroroadmap available here: https://docfinder.bnpparibas-am.com/api/files/F5EE3377-26CE4DFD-B770-DBD29323D78B.

In 2023, BNP Paribas Real Estate signed a new partnershipwith Materrup that offers clean cement made from
uncalcined clay, a highly abundant, local raw material
derived from waste. This product allows to halve thecarbon footprint of construction sites. It is working with
Materrup on five pilot projects in Lyon and Bordeaux that
represent 81,800 m² of floor space, or 700 dwellings.

BNP Paribas Asset Management opposes management
resolutions on the approval of discharge of the board,
board reelections or financial statements (depending on
the market) at companies that do not properly report on
their carbon footprint (scope 1, 2, and 3 when appropriate)or their climate lobbying activities, nor communicate orconstructively engage about their climate strategy. In
addition, it expects companies identified as the world’s
largest corporate GHG emitters to publicly announce theirambition to achieve net zero GHG emissions by 2050 orsooner. It results in a significant opposition vote at general
meetings for climate-related considerations. In 2023, it
opposed 1,080 resolutions at 200 companies based on the
climate-related expectations. It also supports shareholder
proposals when they align with its ESG expectations. In
2023, it supported 85% of shareholder resolutions related
to climate change and it opposed 55% of say-on-climate
proposals that were within its scope, reflecting proposals
that did not meet its expectations.

As part of its net zero commitments, BNP Paribas Cardif isreducing the carbon footprint of its investments. Its goal is
to decrease the carbon footprint of its directly-held equities
and corporate bonds by at least 23% between end-2020
and end-2024. It also aims at reducing the carbon intensityof directly owned office properties by at least 12% between
2020 and 2030 (-47% achieved between 2011 and 2020),
and the emission intensity of electricity producers in which
it invests to less than 125g CO2/kWh by the end of 2024.

Early in 2024, BNP Paribas Asset Management brought tomarket a new equity strategy: the Global Net Zero
Transition strategy, where it applies the NZ:AAA frameworkwith a just transition lens focusing on engagement in orderto source companies within the MSCI ACWI (All Country
World Index). The strategy includes a charity class fund,where it donates part of the management fee to the charity
Electriciens sans frontières, that builds small scale
renewable energy projects in communities predominantly
located in the Global South. Its goal is to continue toincrease its climate and environmentally theme
investments solutions while embedding climate and net
zero considerations across their range of investment
strategies.

8

BNP Paribas Asset Management has a proactive approach
towards issuers and engage individually, as well as
collaboratively with other institutional investors withaligned goals on climate topics. For example, it co-led
engagement with 10 companies in Europe, the U.S. and Asia
through the Climate Action 100+ Initiative in 2023. BothBNP Paribas Asset Management and BNP Paribas Cardif
are members of this investor-led initiative that collectively
works to ensure that the largest corporate GHG emitterstake the necessary action on climate change.

 BNP Paribas Cardif

In addition, to meet the needs of investors who areincreasing their allocations to sustainable private
investment strategies, BNP Paribas Asset Management
decided to broaden its private markets investment platformby acquiring leading Danish natural resources specialist
International Woodland Company (IWC). This will allow
clients to invest in sustainable forestry, agriculture, andnatural ecosystems, as well as carbon credits andconservation projects.

operates. Its commitments focus on reducing the emissions
from its own operations but also those from products built,
renovated and managed by its business lines, as well as
maximizing the use and limiting the risk of building
obsolescence, supporting and facilitating emission
reductions with stakeholders, and storing and offsetting
residual emissions. On a European scale, its Property
Management activity has structured an offer to leadexisting real estate towards net zero, with a range ofsolutions including energy and zero carbon trajectory,
management of actions to achieve net zero, audit to develop
renewable energies in self-consumption and the integrationof soft mobility.

 Initiatives and stewardship

Since 2008, any client may also benefit from a free bespoke
philanthropy advisory service. One out of four clients isrequesting advice to preserve biodiversity, and focus on
venture philanthropy for innovative green tech(decarbonation, green coal, carbon capture solutions, etc.).

 BNP Paribas Real Estate
BNP Paribas Real Estate has taken 10 commitments10
towards a low-carbon future, aiming to reduce the directemissions related to its business and the indirect emissions
related to the buildings it constructs, manages and10

https://inspire.realestate.bnpparibas/en/commitments/climate-change/23

II - GOVERNANCE AND IMPLEMENTATION: A GROWING MOBILISATION TO ACCELERATE THE ENERGY TRANSITION

FOCUS | BNP Paribas invests to support innovation
for the ecological transition

The Group also supports start-ups by partnering withthem on projects with high added value. TEB, a subsidiaryof the Group in Türkiye, has joined forces with theGerman start-up Plan A to calculate CO2 emissions for its
clients in the Turkish textile and automotive sectors. In
Poland, BNP Paribas Bank Polska invested in the startup Envirly to offer their solution to the bank’s MidCap
customers in order to calculate their CO2 emissions.
Finally, BNP Paribas advised ChargePoly, a specialist in
ultrafast charging solutions for electric vehicles, on its
raising of EUR 15 million in equity.

BNP Paribas has been supporting innovation in the areas of
ecological transition by committing a total of EUR 250
million of equity since 2016 to support start-ups. At the endof 2023, through its Ecological Transition Capital investment
line, BNP Paribas had already invested EUR 87.2 million in
12 innovative companies, including CarbonWorks in France(CO2 capture and recovery using microalgae) and Protix in
the Netherlands (insect factory for animal feed), and ineight funds, including Shift4Good, Clay Capital and Seaya
Andromeda.

In 2023, the Group continued to deploy its impact
investments, via its own budget of EUR 200 million or its
funds on behalf of third parties, by favouring direct equity
investments in corporate clients with a strong social and/or environmental impact. 16 new investments (excluding
reinvestments) were made for a total of EUR 56 million,
including Ecov, a shared mobility operator in areas where
public transport is limited or absent, to promote mobility
that is accessible to as many people as possible while
avoiding CO2 emissions thanks to carpooling lines.

Within this same investment line, the SFDR Article 9 fund
BNP Paribas Solar Impulse Venture, to which BNP Paribas
committed EUR 75 million, completed a closing of EUR
131.2 million at the end of 2023. In 2023, this fund invested
in Hello Watt, which helps individuals reduce their carbon
footprint through the energy renovation of their homes.

24

III
RISK MANAGEMENTIII - RISK MANAGEMENT

1 DETAILED EXPOSURES PER SECTOR

1.2 BNP Paribas reported its potentially sensitive exposures to physical climate risks

Despite steady progress made in developing methodologies for quantitative analysis of ESG risk factors and related impacts on traditional financial risks, there are still limitations, including on the underlying data, which require cautiousness in interpreting theinformation presented herein. Thus, tables and graphs presented in this section can only be assessed on the date of publication ofthis document and must be interpreted mindful of the uncertainties related to ESG methodologies, projections and data used.

1.1 BNP Paribas reported its exposures towards sectors that highly
contribute to climate change11
companies have been identified thanks to a double screening
based on:

The Group’s total exposure to non-financial corporates stands
at EUR 454 billion as of 31 December 2023 including loans
and advances, debt securities and equity instruments not held
for trading. The graph below shows breakdown of exposuresby sector notably those considered to significantly contributeto climate change and may not, under any circum­stances, beinterpreted as an exposure to transition risk as such.

Exposures potentially sensitive to physical climate risk at end-December 2023

1 The identification of counterparties belonging to oil, gas
and coal sectors as identified in the Group’s internal ac­
tivity referential or according to the NACE code declaredby the counterparty.

A - Agriculture, forestry and fishing
B - Mining and quarrying

2 The identification of counterparties deriving their revenues
from the fossil fuel value chain as defined in the Climate
Benchmark Standard Regulation14 obtained from an external data provider.

The exposure towards companies excluded from Paris-aligned
benchmarks12 stands at EUR 25 billion and is mainly composedof exposure towards companies active in fossil fuel13. These

These figures are not comparable with publications fromother banks that have taken other disclosure options andare published for information only. Those figures are a firstattempt to flag exposures potentially sensitive to physical risk
events and should not be understood as direct or integrated
risks15. For further information about the recent and on-goingdevelopment to assess physical climate risks please see Part
III. Section 2. How climate risks are identified, measured andmonitored.

Given the current lack of stability of the models, the data
gaps and the guidelines uncertainty, the Bank has chosen to
apply the same methodology as the previous year in using
the physical risk scenarios of the European Central Bank 2022
climate stress test for this exercise. The results of the flood,heat wave and drought scenarios of the ECB’s 2022 climate
stress test have been adjusted to reflect the materiality ofchronic physical risk factors over the estimated duration of
credit portfolios, by only retaining exposures to non-financial
companies to match with the model expected by the EBA.

C - Manufacturing
D - Electricity, gas, steam and air conditioning supply
E - Water supply; sewerage, waste management and remediation activities
F - Construction
G - Wholesale and retail trade; repair of motor vehicles and motorcycles
H - Transportation and storage

Exposures towards sectors that highly contribute to climate change at end-December 2023

L - Real estate activities
Exposures to other sectors (NACE codes I-K & M-U)

A - Agriculture, forestry and fishing
B - Mining and quarrying0%

C - Manufacturing
Exposures potentially sensitive to physical climate risk

E - Water supply; sewerage, waste management and remediation activities
F - Construction
G - Wholesale and retail trade; repair of motor vehicles and motorcycles
H - Transportation and storage
I - Accommodation and food service activities
L - Real estate activities
Sectors' exposure0%

Exposures towards companies excluded from EU Paris-aligned benchmarks% of total non-financial corporates' exposure

11

14

The information disclosed in this part of the report is detailed in the section of Pillar
3 related to ESG risk factors (see. BNP Paribas’ 2023 Universal Registration Document(URD), chapter 5.11).
12
In accordance with Article 12 (1) (d) to (g) and Article 12 (2) of Regulation (EU) 2020/1818.
13
As per the EBA's definition. This amount integrates the whole value chain's dependency
from the fossil fuel sector, from upstream production to transportation or trading.

26

5%

10%

15%

20%

25%

As per Regulation (EU) 2020/1818, companies active in fossil fuel are those that derive
revenues from exploration, mining, extraction, production, processing, storage, refining or
distribution, including transportation, storage and trade, of fossil fuels with the following
thresholds 1% for coal, 10% for oil, 50% for gas.

15

10%

15%

20%

25%

% of total non-financial corporates' exposure

Sectors' exposure

D - Electricity, gas, steam and air conditioning supply

5%

More detail are published in the chapter 5.11 of the 2023 URD.

27

30%

III - RISK MANAGEMENT2HOW CLIMATE RISKS ARE IDENTIFIED,MEASURED, AND MONITORED

Risk identification and assessment

2.1 Insertion of climate risk management in the risk framework of the Group
Accordingly, climate considerations are incorporated, as risk
factors, in the Group’s existing risk management framework,
processes, and governance systems (see Part II. 1.1 The Boardof Directors oversees the management of climate-related
issues).

In line with regulatory and supervisory expectations,
BNP Paribas considers climate-related risks as risk drivers
that may potentially impact the traditional risk categories
such as credit, market or operational risks. They are notstandalone risks per se.

Portfolios are dynamically managed towards the alignment
targets defined by the Group (see Part IV. Section 1.2 Alignment
progress update on the 2022 and 2023 commitments).

BNP Paribas has gradually deepened and broadened theinsertion of climate risk drivers into its risk management
framework and related lifecycle.

Actions reinforcing the ESG risk management framework
What has been done (until April 2024):

What is next:

 Completion of the internal heat maps of climate transition andsovereign risks, and initial version in the climate physical risks heatmap.

 Continue the development of climate physical risks
and biodiversity heat maps.
 Finalize the roll-out of the ESG assessment for special
purpose vehicules, commercial clients and financial
institutions.

 Completion of the roll-out of the ESG assessment for large
corporates. Launch of the ESG assessment for commercial clients andfor financial institutions.

 Further developments for 2025 ICAAP.

 Comprehensive climate section integrated in the 2024 ICAAP (Internal
Capital Adequacy Assessment Process) with transition risk andphysical risk projections, and participation to supervisor exercices
such as EBA Fit-for-55 climate stress test.

 Further insert climate into Group credit policies.

 Reinforced the insertion of climate factors into Group credit policies.

 Keep on strengthening ESG credit portfolio analysis
by progressively reflecting improvements in ESG data
availability and in methodologies development, notably
use of sectoral climate physical risk heatmap, articulate
the climate stress test with the ESG portfolio analysis
and enlarge portfolio coverage with financial institutions
and commercial clients.

 Update of the ESG metrics integrated into the Group’s Risk Appetite
Statement.

 Include other risk types (market, operational, etc.) for
monitoring.

 Definition of an exploratory market risk dashboard analysing
transition risk.

 Continue working on the operational risk taxonomy,
controls and procedures as needed, leverage on thephysical risk tool.

 Update the corporate portfolio analyses and enlargement of thecredit portfolio coverage to sovereign, including the application ofphysical risks.

 Completion of ESG mandatory trainings within RISK and continued
roll-out of sustainability certifications and additional trainings.

Risk monitoring and reporting
The above-mentioned approaches and tools developed for risk
identification, measurement and control do also constitutetools for risk monitoring, as they enable portfolio analyses andprovide for indicators and insights on the Group’s exposure
towards climate factors. Also, climate factors are incorporated
into the Group's Risk Appetite Statement (RAS). The Group's
RAS is defined consistently with the strategy of BNP Paribas
and includes risk principles dedicated to ESG risks drivers(climate-related elements are included). These risk principles,
coupled with dedicated metrics, define the risk toleranceof the Group on these dimensions. For example, the GroupRAS integrates five metrics with limits to control the Group
achievements with respect to its commitments on thermal
Coal and Oil & Gas upstream financing for 2025 and 2030. In
addition, complementary indicators, resulting from the NetZero targets setting regarding the Oil & Gas, Power Generation
and Automotive sectors, and the Low-Carbon Financing arepart of the Risk Appetite Statement for monitoring purposes(see Part IV. Section 1. Net zero alignment update of credit
portfolio).

Climate factors are integrated into the risk taxonomies of theGroup, as well as into the risk identification process (Risk ID),
which feeds the Internal Capital Adequacy Assessment Process(ICAAP) at Group level. Complementing this process, theGroup produces several heat maps, informing the materiality
assessment. Climate scenario analyses are performed andintegrated in the ICAAP. At counterparty and transaction level,
ESG performance and associated risks are also analysedthrough the ESG Assessment which is fully integrated into thecredit process.
Risk management: solutions & adaptation
To closely control the risk exposure towards sectors particularly
exposed to ESG matters, the Group has issued financing andinvestment policies, classified as sector policies. Group credit
related policies have also been reinforced considering ESG
dimensions.
Exclusion & monitoring lists restrict the activity or increase thelevel of scrutiny placed towards specific sectors or activities(see Part I. Section 1.3 Committed to a net zero economy by
2050: BNP Paribas monitors its financing and investment
activities).
Besides, climate-related criteria are incorporated as relevantin the due diligence performed on customers and suppliers, incovenants and procedures related to new/modified activities
and exceptional transactions.

As part of sector/activity RAS review, the Risk and Development
Policy Committee, gathering Business & RISK representatives,
validates the strategic development plan and underlying risk
profile of the sector/activity under review, including the ESG
dimension.

Risk Appetite Framework
Risk identification and measurement
Materiality assessment
Group-wide risk identification process Climate scenario analysis
 Other portfolio analyses (sectoral concentration, portfolioalignment)
Ad-hoc analyses (e.g. sectoral studies, qualitative
assessments)

Risk mitigation and control

Portfolio analyses :Counterparty / transaction analyses as part of due diligenceprocesses : Application of sectoral policies
 Controversies analyses Exclusion & monitoring lists
 Application of Equator principles
 Other analyses

Risk monitoring

28

29

III - RISK MANAGEMENT

2.2 Identifying the climate-related risk events

The question of the transmission channels

THE FUNDAMENTALS OF RISK ID
BNP Paribas’ risk identification process (Risk ID) is an all-risk forward-looking, annual & continuous comprehensive approach
to identify and assess, in a harmonized manner, the risks that the Group is or might be exposed to. It leads to producing andmaintaining BNP Paribas’ Risk Inventory, i.e. a set of "severe but plausible" elementary scenarios ("risk events") corresponding to
the way the risk types the Group is exposed to could materialize. All risk events are structured according to the same triplet-based
approach.

Risk event description
Severe but plausible scenario
corresponding to the materializationof one of the risk types of
BNP Paribas’ reference risk
type taxonomy

Materiality of the risk event
assessed using a severity/ frequency / imminence pattern(several severity scales are available)

flood in Europe which increases the cost of risk as damages andhigher insurance prices cause a valuation shock for real estate
properties in high flooded areas) must be described and assigned
to one of the risk types of BNP Paribas’ risk type taxonomy.

3 The materiality of the risk event must be assessed using a patternthat relies, mainly, on a tri-dimensional severity assessment /frequency assessment / imminence assessment framework. The
materiality of the risk drivers underlying the risk event is inferredfrom the materiality of the risk event.

2 The risk driver(s) that favour, trigger and/or aggravate the risk
event must be identified (for the flood example here: acute

Regulation, norms & politics

Micro-economics

 Business & strategic risks

 Carbon price or carbon tax

 Acute physical impact ofclimate change

 Energy performance / EPCs

 Losses of business opportunity Credit, counterparty &settlement risks

 New ESG-related regulations  New capital expenditures/increased costs
 Sanctions & fines Operational disruption
 Political decisions(excluding supply chain)Social, health & legal
 Supply chain disruption

Transition due to climatechange risk drivers
 Transition to a low-carbon
economy to mitigate climatechange - policy changes
 Transition to a low-carbon
economy to mitigate climatechange - technologicalchanges Transition to a low-carbon
economy to mitigate climatechange - behavioural changes

HOW ARE CLIMATE CHANGE-RELATED DIMENSIONS INCLUDED IN BNP PARIBAS’ RISK IDENTIFICATION PROCESS?

Governance risk drivers

and/or aggravate the materialization of, virtually, any risk type.
Consequently, out of the 115 risk drivers in BNP Paribas’ risk
driver taxonomy used for Risk ID purpose, 13 risk drivers areassociated to ESG concerns, among which seven are totally or
partially climate change-related (see the table here under).

In coherence with the European Banking Authority’s (EBA) andthe European Central Bank’s (ECB) positions16, BNP Paribas’
Risk ID process covers climate change-related risk dimensions
through a set of risk drivers and not via stand-alone risk types,on the grounds that climate risk drivers can favor, trigger

Physical climate change risk
drivers

 Chronic physical impact ofclimate change

physical Impact of climate change), on the basis of BNP Paribas’
risk driver taxonomy.

1 Any risk event (i.e. elementary scenario, for example: a riverine

MAJOR CATEGORIES OF RISKTYPE THAT COULD MATERIALIZE

ESG TRANSMISSION CHANNELS

CLIMATE-RELATED RISK DRIVERS

 Inadequate governanceregarding management ofenvironmental & social risks
Liability consequences ESG related liability consequences

 Changes in expectations,habits or behaviours

 Lower production
 Lower productivity

 Damage to the reputation

 Impact on wealth and/or
solvency

 Dispute, claims, legal
proceeds

Others Morbidity (e.g. diseases,
pandemics) & mortality

 ESG-related technological change Social unrest Availability & costs of risk
transfer to insurance &re-insurance Migration of populations
Physical & financial assets
 Physical asset damage /destruction

 Market risks
 Asset Liability Management
Treasury risks

Risk materialization

Causes or factors favouring,
triggering or aggravating therisk event, identified based on
BNP Paribas’ reference risk driver
taxonomy

3 Risk event materiality assessment

COMBINAtION1

The figure below presents the climate-related transmission
channels that have been embedded in the identification of climate-related scenarios.

Climate-related transmission channels BNP Paribas 2023 Risk ID methodology

The three key components of any risk event
2 Risk drivers identification

created a first version of an ESG transmission channels taxonomy and integrated it into Risk ID process methodology and IT
application.

The connections between climate risk drivers and the materialization of financial or non-financial risk types into severe but
plausible risk events correspond to the transmission channels.
Understanding and standardizing those transmission channels
is thus a key step to enhance the identification process linked
to climate risk drivers. Consequently, in 2023, BNP Paribas has

 Model uncertainty risk
 Operational risks - Model error
 Operational risks - Compliance Operational risks - Information
Communication & Technologie(ICT) Operational risks – Executionrisks Operational risks - Others(frauds, HR, legal, third-party,etc.) Corporate structure risks
 Regulatory risks
 Insurance underwriting risks

 Increased volatility or shift inprices or values
 Lower financial asset performance Stranded assets or workers

Climate change-related risk drivers, extracted from the BNP Paribas’ risk driver taxonomy
LEVEL 1
TYPE OF RISKDRIVERLEVEL 2TYPE OF RISK DRIVER

Environmental,
Physical risk drivers
Social andrelated to climate
Governance drivers change
Transition risk drivers
related to climatechangeLEVEL 3
TYPE OF RISK DRIVER

RELATION
TO CLIMATECHANGE

Acute physical impact of climate change

Yes

Chronic physical impact of climate change

Yes

Transition to a low-carbon economy to mitigate climate change - policy changes

Yes

Transition to a low-carbon economy to mitigate climate change -technologicalchanges

Yes

Transition to a low-carbon economy to mitigate climate change - behavioural changes

Yes

Governance risk drivers

Inadequate governance regarding management of environmental & social risks

Partial

ESG related liability
consequences

ESG-related liability consequences

PartialConcretely, whenever a climate-related risk driver is selected as underlying a risk event, the relevant ESG transmission channels
that correspond to the way the driver concurs to the materialization of the risk event have to be identified.

16

EBA “Report on Management & Supervision of ESG Risks for Credit Institutions& Investment Firms” [EBA/REP/2021/18] and ECB “Guide on climate-related andenvironmental risks” [Nov. 2020].

30

31

III - RISK MANAGEMENTClimate-related information extracted from BNP Paribas 2023 risk inventory
Leveraging on the 2023 Risk Inventory, analyses have been performed to assess the materiality of climate risk drivers on the
different risk types.
The Sankey diagram below illustrates the materiality relationship between the seven risk drivers totally or partially associatedto climate change and the risk types. Their materialisation is totally or partially explained by climate change-related risk
drivers. The thicker the link, the stronger the relation between risk driver and risk type (expressed in materiality).
Climate related
risk drivers

ESG transmission channels relate to the way climate-related risk drivers could ultimately result in direct or indirect impacts theGroup.
Based on 2023 Risk Inventory, when isolating the risk events that are climate-related, it is possible to extract this infographics
that presents the relationship (in terms of materiality), between climate-related risk drivers and the transmission channels thatcharacterize the way these drivers could lead to negative consequences.
ESG transmission
channelsClimate related
risk drivers
Major risk type
categories

ESG - C&E - Acute physical impact of climatechange (23.1%)(3.0%) Carbon price or carbon tax(2.0%) Energy performance / EPCs
(4.0%) New ESG-related regulations

ESG - C&E - Acute physical impact of climatechange (23.1%)(5.7%) Sanctions & fines(10.0%) Political decisions(47.8%) Business & Strategic risks
ESG - C&E - Chronic physical impact of climatechange (5.7%)

ESG - C&E - Chronic physical impact of climatechange (5.7%)(9.0%) Changes in expeditions, habits or behaviours(9.9%) Damage to the reputation

ESG - C&E - Transition to low-carbon
to mitigate climate change Policy changes (25.1%)

ESG - C&E - Transition to low-carbon to mitigate
climate change policy changes (25.1%)(6.5%) Dispute, claims, legal proceeds(0.5%) Social unrest(0.5%) Migration of populations(33.8%) Credit, counterparty & settlement risks(0.8%) Market risks

ESG - C&E - Transition to low-carbon to mitigate
climate change technological changes (8.4%)(8.9%) Physical asset damage / destruction

ESG - C&E - Transition to low-carbon to mitigate
climate change Technological changes (8.4%)(6.2%) Increased volatility or shift in prices or values(2.7%) Lower financial asset performance(1.4%) ALMT risks(0.1%) Operational risks - Model

ESG - C&E - Transition to low-carbon to mitigate
climate change behavioural changes (23.0%)(6.8%) Stranded asstes or workers

ESG - C&E - Transition to low-carbon to mitigate
climate change Behaviourial changes (23.0%)(0.1%) Model uncertainty risks(3.6%) Losses of business opportunity(3.8%) New capital expenditures / Increased costs(1.8%) Operational disruption (exclud. supply chain)(1.5%) Supply chain disruption(0.0%) Operational risks - ICT(0.3%) Operational risks - Execution, delivery & process
mamangement risks(3.5%) Operational risks - Others

ESG - Inadequate governance regarding management of environmental and social risks (2.3%)(0.2%) Corporate structure risks(4.5%) Lower production(2.0%) Lower productivity(1.1%) Impact on wealth and / or solvency(3.4%) ESG-related technological change

ESG - ESG related liability consequences (12.4%)(11.6%) Regulatory & supervisory risks

ESG - ESG related liability consequences (12.4%)

ESG - Inadequate governance regarding mgmt
of environmental and social risks (2.3%)(2.4%) Availability and costs of risk transfer to insurance& re-insurance(0.2%) Insurance underwriting risks

And when deepening the analysis at a more granular level, it appears that, for some risk types, the fraction of their overall materiality
explained by climate-related risk drivers is significant:

0%

100%

Last, the materiality relationship between ESG transmissions channels and the risk type categories of the most aggregated level ofthe Group risk type taxonomy, for the ensemble of climate-related risk events of 2023 Risk Inventory, is displayed in the following
diagram.
ESG transmission
channels

Major risk type
categories

Carbon price or carbon tax (3.0%)
Energy performance / EPCs (2.0%)
New ESG-related regulations (4.0%)

Business risk

Sanctions & fines (5.7%)

Reputational risk

Political decisions (10.0%)

Strategic risk

Changes in expeditions, habits or behaviours (9.0%)

Generic default risk

(47.8%) Business & Strategic risks

Damage to the reputation (9.9%)

Specialized lending risk

(33.8%) Credit, counterparty & settlement risks

Dispute, claims, legal proceeds (6.5%)
Social unrest (0.5%)
Migration of populations (0.5%)

Migration risk
Sector concentration risk
Product concentration risk

Physical asset damage / destruction (8.9%)(0.8%) Market risks

Increased volatility or shift in prices or values (6.2%)(1.4%) ALMT risks

Collateral & guarantee concentration risk

Lower financial asset performance (2.7%)

Liquidity & funding risk

Stranded assets or workers (6.8%)(0.1%) Operational risks - Model

Legal risk

Losses of business opportunity (3.6%)(0.0%) Operational risks - ICT(0.1%) Model uncertainty risks(0.3%) Operational risks - Execution, delivery & process
mamangement risks(3.5%) Operational risks - Others

New capital expenditures / Increased costs (3.8%)
Operational disruption (exclud. supply chain) (1.8%)
Supply chain disruption (1.5%)
Lower production (4.5%)
Lower productivity (2%)
Impact on wealth and / or solvency (1.1%)
ESG-related technological change (3.4%)

People & property Security risk
Risk related to other or all regulations
Part of the risk type materiality explained by climate risk drivers(0.2%) Corporate structure risks(11.6%) Regulatory & supervisory risks(0.2%) Insurance underwriting risks

Availability and costs of risk transfer (2.4%)
to insurance & re-insurance

32

33

III - RISK MANAGEMENT

2.3 Assessing potential impacts of climate risks through climate scenario analyses andstress testing

FRANCE 25%
Below 2°C

Delayed transition
43.6% Others

related risks are fully integrated. As such, the Group’s Internal
Capital Adequacy Assessment Process (ICAAP) incorporates
climate-related risks analysis. The exercises carried out so far
show relatively limited impacts at Group level for scenarios
where the transition is successfully implemented, and thecollective net zero objective is reached by 2050. Under thesescenarios, physical risk impacts also have limited financial
consequences for the Bank, even on a relatively long-term basis.
They do, however, allow for the identification of exposures insome sectors and countries that would face higher risk underthese scenarios.

Over the past few years, BNP Paribas has built a robust
platform for stress testing and financial simulations covering
all risk types and business lines. The Group has also developed
capabilities to assess the potential impact of climate scenarios
on the credit quality of corporate clients and the geolocation ofreal estate to assess the impact of physical risk events (suchas riverine flood). Exercises based on scenarios have increasedin number, diversity, and sophistication.
In 2020-2021, BNP Paribas took part in the pilot program
conducted by the French ACPR (Prudential Supervision and
Resolution Authority), which applied “shocks”, taken fromdifferent NGFS (Network for Greening the Financial System)
climate risks scenarios, to the risk parameters. The objective
was to estimate the possible impact of the transition andphysical risks on bank balance sheets and in terms of expected
loss. In early 2022, BNP Paribas participated in a European
exercise supervised by the ECB.

In 2023 BNP Paribas has tested its corporate portfolio against
three transition scenarios: the Integrated Assessment Model(IAM), the Regional Model of Investment and Development(REMIND) below 2°C (Orderly scenario) and delayed transition(Disorderly scenario), and current policies scenarios for which
the NGFS has provided scenario-conditional pathways of both
macro-economic and climate variables in late 2022.

In 2023, BNP Paribas contributed to the EBA Fit-for-55 Climate
Stress Test by providing specific climate data on the clients.
The Group has also developed internal simulations both ontransition and physical risks that contribute to its capital
adequacy assessment. It is worth noting that some stresstests use the current exposures of the Bank without taking into
account any future change or adaptation, while others allow
the use of a dynamic balance sheet approach, reflecting boththe public commitments taken by the institutions and thetransition impacts on the banking books.

The projection of the Cost of Risk (CoR) until 2050 is performed
with the Bank’s internal modelling framework. First, the latterencompasses a dynamic balance sheet module that enables toreflect sectoral reallocation of the Bank’s unsecured portfolio
but also EPC mix change on the secured by real-estate
portfolio. Moreover, the framework leverages on an in-housesolution that generates credit rating change at client-level inorder to account for credit worthiness evolution in adequacywith the scenario.

18.3% Portofolio secured by real estate
16.2% Real-estate activities and construction

18.3%

43.6%

11.3%

11.3% Other Manufacturing

16.2%
3.8% 3.6%
1.4% 0.7% 0.6% 0.5%

3.8%

Power generation and supply

3.6%

Transportation

1.4%

Mining and quarrying

0.7%

Agriculture

0.6%

Steel and Cement

0.5%

Waste collection and sewerage

0.1%

Coke and petroleum

BELGIUM 13%

Below 2°C

18.3%
11.3%

43.6%

16.2%
3.8% 3.6%
1.4% 0.7% 0.6% 0.5%

Delayed transition

39.5% Portofolio secured by real estate
29.2% Others
14.1% Real-estate activities and construction

29.2%

14.1%

9.1%

Other Manufacturing

3.6%

Transportation

1.3%

Steel and Cement

29.2%

1.29% Power generation and supply

1.3% 1.29%

39.5%

9.1%

1.2%

Agriculture

0.7%

Waste collection and sewerage

3.6% 1.2% 0.7% 0.1%

Mining and quarrying

14.1%
1.3% 1.29%

39.5%

9.1%

3.6% 1.2% 0.7%

ITALY 11%
Below 2°C

Delayed transition
38.1% Others
25.7% Other Manufacturing

Climate scenario analysis is an integral part of the Group’s risk
management and financial steering system, in which climate-

25.7%

38.1%

8.8%

8.8%

Portofolio secured by real estate

7.7%

Power generation and supply

7.6%

Transportation

5.1%

Real-estate activities and construction

2.5%

Steel and Cement

5.1%

2.5%

2.2%

Mining and quarrying

7.7% 7.6% 2.2%

0.8%

1.1%

Waste collection and sewerage

0.5%

0.8%

Agriculture

0.5%

Coke and petroleum

1.1%

DASHBOARD | Relative impacts of an orderly (below 2°C ) and a disorderly (delayed transition) scenario vs. current policies
scenario per region and sector

25.7%

38.1%

8.8%

5.1%

7.7% 7.6%

2.5%
0.8%

2.2% 1.1% 0.5%

REST OF EUROPE 24%
The indicator used is the relative increase in the total Cost of
Risk in percentage of the Exposure at Default (EaD) between
the current policies scenario and the other scenarios at 2040
when the transition is in full swing. The colour represents thesize of the impact as follows:

The results of the stress test are illustrated in the dashboard
below for corporates. Each geographical area has a weightequivalent to its share in the total exposure of the portfolio.
The surface associated to each sector (or group of sectors), as
defined in the Statistical Classification of Economic Activities inthe European Community (NACE codes), is proportional to its
weight in the total exposure to the corresponding geographicalarea.

Low impact 		Moderate impact

Below 2°C
42.8% Others
22.3% Other Manufacturing

22.3%

Slight moderate impact

9.1%

Hight impact

42.8%

34

Delayed transition

5.1% 3.4%
7.6% 6.3% 2.3% 0.7%

0.5%

9.1%

Power generation and supply

7.6%

Real-estate activities and construction

6.3%

Transportation

5.1%

Portofolio secured by real estate

3.4%

Mining and quarrying

2.3%

Steel and Cement

0.7%

Waste collection and sewerage

0.5%

Coke and petroleum

0.1%

Agriculture

35

22.3%

42.8%

7.6%

6.3%

9.1%

5.1%

3.4%

2,3%

0.7% 0.5%

III - RISK MANAGEMENT

2.4 New tools to further assess and monitor climate risk

US 12%
Below 2°C

Delayed transition
45.2% Others
31.7% Other Manufacturing
9.3%

Power generation and supply

4.2%

Real-estate activities and construction

3.8%

Mining and quarrying

3.4%

Transportation

4.2% 3.4%

1.1%

Steel and Cement

0.8%

Waste collection and sewerage

3.8%

0.6%

Coke and petroleum

31.7%

9.3%

45.2%

1.1%

0.8%

0.6%

 BNP Paribas monitors climate-related developments at country and sovereign levels

31.7%
4.2% 3.8%

45.2%

9.3%

3.4%

1.1%

0.8%

0.6%

REST OF THE WORLD 16%
Below 2°C

Delayed transition

18.6% Transportation
16.7% Other Manufacturing

16.7%

7.7%

31.5%

9.5%

8.0%

3.3%

3.9%
0.3%
0.26%

0.2%

9.5%

Power generation and supply

8.0%

Mining and quarrying

7.7%

Real-estate activities and construction

3.9%

Steel and Cement

3.3%

Coke and petroleum

0.3%

Waste collection and sewerage

0.26% Portofolio secured by real estate
0.2%

16.7%

7.7%

31.5%

9.5% 8.0% 3.3%

3.9%
0.3%
0.26% 0.2%
0,2%Agriculture

 LESSONS LEARNT: Challenges are important for supervisors,
banks and the academic world regarding the quality of new
data and the development of new modelling approaches.
Additional important work on the definition of coherent andplausible climate stress test scenarios is necessary.

 THE RESIDENTIAL REAL ESTATE PORTFOLIO has been tested
against riverine and pluvial flood risks under RCP17 8.5 2085
conditions assuming baseline macro-economic conditions
using external estimations of asset shocks.
In the Group’s ICAAP, a precise location level is collected
and consequently, much more granular price shocks at theproperty-level are conveyed than in the 2022 ECB climate
stress test with Nomenclature of Territorial Units for Statistics
3 (NUTS3), taking into account the fact that all properties are
not hit at the same time during a realistic flood event.

17

18.6%

Therefore, country and sovereign climate risks indicators are
becoming central to the Bank’s cross-border activities. The
Bank has recently built its in-house, proprietary gauge of ESG
and Climate & Environment (C&E) sovereign risk assessment,
based on variables from recognised external sources,
including the NGFS, and covering more than 180 countries.
As a ranking does not fully capture a sovereign’s ESG profile, thetransformation of data into metrics relies on the “distance tobest performance” method, across a series of ESG dimensions.
A “distance to frontier” score captures the gap between an
economy’s performance and a measure of best practices,
either represented by those of the best performing countries
or by an ideal target.

31.5% Others

18.6%

The E dimension results in a combination of nine metrics,
related to acute and/or chronic climate physical risks andto climate transition risks: (1/2) the exposure to natural
catastrophes and to water scarcity, (3/4) the under-waterand above-ground biodiversity risks, (5) the greenhousegases emitted by the economy, (6) the GDP’s dependency to
the fossil fuels production industries, and finally (7/8/9) the
sensitivity of the economies to three climate risks scenarios
designed by NGFS, i.e. the “Fragmented World” scenario, the“Delayed Transition” scenario, and the “Net Zero emissions”
scenario. The S and G dimensions are built on more traditionalcountry risk analysis factors: the human development, theincome distribution, the respect of civil rights, the government
effectiveness and respect of the rule of law, the gender equality,
political stability, the fight against corruption, etc.

Country risk is an essential component in the assessment of
the creditworthiness of the Group’s counterparties involved incross-border transactions, and sovereign risks are central tothe analysis of the risks associated with the Bank’s exposure to
public and banking counterparties.

 BNP Paribas is progressing towards a vision of the residual physical risk
Following the internalisation of various physical risk models
over the past few years (including riverine and coastal floods
as well as chronic heat), BNP Paribas has recently added
drought and tropical cyclone to the range of hazards analysedinternally. The Group has also identified strategic partners forenhancing the in-house capabilities, with a larger and/or richer(e.g. higher-resolution) set of hazards, for example pluvial(flash flood), hail and wildfire. Analysis is generally performed
across a number of science-based scenarios, mostly CMIP18(e.g. SSP126, SSP245, SSP585). Time horizons range from 2030
to 2050 and, for some hazards, up to 2100.

of power generating assets and apply different damage anddisruption models. Nevertheless, sourcing corporate asset
data across all sectors (location, type of assets, size andstrategic importance) has remained a key challenge to expand
the analysis across the entire portfolio. In this context, it is also
worth noting that BNP Paribas has engaged in dialogues withkey clients to benchmark, test and refine the calculations, aswell as reflect on adaptation measures.
For the purpose of portfolio stress-testing (e.g. ICAAP), moresophisticated approaches have also been used, typicallycatastrophe models relying on large numbers of climateconditioned events.

Those physical risks models have been applied, in an
exploratory way, to the Group’s residential and commercial
real estate portfolios, as well as on its main offices and data
centres. Regarding the corporate portfolio, BNP Paribas has
focused its efforts on some key sectors where the required
asset-level data is readily available, allowing the development,
calibration and application of more precise vulnerability
functions. For example, in the case of the power sector,
BNP Paribas’ approaches distinguish between different types

18

RCP: Representative Concentration Pathway is a greenhouse gas concentration trajectory
adopted by the IPCC. Four pathways are used for climate modeling and research (RCP 2.6, 4.5,
6.0 and 8.5 named after a possible range of radiative forcing values in the year 2100).

36

Recognising the fact that physical risks are primarily borne by
the insurance and reinsurance industry (and in some instances
public authorities), the next step is to achieve a residual risk
view, by reflecting insurance coverage and/or public schemes
and understanding the way the insurance protection gap will
evolve under future climate scenarios.
Please see the illustration on the next page.

CMIP Phase 6 (CMIP6) - Coupled Model Intercomparison Project (wcrp-cmip.org).

37

III - RISK MANAGEMENT

The ﬁrst step in assessing physical risk
is to use climate models to identify
geographical areas at risk lower end of
the pyramid.

Physical climate risks(floods, sea level rise, drought, etc.)

GROSS RISK

Exposure(asset location)

Vulnerability

The assets in scope must then be
identiﬁed, and their location reconciledwith the climate hazards maps.
The vulnerability which is speciﬁc to each
asset characteristic must also be taken
into account.

(asset type and characteristics)

RESIDUAL RISK

Adaptationand insurance
coverage

The ESG Assessment tool covers five ESG dimensions including climate and environment
Answers to preliminary questions trigger speciﬁc questions

Climate (E)Environment (E)Preliminary
questions todetermine
the activityof the client

Lastly, any possible adaptation measuresand insurance coverage must be taken into
account to get a clear view of the risk.

Pollution & Biodiversity
Human Rights - Workforce

Social (S)Human Rights - local Communities and Consumers

Governance (G)Governance & Business Ethics

at counterparty, transaction and collateral levels. The global
framework surrounding the credit process has been enhanced,
in particular through the update of the various credit policies,
encompassing dedicated and adapted ESG sections (including
climate) and leveraging on the ESG Assessment outcomes.

This analysis on these five ESG dimensions provides a global
overview of the ESG profile of the client, which is completed by
the controversies analysis for a full evaluation.

3

The qualitative conclusions of the ESG Assessment (including
controversies analysis) are provided by the RelationshipManager and Group CSR if applicable and challenged by RISK
as the control function, to allow a well-balanced evaluation of
the performance and risk.

FOCUS ON KEY RISKS

Credit risk is expected to be one of the most impacted risks by
ESG and climate risk drivers and is also the most mature interms of assessment methodologies.
However, the Group also adapts its risk framework to embed
ESG and climate-risk drivers in other risk processes to capture
potential impacts of these drivers, as the case may be.

ESG Assessment helps decision-making through the usual credit
processes, in strengthening and documenting due diligence
and analysis on climate-related and environmental aspects

3.1 Credit Risk: ESG Assessment, clients' environment and climate performance, review andchallenge during the credit process
For corporate clients, BNP Paribas has developed the ESG Assessment. This tool enables a more harmonized, systematic,
comprehensive, and formal review of climate topics through the credit chain: from origination to credit granting, monitoring andreporting.
This specific analysis aims to identify companies for which
weak ESG performance and risk management could generatecredit, investment or reputation risks, as well as negativeenvironmental and social impacts.

The ESG Assessment enables to: Verify client compliance with BNP Paribas sector policies,
especially with climate-related criteria.
 Assess how prepared the Bank’s corporate clients are to
manage all ESG challenges, including climate-related ones.

As of end of 2023, over 3,000 analyses of very large and large
corporate clients were carried out, covering almost all clientsof these scopes thanks to 19 sectoral questionnaires.

 Ensure that their strategies and commitments address key
ESG risks specific to their sector and, more specifically forclimate, their GHG emissions reduction plans and their net
zero strategies.

In 2023, the ESG assessment framework has been enhanced
thanks to new questionnaires adapted to relevant mediumsized corporate customers (companies with sales of over
EUR 50 million, selected on risk-based criteria) and financial
institutions, with the aim to cover those clients by end of 2024.

 Assess the maturity of their ESG strategy and their ability
to monitor the key stakes of their industry, and to publish
indicators.
 Confirm if action plans have been implemented.
 Analyse the materiality of the Bank’s corporate clients ESG
controversies and their potential impact on the client.

38

3.2 Operational Risk
Thanks to these plans, which aim at mitigating these risks,
BNP Paribas is in a favorable position to react quickly to climate
and environmental events that could impact its activities.

Regarding the operational risk, leveraging on climate
scenarios, the exposure of BNP Paribas' operations to thedifferent types of physical risks is assessed throughout its
various locations worldwide. This exercise supports the designof business continuity plans that are commensurate with thelocal vulnerabilities of the Group’s premises.

On a broader scale, the integration of ESG-related topics in
BNP Paribas operational risk framework continues to ensure
the identification, assessment and reporting of operationalrisks potentially driven by climate and environmental risks.

3.3 Market Risk
and physical risks, based on a blend of internal and external
information (sectoral heatmaps, ratings, etc.). The dashboard
is used to monitor trading portfolios and where applicable,
to drill-down into specific issuers of concern. However, thedashboards indicate that the risks are not material on theportfolios in scope.

Market risk is the risk that arises from movements in market
variables, such as stock prices, interest rates, exchanges
rates, and commodity prices. Over the course of 2023,
BNP Paribas has continued to strengthen its RISK ID process toensure climate and environmental risk drivers are adequately
considered in the context of its Global Market activities. The
Bank has also continued to improve its market risk exploratory
dashboard, which provides a consolidated view of transition

39

IV
METRICS, TARGETS &ALIGNMENT PROGRESS :MONITORING THE ACCELERATION
TO NET ZERO BY 2050

1 NET ZERO ALIGNMENT UPDATE OF CREDIT PORTFOLIO
1.1 Introduction
targets are set for 2030, which is considered as an appropriate
time horizon taking into account the respective industries’
decarbonisation pathways and underlying challenges. As
the Group further accelerates its pivot away from financing
fossil fuels and towards financing low-carbon energies, it isalso adapting its Oil and Gas indicators with the objective tobetter measure and monitor the impact of its strategy in termsof absolute emissions. The Group is introducing a financed
emissions indicator for its Oil and Gas portfolio, together withan associated 2030 reduction target that is replacing the earlier
emission intensity indicator, which has become obsolete in the
new context.

BNP Paribas decided to gradually align its loan portfolio withthe objectives of the Paris Agreement. In 2021, the Group
committed to setting intermediary alignment targets for themost carbon-intensive sectors. To date, it has published targets
for six sectors - Oil and Gas, Power generation, Automotive,
Steel, Aluminium and Cement.
In 2024, the Group is setting portfolio alignment targets forthree additional sectors: Aviation, Shipping, and Commercial
Real Estate, while also disclosing its approach to the Residential
Real Estate and Agriculture sectors. The new alignment
targets are informed by science-based and industry-endorsed
scenarios, published by reputable organisations. All new Methodological choices
BNP Paribas' review of highly emitting sectors focuses on its loan portfolio, comprised of loans and contingent facilities
such as guarantees or letters of credit, and balance sheet securities. The portfolio is measured in terms of credit exposure,including drawn and committed undrawn amounts, except for the Oil & Gas financed emissions metric which is computed
using outstanding (drawn) amounts. As part of its objective to finance a carbon-neutral economy by 2050, the Bank aims
to set intermediary targets which are both realistic and ambitious. With the exception of the Oil & Gas sector, for which theindicators are based on credit exposure and on absolute emissions, the metrics for all sectors are based on physical emission
intensities, supplemented with one operational KPI where relevant.
A methodology has been developed for each sector to assess BNP Paribas’ loan portfolio carbon emissions baselines andtrajectories. This work leverages both our in-house expertise and external market initiatives19, to which the Group actively
contributes, such as the working groups sponsored by the UNEP FI20 or by the Center for Climate-Aligned Finance of the Rocky
Mountain Institute21. These methodological choices comply with the NZBA guidelines, and our targets are benchmarked
against the Net Zero Emissions by 2050 Scenario of the IEA (IEA NZE 2050) or, in certain cases, against other science-based
scenarios when they present distinct advantages in terms of granularity, scope or metrics.

BNP Paribas methodological building blocks for sector’s initial assessment and target settingDatagatheringExperts &literature review
Understand thevalue chain,sourceof emissions andnet zero drivers

1

Collect companies
2
ﬁnancial andemissions data

FinancialscopingDatagatheringSet the rules todeﬁne the portfolio 3
exposure in scope

Assess available
4
science-based
scenarios to reachnet zero by 2050

Pegasus Guidelines for the Aviation Sector and Poseidon Principles working group for
Shipping. For Steel and Aluminium, the working groups of the Center for Climate Aligned
Finance.

Targetsetting

Design the5methodology tocompute theportofolio climate
performance

Set ambitious
6
and realistic
interim targets
to reach net zeroby 2050

Group to adjust sector baselines and trajectories in futurereports in accordance with the best practices set by climate
science. Methodological evolutions will be monitored ona regular basis, as well as potential impacts on trajectoryintermediary points. See also our disclaimer, p. 70.

BNP Paribas strives to use the best available data andmethodologies for each of the covered sectors. As datareliability, methodologies and standards continue to improve,
BNP Paribas expects that regular reassessment will beneeded to ensure that its models and analyses reflect new
developments, key trends and metrics. This might lead the19

Calculation
methodology

20
21

41

https://www.unepfi.org/net%20zero-banking/https://climatealignment.org/ and https://rmi.org/

360° SECTOR OVERVIEW - CLIMATE ALIGNMENT DASHBOARD

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

OIL & GAS

~0.8%
Exposure

Upstream

Midstream

Oil Exploration & Production

Transportation & Storage

Reﬁning

Gas Exploration & Production

Transportation & Storage

Processing & Distribution

Emission scope

2

1

CO2

GHG considered3

Distribution

Decrease in ﬁnancing to upstream activities (%)
2020
2022

-15%

-12%

2023

-43%

-37%

2025

-25%

-12%

Oil

Oil & Gas

Emission intensity (gCO2e/RTK)~0.7%

AVIATION
Parts
manufacturing

Exposure

AircraftShipbuilding
manufacturing

Infrastructure
Infrastructure(e.g.
(e.g,airports)
ports)
Maintenance

956
<785

Scrapping

Aircraft use

785

Credit risk exposure to upstream activities (€bn)

CH4

5.0

4.4

-80%

5.3

3.0

4.6

3.5

-30%
3.7

Emission scope2

1

GHG considered

3

CO2

CH4

N2O

2022

2030

1.0
3Q2022 4Q2022 2023
Oil

~1.9%

POWER GENERATIONPower generation

Emission scope

2

CO2
Emissions~0.7%
Exposure

Suppliers

Car manufacturers

332

2020

AUTOMOTIVE

2030

Emission intensity (gCO2/kWh)

208

Electricity off takers

GHG considered

3

3Q2022 4Q2022 2023
Gas

Exposure

Transmission - Distribution

1

2030

148

<146

2023

2025

8.3

Emission scope

Shipbuilding

1

2

3

GHG considered

CO2

151

<137

CH4

Construction

Building
ownership

5.4

N2O

2022

COMMERCIAL REAL ESTATESuppliers

5.6-6.4

Ship
Scrapping

Maintenance / Retroﬁtting
Ship use~1.4%
Exposure

183

Distributors

Emission intensity (gCO2e/dwt.nm)

Exposure

Infrastructure (e.g,(e.g. ports)
ports)
InfrastructureParts
manufacturing

Emission intensity (gCO2/km WLTP)~0.5%

SHIPPING

2030

Emission intensity (kgCO2e/m2)
28.4
16.7-19.5

Building
exploitation

Recycling
Recycling

13.5

121
Emission scope

1

2

3

CO2

GHG considered

2020

Exposure

STEEL

Emissions
Emissions
~0.3%

2023

Emission scope

2025

Emission intensity (tCO2/t crude steel)

1

2

3

GHG considered

CO2

CH4

N2O

F-gases

Ironmaking &Steelmaking

Emission scope

1

2

Rolling & Coating

RESIDENTIAL REAL ESTATE

~8.5%

1.6

CO2

2022

ALUMINIUM~0.04%

59.7

Exposure

1.5

Suppliers

Construction<1.2

Building
ownership

Building
exploitation

1.2

GHG considered3

Downstream

2030

Emission intensity (kgCO2e/m2)

Exposure

Mining2022

2023

Emission scope

2030

1

2

3

GHG considered

CO2

Recycling

35.5

34.4
20.2

CH4

N2O

F-gases

Group

Italy
France2022

Belgium

Emission intensity (tCO2e/t aluminium)

Exposure

Mining / reﬁning

Smelting

Transformation

6.2

Downstream

5.8

8.9

1

2

3

GHG considered

PFC

CO2

2022

~0.1%

2023

2030

1

Clinker & Cement
manufacturing

2

3

VALUE CHAIN SEGMENT(S) / EMISSION SCOPE NOT COVEREDComments on metrics shown in the Climate Alignment Dashboard:

Emission intensity (tCO2/t cementitious product)

Exposure

Emission scope

BNP PARIBAS 2025/2030 TARGETIEA NZE 2025/2030 BENCHMARK (IAI 1.5DS BENCHMARK FOR ALUMINIUM, MPP PRU FOR AVIATION, DNV 1.6° FOR SHIPPING, CRREM V2.02 FOR REAL ESTATE)CEMENT

Limestone quarrying

BNP PARIBAS UPDATED METRICVALUE CHAIN SEGMENT(S) / EMISSION SCOPE COVERED<5.6

Secondary production

Emission scope

BNP PARIBAS BASELINE

GHG considered

Downstream (e.g. concrete)

CO2

42

0.67

0.64

2021

2022

<0.51

2030

• Emission intensity (all sectors excluding Oil and Gas): necessary to measure CO2 (or CO2 equivalent) relative emissions, and therefore to evaluate a
sector's progress towards decarbonisation.
• Exposure %: sector exposure corresponding to the value chain segments in scope as a share of total BNP Paribas gross exposure to credit risk as of 31
December 2023 for Oil and Gas, Power, Automotive, Steel and Aluminium, as of 31 December 2022 (baseline year) for Aviation, Shipping, Commercial
Real Estate and Residential Real Estate, and as of 31 December 2021 (baseline year) for Cement.
• Emissions scope and GHG considered: for additional details, see each sector’s section in the following pages.

0.47

43

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

1.2 Alignment progress update on the 2022 and 2023 commitments
Oil and Gas

Emissionscope

GHG
considered

Scenario

1, 2 & 3

CO2
CH4

IEA NZE 2050

Data sources

Sector share of total
emissions- IEA NZE scenario
c. 40% of global GHG emissions- Wood Mackenzie(of which c. 15%- 2006 IPCC Guidelines
for scope 1 & 2)222023 Credit exposure

Sep 30, 2022
Baseline

2030 Target

Metricc. 0.4% of BNP Paribas’
total gross exposure tocredit risk

Upstream Oil: 5.0
Upstream Gas: 5.3< 1.0 (-80%)< 3.7 (-30%)

Credit exposure to upstream
Oil and Gas in EUR billion

 SECTOR DYNAMICS

While replacing the earlier emission intensity metric, which
has become obsolete at portfolio level in the context ofthe strong acceleration of the Group’s upstream exposure
reduction targets, BNP Paribas intends to continue to use theoperational emission intensities indicators for its internal
assessment of individual Oil and Gas companies' performance.
The Group’s financed emission indicator is subject to certain
limitations usual for this kind of metrics (use of estimates,
potential reporting date mismatches, etc.). It has been tailored
to measure the impact of the Group’s upstream exposure
reduction strategy and as such may not be comparablewith other similar metrics, including the financed emissions
reported under Pillar 3 or other reporting requirements.

The 2030 financed emissions target is set at 8.2 MtCO2e,
representing a 70% reduction compared to a September 2022
baseline of 27.3 MtCO2e. The target is benchmarked against
the IEA NZE scenario which involves a reduction in Oil andGas emissions of 34% between 2022 and 2030. It also takes
into account the Group’s objectives in terms of reducing
upstream exposure as well as its targets to reduce the weightof the fossil fuel financing in its energy production financing
portfolio to 10% by 2030. As of end of 2023, the metric stoodat 15.9 MtCO2e, representing a 42% reduction vs. the baseline.

The financed emissions indicator formula reads (simplified):
Financed emissions metric = ∑ emissionsc x Drawn amounts c(Equity + Debt)c
c = company

The Group has similary committed to decrease its upstream
Gas financing (EUR 5.3 billion at the end of September 2022)
by more than 30% by 2030.

Over the course of last year, the Oil and Gas sector has
continued to be impacted by the unstable geopoliticalsituation, resulting in energy supply tensions on a global
scale, with strong repercussions in the European market andsignificant volatility in energy prices globally.

The Group also decided to no longer provide any financing
dedicated to the development of new Oil and Gas fields,
regardless of the financing method (project financing, reservebased lending, FPSO)24, nor to non-diversified upstream Oil
players.

In Europe, the shortage in Russian natural gas supply in 2022 andthe resulting energy uncertainty have required the identification of alternative supplies such as liquefied natural gas (LNG)
imports (with related infrastructure build-up), essentiallycoming from the US and the Middle East. In that context,
LNG became the base source of natural gas supply into
Europe reaching 35% of the overall supply in 202223 and in
2023.
In 2023, BNP Paribas has further accelerated its objectives
to reduce the financing to upstream Oil and Gas, while also
pursuing its efforts to support its clients engaged in the transition. Together with the deployment of low carbon financing
at scale, we expect the security of natural gas supplies toremain high on the European countries’ agenda in years to
come.

BNP Paribas first introduced in 2021 and then reinforced in
2022 a set of 2025 objectives to reduce its credit exposure to
the upstream Oil and Gas activities.
In January 2023, this ambition was substantially strengthened
and extended to 2030: BNP Paribas has committed to reduce
its upstream Oil financing to less than EUR 1 billion by 2030,
i.e. an 80% decrease compared to its exposure amount of
EUR 5 billion at the end of September 2022.
Source : IEA - https://iea.blob.core.windows.net/assets/2f65984e-73ee-40ba-a4d5bb2e2c94cecb/EmissionsfromOilandGasOperationinNetZeroTransitions.pdf

Baseline

2023 Results

2025 Target

Upstream Oil Credit Exposure

Dec 31, 2020

-43%

-25%

Upstream Oil and Gas Credit Exposure

Dec 31, 2020

-37%

-12%

Metrics

Baseline

2023 Results

2030 Target

Sep 30, 2022

-40% (EUR 3.0bn)-80%

Upstream Gas Credit Exposure

Sep 30, 2022

-34% (EUR 3.5bn)-30%

 FINANCED EMISSIONS METRIC

Overview of Oil and Gas financed emissions metricSep 30, 2022

2023 Result

2030 Target

27.3(baseline)

15.9(-42%)

8.2(-70%)

23

44

Metrics

Upstream Oil Credit Exposure

The financed emissions indicator builds on the PCAF
methodology and is specifically tailored to measure andmonitor the impact of the Group’s exposure reduction
strategy in terms of absolute emissions. It covers scope 1 &2 emissions for upstream and refining, together with scope
3 emissions for upstream (end-use combustion). The scope
1 & 2 emissions include methane emissions which need todecrease by 75% by 2030 compared to 2020 levels under the
IEA NZE scenario.

 OPERATIONAL METRICS: UPSTREAM OIL AND
UPSTREAM GAS CREDIT EXPOSURE

Overview of Oil and Gas operational metric

As of end 2023, BNP Paribas had already exceeded its 2025
upstream Oil and Gas and upstream Oil financing reduction
targets (respectively -12% and -25%) vs. December 2020, withactual reductions of -37% and -43%. It is also well on trackwith its 2030 objectives as can be seen in the table on thefollowing page.

In order to better measure and monitor the impact of its
pivot away from financing fossil fuels and towards financing
low-carbon energies, the Group is introducing a financed
emissions indicator for its Oil and Gas portfolio, together withan associated 2030 reduction target. The baseline is set at
30 September 2022, which is in line with the baseline for
the Bank’s 2030 upstream Oil and Gas exposure reduction
targets.

As of 31 December 2023, exposure to upstream Oil and Gas
represented c. 0.4% and exposure to upstream Oil and Gas
and refining represented c. 0.8% of BNP Paribas’ total gross
exposure to credit risk.

22

Attribution factors are computed for upstream and refining
entities using outstanding (drawn) amounts and balance
sheet items (equity and debt). The attribution factor is subject
to a certain degree of inherent volatility related to year-onyear fluctuations in company values or changing drawing
patterns. In order to reduce potential distortion associatedwith company book fluctuations, the attribution factors arecomputed using 3-year averages for equity and debt.

24

Source : WEO 2023 - https://iea.blob.core.windows.net/assets/86ede39e-4436-42d7-ba2aedf61467e070/WorldEnergyOutlook2023.pdf
Floating production storage and offloading.

Metrics
Financed emissions (MtCO2e)

Note: The Group’s financed
emissions metric is computed
using the following data sources: CO2 and CH4 emissions for scopes

1 and 2 (MtCO2e per annum)
are taken from Wood Mackenzie
for each upstream or refining
counterparty.

CO2 emissions for scope 3
are calculated based on O&G
volumes extracted by eachcounterparty, using data sourced
from Wood Mackenzie to which
Emission factors computed using
IPCC 2006 and IEA data areapplied.

 Equity and Debt = company data

consolidated by BNP Paribas,
three-year averages.

BNP Paribas' 2030 target is more ambitious than the IEA NZE scenario which involves areduction in Oil and Gas emissions of 34% between 2022 and 2030.

BNP Paribas partnership with Kayrros
In 2023, BNP Paribas formed a landmark research & development partnership with Kayrros - a global environmental
intelligence firm. Kayrros uses artificial intelligence to process satellite images and track global methane emissions in nearreal time. BNP Paribas teams intend to build on these methane tracking technologies to work towards developing moreaccurate industry-level methane metrics using different modelling techniques, including geospatial data analytics. The Groupwill leverage Kayrros’ expertise to deepen its understanding of the methane footprint and enhance its engagement with oil
and gas companies. The project aims to supplement the existing corpus of knowledge on methane emissions quantification
while promoting best practices in data measurement, analysis and reporting. Its aim is to effectively contribute to the toolkit
available to banks to measure their progress towards the methane abatement goals of IPCC (AR6).

45

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

Power Generation

Emissionscope

GHG
considered

Scenario

Data sources

Sector share of total
emissions

1

CO2

IEA NZE 2050

- IEA NZE scenario- Asset Impact- IEA WEO 2022

c. 32% of global
GHG emissions

2023 Credit exposure

2020 Baseline

2025 Target

Metricc. 1.9% of BNP Paribas’ total
gross exposure to credit risk

208

146 (-30%)

gCO2/kWhEmission
scope

Automotive

GHG
considered

3(Tailpipe
emissions)

CO2

Metricc. 0.7% of BNP Paribas’ total
gross exposure to credit risk

183

137 (-25%)

gCO2/km WLTP

BNP Paribas’ portfolio emission intensity significantly decreased
in 2023 (148 gCO2/kWh) compared to 2022 (179 gCO2/kWh). This
improvement is due to the decrease of coal and gas in the technology
mix, the increase of the Bank’s exposure to clients in the renewableenergy field, and the updating of client’s data.

2023 saw a solid growth in production and sales of lightduty vehicles, driven by pent-up demand which followed
supply shortages in the previous year. Much of the growth
was carried by electrified car sales, which however noticeably slowed in the later part of the year. A certain
retrenchment in electric vehicles subsidies in Europe, theglobal rise of interest rates, and remaining limitations inthe ‘ease of use’ of battery electric vehicles all played their
part.

In 2023, BNP Paribas accelerated its financing role bysupporting its clients in the renewable energy sector
leading to the decarbonisation of the industry.
As of 31 December 2023, exposure to Power Generation
represented c. 1.9 % of BNP Paribas’ total gross exposure
to credit risk.

2022

2023

2025
TargetShare of coal (%)

10

8

7

5

<5

Share of renewables (%)

57

62

60

65

>66

Metrics

 OPERATIONAL METRICS: SHARE OF COAL AND
SHARE OF RENEWABLES
The share of coal in the capacity mix of our financed
Power Generation portfolio continued to decrease from
7% in 2022 to 5% in 2023, as a direct consequence of theongoing enforcement of BNP Paribas’ coal policy, which
entails to no longer finance companies that use coal
to produce electricity in the EU and OECD countries by
2030, and in the rest of the world by 2040.

Emission intensity(gCO2/kWh)26

Renewable energy: wind and marine energy, photovoltaic solar energy, concentrated
solar energy, hydroelectricity, geothermal energy, bioenergy (including biofuels
except for first generation).

182

2022
179

2023
148

2025
Target<146

The portfolio’s emission intensity decreased by 16 gCO2/km WLTP30
to reach 151 gCO2/km in 2023. In addition to the increased shareof electrified vehicles in our clients’ production, it was driven by
the continued efforts of the Group’s automotive clients to reduce
the emissions of their models with combustion engines.
Overview of Automotive operational metric and emission
intensity metric

As of 31 December 2023, the NZBA Automotive28 exposure
represented represented c. 0.7% of the Group’s total gross
exposure to credit risk.

 OPERATIONAL METRICS: SHARE OF ELECTRIFIEDVEHICLES29
As a result of the above market developments, the share ofelectrified vehicles in the powertrain technology mix of the
BNP Paribas’ financed automotive manufacturing portfolio
continued to increase, albeit at a slower pace, reaching
15% in 2023 compared to 14% in 2022.

2021

2022

2023

2025
TargetShare of electrified
vehicles (%)

4

7

14

15

>25

Emission intensity(gCO2/km WLTP)

183

176

167

151

<137

• Emission factors per technology from Asset Impact, focusing
on tailpipe emissions of new vehicles sold (i.e. excluding
current fleet in service) based on average standard CO2
emissions across manufacturer and vehicle type per km
driven based on the WLTP norm.

See the detailed elctricity mix by capacity in our 2023 URD p. 656.
28
29

46

2020

• Powertrain technology mix per counterparty (in % of vehicles
produced) from S&P Global. The produced fleet is segregatedacross five powertrain mixes: Internal Combustion Engine(ICE), Hybrid, Plug-in Hybrid (PHEV), Battery Electric Vehicles(BEV) and Fuel-Cell vehicles (FC).

• Latest updated capacity factors per technology & implied emission
factors per technology sourced from the IEA World Energy Outlook
2023. Capacity factors per technology measure how often an
electric generator operates over a specific period, using a ratio(expressed as a percentage) of the actual output to the maximum
possible output over that period.

27

Metrics

Note: the Group’s emission intensity is calculated using thefollowing data sources:• Installed capacity per technology per counterparty (in MW)
sourced from Asset Impact. This data is used to estimate theportfolio generation capacity mix as well as to compute theportfolio emissions intensity.

In the World Energy Outlook report published by the IEA
in 2023, the global coal and the renewable capacities
represented 24% and 31% respectively in 2022.

IEA – Electricity 2024 – Analysis and forecast to 2026 and IEA Renewables 2023 –Analysis and forecasts to 2028

208

2021

 EMISSION INTENSITY METRIC

Note: the Group’s emission intensity is calculated using the following
data sources:

The share of renewables26 was up to 65% in 2023
compared to 60% in 2022. Overall, the share of lowcarbon energies (i.e. renewables and nuclear) also
increased from 69% in 2022 to 74% in 202327.

25

2020

- Asset Impact
2025 Target

In 2023, the global demand for electricity grew by 2.2%25
caused by a strong growth in China which more thancompensated the decrease in the USA and the EU. In the
renewable field, capacity additions increased by almost
50% to nearly 510 gigawatts with a strong accelerationin China. Global CO2 emissions from power generation
increased by 1% in 2023, mainly due to a rebound incoal-fired power generation, especially in China andIndia, which counterbalanced a reduced hydropower
output driven by droughts.

2021

c. 10% of global
CO2 emissions- S&P Global

2020 Baseline

 SECTOR DYNAMICS

2020

IEA NZE 2050

2023 Credit exposure EMISSION INTENSITY METRIC

Metrics

Sector share of
total emissions

Data sources- IEA NZE scenario

 SECTOR DYNAMICS

Overview of Power Generation operational metrics and emission
intensity metric

Scenario

In our methodology defined as light-duty vehicule manufacturing.
Electrified vehicles refers to a range of technologies that use electricity to propel avehicle including BEV: Battery Electric Vehicle, PHEV: Plug-in Hybrid Electric Vehicle,
FCV: Fuel Cell Vehicle.

30

47

The Worldwide harmonized Light vehicles Test Procedure (WLTP) is a global standard
for determining the levels of pollutants, CO2 emissions and fuel consumption for light
duty vehicles.

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

Emission
scope

Steel

1, 2 & 3
cat. 1GHG
considered

CO22023 Credit exposure

Sector share of total
emissions

Scenario

Data sources

IEA NZE 2050

- IEA NZE scenario- Commodities Research
Unit (CRU)- Public client disclosures

c. 7% of global CO2
emissions2022 Baseline

2030 Target

Metric1.2 (-25%)

tCO2/t crude steelc. 0.3% of BNP Paribas’ total
gross exposure to credit risk

1.6

 SECTOR DYNAMICS

As of 31 December 2023, the steel sector represented c. 0.3% of
BNP Paribas’ total gross exposure to credit risk.

Metric2022

2023

2030 Target

Emission intensity(tCO2/t of crude steel)

1.6

1.5

<1.2

Note: The Group’s emission intensity is estimated using thefollowing data sources:• Emission intensity baseline calculated for each furnace
based on specific boundaries (raw material preparation
including performed by third party providers for non-fully
integrated steelmakers, iron making and steel making)sourced from CRU.

 EMISSION INTENSITY METRICBNP Paribas' portfolio emission intensity decreased in 2023
(1.5 tCO2/t of crude steel) compared to 2022 (1.6 tCO2/t ofcrude steel). This improvement is due to the decrease of theemission intensity of some clients, partly thanks to energy
and material efficiency initiatives. BNP Paribas' steel portfolio
remains below the worldwide average emission intensity of
1.8 tC02/t crude steel and in line with the IEA 2030 target.

• 2030 emission intensity: when available most recent
publicly announced emission reduction commitments
otherwise CRU estimates.

Scenario

Data sources

Sector share of total
emissions

1&2

CO2
PFC31

IAI 1.5 Degree
scenario- IEA 1.5 Degree scenario- Commodities Research
Unit- IEA NZE scenario

3% of global
CO2 emissions

2023 Credit exposure2022 Baseline

2030 Target

Metric

0.04% of BNP Paribas' total
gross exposure to credit risk

6.2

5.6 (-10%)tCO2e/t aluminium

Overview of Aluminium emission intensity metric

In 2023, primary aluminium production increased by 2% at
70.6 million metric tonnes, mainly driven by an increase in
China (strong growth in solar modules and electric vehicles)
and in the Gulf Cooperation Council countries while Europe
decreased its production notably due to weak demand andfloating/unhedged power tariffs32.
c. 0.04 % of BNP Paribas’ total gross exposure to credit risk.

2022

2023

2030 Target

Emission intensity(tCO2e/t of aluminium)

6.2

5.8

<5.6

• Emission Intensity baseline calculated for each aluminium
smelter sourced from CRU.
• 2030 emission intensity: when available most recent
publicly announced emission reduction commitments
otherwise CRU estimates.

 EMISSION INTENSITY METRICBNP Paribas’ portfolio emission intensity decreased in 2023
(5.8 tCO2e/t of aluminium) compared to 2022 (6.2 tCO2e/t ofaluminium). It is mainly due to clients’ improvements. It
remains well below the worldwide average (11.5 tCO2e/tof aluminium in 2022) as the Bank continues to focus its
financing, on average, on clients operating with relatively low
emission intensities.

32

MetricNote: the Group’s emission intensity is estimated using thefollowing data sources:

As of 31 December 2023, the aluminium sector represented

31

48

GHG
considered SECTOR DYNAMICS

Overview of steel emission intensity metric

In 2023, global crude steel production was almost the sameas in 2022 reaching 1,891 million tonnes: China’s production
was flat due to a weaker demand from the construction
sector while growth in India and Russia compensated capacity
reduction in the EU.

Aluminium

Emission
scope

PFC: Perfluorocarbon.
Source: International Aluminium Institute.

49

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

CementEmissionscope

GHG
considered

Scenario

Data sources

Sector share of total
emissions

1 (Gross33)&2

CO2

IEA NZE 2050

- IEA NZE scenario- Clients' public disclosures

c. 7% of global CO2

2022 Credit exposure2021 Baseline

2030 Target

Metricc. 0.1% of BNP Paribas' total
gross exposure credit risk

0.67

0.51 (-24%)

tCO2 /t cementitious
product

1.3 2024 new portfolio alignment approaches and targets
Emissionscope

GHG
considered

Scenario

Data sources

Sector share of
total emissions

1 & 3, cat. 3 (airlines)
or 3, cat. 13 (lessors)
Well-to-Wake

CO2
CH4
N2O

MPP35
Prudent
scenario- PACE36- MPP Prudent scenario- Public client disclosures

2 to 3%of global CO2
emissions2022 Credit exposure

2022
Baseline

2030 Target

Metricc. 0.7% of BNP Paribas' total gross
exposure to credit risk

956

785 (-18%)

gCO2e/RTK (Revenue
Tonne Kilometre)emissions

Aviation SECTOR DYNAMICS
Global cement production declined significantly in 2022, down
5% and driven by China (-11%). China remains the leading
cement producer, with 51% of global production, where India isincreasing its share in global production34.

BNP Paribas’ portfolio. The average emission was further improved by the Group increasing its exposure to lower emittingclients. Overall this led to a material year-on-year reduction inemission intensity of more than 4%.

In 2022, major cement players have worked to reduce theircarbon intensities by optimising the production parameters(clinker to cement ratio, energy efficiency, cement content). In
the near future, these elements will remain the main driverof decarbonisation, together with the use of alternative products for cement. Carbon capture and storage solutions will be
required to maintain the decarbonisation trend in the longer
term. Some of our clients are now planning first introductionsof these technologies by 2030.

Overview of Cement emission intensity metric
MetricEmission intensity(tCO2/t cementitious
product)

2021
0.67

2022
0.64

2030
Target<0.51

Note: The provided data relate to year-end 2022, as BNP Paribas
relies on clients’ data and public commitments announced
in annual reports which became available throughout 2023.
Emission data coverage represents 96% of BNP Paribas’ credit
exposure (2021: 90%).

As of 31 December 2022, the cement manufacturing activities
represented c. 0.1% of BNP Paribas total gross exposure tocredit risk.

 SECTOR CONTEXT
sectors decarbonise, Aviation’s share in overall emissions is
expected to be amplified in the future, driven by the continued
growth of the sector. At this pace, air transport cumulative
GHG emissions between 2022 and 2050 could sum up to
47 GtCO2e and exceed the 1.5°C carbon budget of the sector bya factor of more than two.

Aviation connects people, provides access to goods andservices and enables trading across geographies. It is therefore
fundamental to the world economy. In 2019, prior to thepandemic - induced volatility in air traffic, the air transport
sector represented EUR 3.5 trillion (4.1% of the world’s GDP).
The Aviation decarbonisation path starts from a hard to abate
framework: in 2019 pre-pandemic GHG emissions from thesector contributed to roughly 2 to 3% of global total emissions(1.2 GtCO2e).

Numerous stakeholders in the aviation value chain have broadlycommitted to net zero by mid-century, with intermediatetargets, but the path to reaching that goal remains complex.
Given the capital-intensive nature of the sector and the lack ofreadiness of alternative lower emission technologies, achievingcarbon neutral operations will require time and massive capital
investments, initially supporting a wider uptake of Sustainable
Aviation Fuels (SAF).

The current projections of the International Air Transport
Association (IATA) estimate that demand for air travel in 2050
could exceed 10 billion air passenger journeys - more thandoubling 2019 levels - as the global economy continues todevelop in the coming years and a larger share of emerging
economies' population adopt a regular flying mode. As other. EMISSION INTENSITY METRIC

Parts
manufacturing

Over 2022 the collective decarbonisation efforts of the sector

AircraftShipbuilding
manufacturing

have led to a reduction of the average emission intensity of

Infrastructure
Infrastructure(e.g.
(e.g,airports)
ports)
Maintenance

Scrapping

Aircraft use~95% of absolute CO2 emissions

Parts
manufacturers
LegendIn-scope

Original
Shipbuilding
equipment
manufacturers

Aircraft operators
Aircraft lessors

Recycling actors

Out of scope APPROACH
BNP Paribas’ portfolio emissions intensity measurement leverages on the methodology outlined by the Pegasus Guidelines.

lines and scope 3 category 13 (downstream leased assets) for
lessors.

Financial scope
Secured and unsecured exposure (drawn and committed undrawn amounts), encompassing commercial and export credit
agency-insured lending. As of 31 December 2022, exposure to
the Aviation sector represented c. 0.7% of BNP Paribas total

Emissions are measured on a well-to-wake basis, which includes the emissions released during combustion, as well as
upstream fuel emissions (which are negative for Sustainable
Aviation Fuels). All Kyoto Protocol GHGs (including CO2, CH4
and N2O) are in scope.

gross exposure to credit risk.

Value chain

Emission scope

BNP Paribas’ portfolio emissions intensity measurement focuses on the operations of commercial aircraft, whether owned
by airlines or lessors, and which represent c. 95% of the total
CO2 emissions along the value chain.

Scope 1 and scope 3 category 3 (fuel and energy-related activities which are not included in scope 1 or scope 2) for air33

Scope 1 emissions on a gross basis, i.e. including emissions released by the
combustion of alternative fuels – excluding biomass.

34

50

Source: IEA, Tracking Cement.

35
36

Mission Possible Partnership.
Platform for Analysing Carbon Emissions.

51IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

By 2030, BNP Paribas targets a reduction of 18% of its Aviation
portfolio emission intensity vs. the 2022 baseline, representing
785 gCO2e/RTK, aligned with MPP PRU scenario projections.

Metrics
Emission intensity defined in grams of CO2e per Revenue Tonne
Kilometre (RTK), with RTK a unit of traffic measurement corresponding to one metric tonne of payload carried one kilometre. This metric is used in the Pegasus Guidelines and has
several advantages: (i) RTKs encompass all types of payloadi.e. passengers, belly freight and dedicated cargo traffic, (ii) it
reflects airlines efforts to improve emissions intensity throughload factor optimization, and (iii) it is consistent with SBTi’s
guidance for the aviation sector.

This reduction target is highly dependent on a small number ofenablers such as operational efficiency, which may be affectedby individual operational strategies from airlines and otherstakeholders (e.g. civil aviation authorities), as well as thescaling up and availability of SAFs. It does not consider any
carbon offsetting measure and assumes that the share of cargo
aircraft, which typically exhibit lower emission metric pertransported weight than passenger aircraft, remains marginalin BNP Paribas' Aviation portfolio.

Data sources
BNP Paribas leverages on the data collected directly fromclients and through PACE (Platform for Analysing Carbon
Emissions), one of the Pegasus Guidelines qualified third-party
data provider.

 DECARBONISATION ENABLERS
Aviation’s unique requirements, including passenger safety,
weight and size constraints, long innovation cycle and the highcost and/or limited scale of key decarbonisation levers depict
the challenges the sector faces towards more sustainable
travelling and, ultimately, net zero flying by 2050.

 BENCHMARK METHODOLOGY & TARGET SETTING
BNP Paribas has elected to use the Prudent scenario of theMission Possible Partnership (the "MPP PRU scenario") asa benchmark for the decarbonisation of its Aviation lending
portfolio. The MPP PRU scenario (i) consists in a 1.5°C-aligned
trajectory for Aviation, (ii) is based on robust and credible
industry-backed assumptions in terms of traffic forecasts
and gradual technological developments, (iii) differentiates
passenger and dedicated cargo operations, and (iv) is thereference benchmark used in the Pegasus Guidelines.

The decarbonisation of aviation encompasses - beyond
limiting air travel demand - operational efficiency, fleet
renewal, SAFs and novel aspirational propulsions (hydrogen,battery-electric and hybrid aircraft). Near term solutions rely
more on enhancing operational efficiency, renewal of fleet andgradual introduction of sustainable fuels, which are the threelevers considered for setting the BNP Paribas aviation portfolio
2030 target. Longer term enablers (after mid-2030s) include
wider SAFs offtake and the adoption of electric, hybrid andhydrogen-powered propulsions that at 2050 horizon will havethe potential to serve regional, short-haul and perhaps somemedium-haul markets. To achieve its 2030 target, BNP Paribas
recognizes that these enablers are not fully in the hands of
its clients. Several factors are also highly dependent on policy
support and industry collaboration across the value chain –including for the future availability and price of SAF.

We have also considered the IEA NZE scenario, which is
however currently less adapted to the Aviation sector on somekey parameters (traffic forecasts, scope, type of emissions
covered, metrics, granularity).
BNP Paribas Aviation Emission Intensity(2022 and 2030, Well-to-Wake gCO2e/RTK)BNP Paribas
Emission intensity(gCO2e/RTK)

956

Baseline
2030 Target

2030

GHG
considered

1 & 3, cat. 3
Well-to-Wake

CO2
CH4
N2O

Scenario

Data sources- DNV 1.5 Initiative scenarios- IMO Revised- DNV/IMO
Strategy- Asset Impact- Det Norske Veritas- Public client disclosures

Sector share of
total emissions
2-3%of global CO2
emissions2022 Credit exposure2022 Baseline

2030 Target

Metric

0.5% of BNP Paribas' total
gross exposure to credit risk

8.3

5.6 - 6.4(-32% to -23%)

Annual Efficiency
Ratio (AER) in
gCO2e/dwt.nm

 SECTOR CONTEXT
international shipping to reach net zero “by or around” 2050
(compared to its 2018 initial target of a 50% reduction in GHG
emissions with respect to 2008 levels). Emissions are now
considered on a full lifecycle (i.e. well-to-wake) basis.

Representing approximately 80% of global trade by volume,
seaborne transport is therefore essential to the world economy, including in terms of energy and food security.
The shipping sector contributes to 2-3%37 of global greenhousegases emissions and is deemed a hard-to-abate sector. At thesame time, it remains by far the most carbon-efficient mode ofcommercial transport today in terms of emissions per distancetravelled.

European authorities have also stepped up their ambitions.
From 2025 onwards, the FuelEU Maritime regulation will set
requirements to reduce the average annual well-to-wake GHG
emission intensity of onboard energy used by ships trading in
the EU between 2025 and 2050.

According to the IEA Stated Policies Scenario (IEA, 2023 WEO),
without further actions, carbon emissions from the sector are
expected to increase from 855 MtCO2 to 1,098 MtCO2 between
2022 and 2050, as seaborne trade volume grows by 2.9% peryear on average over the same period. Regulations, policies,
and industry initiatives remain key to achieve sufficient reductions in GHG emissions.

Confronted with the need for a technological and operational
shift, the sector already embarked on voluntary decarbonisation efforts by way of operational improvements, such as slow
steaming, optimisation of weather/voyage routings, technicalretrofits (installation of energy saving devices), efficiency gains
and the development of nascent alternative propulsion technologies.

In July 2023, the International Maritime Organization (IMO)
revised its GHG strategy and declared an ambition for

Infrastructure (e.g,(e.g. ports)
ports)
InfrastructureParts
manufacturing

Shipbuilding
Shipbuilding

Maintenance / Retroﬁtting

Ship use

Ship
Scrapping~95% of absolute CO2 emissions

-18%

785

2022

MPP PRUSCENARIO

Shipping

Emission
scope

Operational
efficiency

Better utilization of aircraft (higher loadfactor), air traffic management, flight andground operations, incremental improvements on turbine and aerodynamics.

Fleet
renewalLarger share of new generation aircraft inoperations.

Sustainable
Aviation
Fuels (SAF)

Sustainable Aviation Fuels (SAF) having
lower lifecycle emissions than traditional jet-fuel. SAFs are drop-in fuels andcan be used without changes to aircraft
and airport infrastructure. But they require a massive ramp up of production andneed significant quantities of sustainable
feedstock (among others without competition with food or feed) and energy.

785

Parts
manufacturers
Legend2030
MPP PRU Benchmark

At 2022-end, BNP Paribas Aviation portfolio compares
favourably to the global industry average, at 956 gCO2e/RTK.
This performance can mainly be attributed to the to the larger
share of young aircraft in the Bank's global portfolio comparedto the world average.

Novelaspirational
propulsions

Introduction of novel propulsion technologies including hybrid, hydrogen and battery-electric aircraft.

Ship owners & operators

Recycling
actorsOut of scope APPROACH
Emissions are measured on a well-to-wake basis, which includes the emissions released during combustion on board ofa vessel, mainly for propulsion purposes, as well as upstream
fuel emissions. CO2, CH4 and N2O are included.

Financial scope
Secured and unsecured exposures (drawn and committed undrawn amounts), encompassing commercial and export credit
agency-insured lending. As of 31 December 2022, exposure to
the Shipping sector represented c. 0.5% of BNP Paribas total
gross exposure to credit risk.

Value chain
BNP Paribas’ portfolio emission intensity measurement focuses on cargo vessels once built, delivered
and in operations, which represent the vast majority of
the GHG emissions along the value chain, BNP Paribas’
approach excludes vessels under construction.

Emission scope
Scope 1 and scope 3 category 3 (fuel and energy-related activities which are not included in scope 1 or scope 2) of shipowners & operators.
37

52

In-scope

Shipbuilders
Shipbuilding

The Fourth IMO GHG Study 2018.

53

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

Metrics

By 2030, BNP Paribas targets a reduction between -23% and-32% in emission intensity, representing an intensity ranging
from 5.6 to 6.4 gCO2e/dwt.nm. The lower end of our 2030 emis-

BNP Paribas measures the Annual Efficiency Ratio (AER) of eachof the vessels in-scope. The AER is the most widely used carbon intensity metric in the industry today, being mandated by
the IMO for existing regulations (IMO DCS38, CII39) and therefore the standard applied by ship finance institutions. The AER
is reported in grams of CO2 equivalent per deadweight tonne
times nautical miles (gCO2e/dwt.nm), reflecting the emissions
generated in relation to the maximum cargo capacity of theship and the distance sailed.

 DECARBONISATION ENABLERS
While the industry has already started to improve its energy
efficiency with practical measures (e.g. engine improvement,
weather routing, electric onshore powering at berth, etc.), theability of the shipping sector to substantially reduce its GHG
emissions remains contingent on the ramp-up in scalable
volumes of low or zero emissions fuels and the uptake of
new propulsion technologies able to run on such new fuels.
Such developments related to alternative fuels are beyond
the business model of shipping companies alone, as a result,the decarbonisation of the sector would require strong andsustained efforts from multiple stakeholders across the energy
and maritime industries, as well as coordinated governmentand regulatory actions and incentives.

To obtain an aggregated metric at portfolio level, the emission
intensities are weighted by the corresponding loan exposures.
Passenger shipping has been excluded due to a different metriccomputation, the need of a specific emission intensity formulaand a lack of comparability with cargo vessels.
Data sources
BNP Paribas leverages on emission intensities sourced fromDNV Maritime Advisory / IMO Data Collection System for vessels falling within the Poseidon Principles’ alignment calculation scope and from Asset Impact for counterparties within theremaining exposure.

Among the key enablers of the sector’s decarbonisation,
alternative fuels stand out by offering significant reductions
in well-to-wake GHG emissions, such as green/blue ammonia,
methanol, LNG, biofuels and low-carbon hydrogen. However,
to make them economically and practically viable, theirproduction must be scaled up with their processing using
renewable energy. The challenge is compounded by today's
current outlook for multiple fuelling alternatives rather than
one single clean fuel of choice. Additionally, ships capableof using these fuels need to be built as well as the supply
infrastructure/bunkering logistics enabling to fuel them.

 BENCHMARK METHODOLOGY & TARGET SETTING
BNP Paribas has reviewed several decarbonisation pathways
proposed for the global shipping industry from a variety ofsources (IEA, IMO, SBTi, Bureau Veritas, DNV). Our target
setting exercise was informed by these scenarios, however,
our underlying assumptions and metrics computations
are best compared to the DNV bottom-up approach which
was designed at the request of a group of banks involved in
Shipping, including BNP Paribas.

BNP Paribas

8.3-32% to -23%

5.6-6.4

2022

TRAJECTORY

2030

Baseline
2030 Target

5.4

2030

Fleet
renewal /upgradeVessel retrofits and introduction of newbuilds with the highest energy efficiency
propulsion available.

Speed
reduction

Benefits of slow steaming might be narrowed depending on the geopoliticalcontext, logistics bottlenecks and/or market conditions on a given shipping segment.

DNV 1.6°C Benchmark

Alternative
Fuels uptake

At end-2022, BNP Paribas Shipping portfolio emission intensity
stood at 8.3 gCO2e/dwt.nm.

International Maritime Organization Data Collection System.
39
Carbon Intensity Indicator.
38

54

Low- and zero- emissions alternative fuelsrequire a significant increase of production
to drive costs down.

Scenario

1, 2, and whenapplicable partof 3, cat. 13(downstream
leased assets)

CO2,
CH4
N2O
F-gases40

CRREM41
Global Pathways
V2.02

Data sources

Sector share of
total emissions- EPCs collected from clientsc. 10% of global
and public databases
GHG emissions42- Public client disclosures

2022 Credit exposure2022 Baseline

2030 Target

Metricc. 1.4% of BNP Paribas'
total gross exposure to credit risk

28.4

16.7-19.5(-41% to -31%)

kgCO2e/m²

countries. Furthermore, there is a high variety of building types
within the sector (e.g. retail shops, hospitals, warehouses),leading to considerable variation in emission profiles, due totheir different purposes and specifications.

The Commercial Real Estate (CRE) sector comprises all realestate used for commercial purposes where the building isleased, used, or operated to generate an income. This includes
predominantly non-residential properties (offices, warehousesetc.), which account for approximately 13% of global CO2
emissions. One quarter of these emissions is associated withconstruction (embodied emissions, c. 3%) and the rest with theutilisation of the buildings (operational emissions, c. 10% of
global GHG emissions).

Technologies and solutions are available today to build low to
net zero buildings, and in certain markets this is already being
made mandatory through local regulations (e.g. RE2020 inFrance). However, around 80% of the buildings that exist today
are still expected to exist in 205044. For this existing stock, asignificant acceleration in renovations will be required.

Within the operational emissions, approximately 30% of
operational emissions are direct emissions originated fromthe on-site generation of energy43. The other 70% come fromindirect emissions, i.e. associated with electricity and heatgenerated remotely and used on-site. This makes the sector
heavily dependent on the local energy mix and the level ofelectricity grid decarbonisation, which vary strongly between

Suppliers

Construction

Est. share of

Building
ownership

Building
exploitation

Recycling~75%

Raw material

Construction co.

Processor

Developers

Transporters

Property dealers

Stakeholders

LegendTo get on track with the IEA NZE scenario by 2030, buildings’
energy intensity (both residential and non-residential) will
have to decrease by 35% compared to 2022. This is four times
faster than over the 2010-2022 period, which highlights thechallenge ahead.

~25%

emissionsTo achieve its 2030 target, BNP Paribas recognizes that theseenablers are not fully in the hands of its clients. Several factors
are also highly dependent on policy support and industry
collaboration across the value chain – including for the ramp
up of alternative fuels.

DNV 1.6°C

GHG
Considered SECTOR CONTEXT

Despite their current high cost, alternative fuels could becomecompetitive with the right level of investment and involvementof all stakeholders, supported by regulatory measures (pricing
and/or tax mechanism) to disincentivize the use of conventional
fossil fuels.

BNP Paribas’ 2030 commitment for the
Shipping sector

Emission intensity (gCO2e/
dwt.nm)Commercial
Real Estatesion intensity target range is close to the DNV 1.6°C trajectory.

Emissionscope

In-scope

Real Estate investors
Owner-Occupiers
Tenants

Out of scope APPROACH
Emission scope

Value chain
BNP Paribas focuses on the emissions from building utilization (ownership and exploitation), as this accounts for c. 75%of the emissions across the sector’s value chain. Construction-related emissions are not included. However, a significant part of these are already subject to specific alignment
targets of the Group (production of cement and steel).

Scope 1, 2 and part of scope 3 are included (scope 3 is limited
to category 13, downstream leased assets, which accounts fortenant’s scope 1 and 2 emissions).
CO2, CH4, N2O and F-gases (when data is available) are in­cluded.
Subject to data and methodology availability.
CRREM : Carbon Risk Real Estate Monitor .
42
Non-residential direct & indirect emissions, excluding construction. Source: United Nations
Environment Programme (2024), Global Status Report for Buildings and Construction.
40

43

41

44

55

IEA, Tracking Buildings.
Source: World Economic Forum, ‘To create net zero cities, we need to look hard at our older
buildings’, 8 Nov. 2022.

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

Within the building utilization phase, the scope aligns with
the Group’s definition of the real estate sector, which excludes
owner-occupied real estate. It therefore focuses on emissions
from buildings owned by real estate investors, including theirtenants’ emissions, under a whole-building approach.

level. This granularity allows the Group to take into accountthe diverse starting points across building types and countries
and to monitor our clients’ progress by comparing to the relevant decarbonisation curves. The CRREM provides fully aligned
1.5°C decarbonization pathways for the real estate sector.

For secured lines, the emissions are measured at asset property level, while for unsecured financing the emissions aremeasured at property portfolio level, as disclosed by the Real
Estate Trust Investments (REITs).

While the Bank aims at maintaining a stable benchmark allowing to track and compare progress over time, it also anticipates that the portfolio composition may change in the future.
If a material change in the portfolio mix occurs, BNP Paribas
may adjust the benchmark to ensure it remains representative for the underlying asset types and countries. In addition,
BNP Paribas aims to improve its data quality and coveragefor the sector. This could also result in an adjustment to thebenchmark.

Financial scope
The Group prioritized its largest markets and portfolios where
sufficient data could be obtained:- Secured financing portfolios of CIB EMEA and Commercial &Personal Banking in France- Unsecured-REITs financing portfolio of CIB in EMEA andCommercial & Personal Banking in France and Belgium

BNP Paribas
Emission intensity(kgCO2e/m2)

Metrics
The chosen metric is an emission intensity, defined as kilogramof CO2e per square metre. To come to an aggregated metric,
emission intensities are weighted by loan exposures.

28.4

CRREM
BENCHMARK V2.02

BNP Paribas’ 2030 target on the Commercial Real
Estate Sector

30.3-41% to -31%

16.7 - 19.5

-55%

Data sources

13.5

For the secured portfolio, the Bank has leveraged on collected
Energy Performance Certificates (EPCs) that are directly related to the collateralized assets. This was complemented byinformation obtained from public databases, e.g. ADEME andBase des Notaires in France. Where no direct emission intensity was provided on the EPC, energy intensity or labels wereconverted by using national emission factors and appropriate
EPC scales.

2022
Baseline
2030 Target

Building’s energy
consumption

Reducing the energy consumption
through energy efficiency and management measures (e.g. high quality
isolation, improved systems efficiency,
adjusting to consumption patterns).

Energy source &mix

Sourcing low to zero emitting energies for building operations (e.g. green
electricity, bio energy):- At building level, it requires adaptations to allow for cleaner energy
sourcing (e.g. electrification of heating). The owner may also be able
to ensure sourcing of green energy
from its suppliers.
- At location / country level, it requires decarbonisation of the power
generation mix (this lever is however not in the hands of building
owners).

2030

2022

BNP Paribas identified several transition levers that it aims
to implement. For instance, Commercial & Personal Banking
in France will increase its share of financing of green assets(following EU Taxonomy, FrenchRE2020 and/or high scores
under well-established independent sustainable assessment
methods). The origination teams across the Bank will include
climate impact as a decision criterion in their businessdecisions. With respect to the unsecured financing to REIT
clients, BNP Paribas will monitor their climate targets andsupport them in their net zero trajectory.

2030

CRREM V2.02 Benchmark

At end-2022, BNP Paribas’ emission intensity on the covered
Commercial Real Estate scope was 28.4 kgCO2e/m², which is
6% below the comparable CRREM benchmark. The portfolio
benefits from an exposure to large Real Estate Investors, whose
assets, on average, exhibit a slightly better performance thanthe 2022 CRREM benchmark.

For the unsecured-REITs portfolio, the Bank has mostly leveraged the information disclosed by clients in their annual /sustainability reports. When available, market-based information was used.
Where no specific asset or company data was available, theBank used additional assumptions by leveraging existing dataon similar assets (considering at least country and buildingtype), or on a proxy basis (using ADEME).

BNP Paribas sets an intermediate target for 2030 in the formof a range of 16.7 to 19.5 kgCO2e/m², representing a reduction
range of 41% to 31%.

The availability of the EPC information varies strongly between
countries. There is a high dependency on a country’s regulations (including privacy laws) and data infrastructure. As a result, in certain markets, the data collection has been limited
to such an extent that these markets could not be included inscope today.

This reduction range remains lower than what the CRREM
V2.02 trajectory would prescribe for 2030. The set target range
reflects the current projections by the relevant countries fortheir building and energy sectors under existing national
measures45, factoring in a degree of uncertainty as well as anactive steering of the Group’s portfolio.
The Group’s ability to achieve the target is highly dependent on
factors that are outside the control of BNP Paribas, such as theevolution of the energy mix within countries, the developmentof local EPC regulations, or the national net zero transition
strategies for the real estate sector.

 BENCHMARK METHODOLOGY & TARGET SETTING
BNP Paribas uses CRREM scenario V2.02, as it provides granular decarbonisation pathways at a country and building - typeCountries’ submissions to the United Nations Framework Convention on Climate Change
under the With Existing Measures (WEM) scenarios, which account for domestic policies
and measures already in place.

As noted, the sector’s transition is heavily reliant on retrofitting
the existing building stock. When considering operationalemissions, this can be achieved through 2 main levers: by
reducing energy consumption and by sourcing cleaner energy.

BNP Paribas’ 2030 commitment for theCommercial Real Estate sector

As of December 31, 2022, exposure to the Commercial Real
Estate sector represented c. 1.4% of BNP Paribas total financing.

45

 DECARBONISATION ENABLERS

56

57

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

Emission
scope

GHG
Considered

Scenario

1, 2

CO2,
CH4
N2O
F-gases46

CRREM47
Global Pathways
V2.02

Residential
Real Estate

Data sources

Sector share of
total emissions- CRREM V2.02- ADEME- External providers

17%of global GHG
emissions48

2022 Credit exposure2022 Baseline

Metric8.5%
of BNP Paribas’ total gross exposure
to credit risk

France: 20.2
Italy: 34.4
Belgium: 59.7
Group: 35.5

kgCO2e/m2

 SECTOR CONTEXTEurope is composed of 229 million residential dwellings49 and
75% of this building stock ought to be renovated by 2030.

The residential real estate sector accounts for approximatively
23% of the global GHG emissions, divided between construction activities (embodied emissions - scope 3) and building
operations encompassing building ownership and usage (operational emissions - scopes 1 & 2), contributing for c. 6% andc. 17% respectively.

The current renovation rate is well below expectations; increasing energy prices are boosting homeowners’ willingness toimprove their properties but inflationary environment is also
lowering the purchasing power required to do so, especiallyfor more vulnerable households. The rhythm is also hindered by the lack of certified craftspeople and of availability of
construction materials.

Whereas buildings’ minimum performance standards are increasing, the challenge to successfully decarbonize this sector
relies mostly on the renovation potential of existing buildings.

Data sources

to unleash the full renovation potential by itself: collective
actions of policy makers, financial institutions, industry
experts and consumers are required.

BNP Paribas has used energy performance certificates (EPC)
to compute the emission intensities of the residential realestate portfolio, which is dependent on data availability foreach country:

 BNP Paribas wants to support its clients in the transition
without penalising access to housing in a tight macroeconomic
context.

 In France, the mortgage loan database was matched withboth proprietary and public EPC databases (e.g. ADEME),
which allowed to collect EPCs for 59% of the portfolio’s
outstanding. The other part was modelled from different
sources.

 DECARBONISATION ENABLERS
To decarbonise its portfolio, BNP Paribas is positioning itself asa “Trusted Companion” for clients to support them in their homeacquisition and in their energy transition. The “My Sustainable
Home” strategy towards net zero covers four priorities:

 In Belgium, the collected EPCs represent 14% of theportfolio’s outstanding. For the remaining 86%, EPCs
were approximated based on the most granulargeographical EPC label mix publicly available. The
Belgian EPCs only display energy consumption, hence
an emission factor was estimated (based on CRREM’slatest methodology) to convert it into GHG emissions.

1. Increase clients’ awareness and advise them based on
EPCs collected and self-assessment tools.

 In Italy, an independent appraisal company specialized in
credit bureau, CRIF50, has provided EPCs based on the unique
cadastral references of the financed dwellings (16% werematched with regional databases and 84% were modelled).

The Group systematically collects EPCs and upskills advisors
to better support clients’ during their home projects and equipthem with home self-assessment tools. It will allow them tocarry out online diagnostics and to understand renovations
priorities, project budget estimations and impacts on EPCs andhome valuations.

Since Q4 2023, BNP Paribas collects 100% of EPCs on eligible
mortgages at dwelling acquisition in France, Italy, and Belgium.
It will strongly improve the quality of information over time.

2. Encourage clients to finance more efficient properties, via
incentivising acquisition offers and support first-time buyers
in this process.
The Group systematically collects EPCs and offers attractive
mortgage terms and preferential rates to its clients in Belgium
and in Italy who are buying a home with an energy efficient EPC
label. In line with the EU policy guidance for a fair and inclusivetransition towards climate neutrality, it also recognizes theneed to facilitate access to home-ownership, especially forfirst-time buyers and young people. Thus, the Bank supports
them via innovative financing offers like “Happynest”, a rentto-own solution of energy efficient properties in Belgium.

 BENCHMARK METHODOLOGY & TARGET-SETTING
Suppliers

Construction

Est. share of

Building
exploitation

Recycling~25%

emissions~75%

Raw material

Construction co.

Processor

Developers

Transporters

Property dealers

Stakeholders

LegendBuilding
ownership

In-scope

Real Estate investors
Owner
Tenants

Out of scope

BNP Paribas has decided to use the latest net zero pathways
published by the CRREM as a benchmark for the decarbonisationof its residential real estate portfolio. It is aligned with a
1.5-degree scenario and with energy reduction pathways
tailored per country (France, Italy, Belgium) and building type.
At year-end 2022, the CO2e intensity of our mortgage portfolioswas: 20.2 kgCO2e/m2 in France,
 34.4 kgCO2e/m2 in Italy, 59.7 kgCO2e/m2 in Belgium.

3. Address financing needs of renovations via dedicatedloans integrating governmental grants or discounts for homeacquirers and existing homeowners.
BNP Paribas aims at supporting clients with financing solutions
like dedicated renovation loans and governmental backed
loans. In addition, it supports the financing of renovations in
co-ownerships in Belgium and in France.

At Group level, weighted by the number of assets, it represented
35.5 kgCO2e/m2.

 APPROACH
Value chain

Geographical scope

BNP Paribas has focused on building ownership and exploitation (scope 1 and 2), which means energy used for the home,
representing 75% of CO2 emissions for the entire building life.
Regarding the rest of the value chain (scope 3), transmission
and distribution losses are excluded, as recommended by CRREM.

As of December 31, 2022, the residential real estate sector
represented c. 8.5% of BNP Paribas’ total gross exposure
to credit risk. The French, Italian and Belgian residential
mortgage exposures represent 83% of BNP Paribas’ residential mortgages. All the other mortgage markets are alsostrongly engaged in supporting clients’ energy transition.

Metrics

Financing scope

At country portfolio level, intensity-based metric expressed in
kilogram of CO2 equivalent per square metre, is weighted on thefinanced squared meters, aligned with the PCAF methodology.
At Group level, to be representative of the multicountry
portfolio, intensity-based metric is weighted by the number ofassets the Group finances in each country.

The baseline calculation accounts for scope 1 and 2 emissions, in line with CRREM methodology.
CO2, CH4, N2O and F-gases (when data is available) are included.

46
47

Subject to data and methodology availability.
Residential direct and indirect emissions, excluding construction. Source: United Nations
Environment Programme (2024), Global Status Report for Buildings and Construction.

48
49

58

Carbon Risk Real Estate Monitor
ECB Data Portal 2023 Annual figures for residential properties all dwelling types https://data.ecb.europa.eu/data/datasets/RESH/RESH.A.B6._T.N._TR.NPRO.4F0._Z.N._Z

A large part of the difference between the results can be
explained with the disparities in the energy mix of the three
countries.

4. Expand to a beyond banking role by partnering withexperts to propose an end-to-end energy renovation journey
for clients and prospects.

For the time being, it was decided not to set quantitative net
zero targets for BNP Paribas’ credit portfolio in the residential
real estate sector by considering the following: Decarbonizing the residential real estate sector is, to a great
extent, dependent on the energy mix of the country, varying
across the European countries.

BNP Paribas’ goal is to enrich its support with beyond banking
services especially on energy renovations: in France, theCommercial Bank and the Domofinance joint-venture arepartnering with IZI by EDF, to provide clients with an endto-end journey (certified craftspeople, works’ inspection, andan EPC post works). BNP Paribas Personal Finance partneredwith Effy to boost energy renovations. In Italy, BNL ABITO also
provides clients with many beyond banking services.

 The sector faces regulatory changes and uncertainty: local
regulations are still evolutive and the national transpositionsof the revised European Energy Performance Building Directive(EPBD) are yet to be determined.

SeePart II. Section 3. BNP Paribas supports the low-carbon
transition of all its clients for more examples.

 Defining a clear pathway towards energy efficiency inresidential real estate, enabling a just transition, andaddressing clients’ needs is thus essential to BNP Paribas’
decarbonisation strategy. However, the Group is not able
50

CRIF: Centrale Rischi Finanziari.

59

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

Emissionscope

GHG
considered

Sector share of total
emissions2023 Credit exposure

1&2

CO2,
CH4
N2O

21% of global GHG
emissions<0.4% of BNP Paribas' total gross exposure to credit risk

Agriculture SECTOR CONTEXTIn 2021, the farm gate and land use change represented 21%of global greenhouse gas emissions, and contributed for 39% of
methane (CH4), 74% of nitrous oxide (N2O), and 12% of carbon
dioxide (CO2) emissions globally, all excluding pre and post-

Upstream

Farm-gate

Agricultural
inputs

Farms

Downstream

Distribution

Equipment
production

Crops

Trading

Raw materials

Livestock

Logistics

Dairy

Storage

Additional inputs(incl. fertilizer
manufacture)

LegendIn-scope

production processing51. Emissions from within the farm gate
and from land use change, together, represented 67% of global
agriculture, agribusiness & food systems emissions.

Production
inputs

Production:
processing

Inputs (e.g. foodadditives)

Food processing(e.g. milling,meat & ﬁshprocessing,biofuel production)
Packaging

Equipment (e.g.
for refrigeration,
processing,packaging)

Last mile
Commercial
distribution
Retail & foodservice

Out of scope PORTFOLIO DESCRIPTION APPROACH TO TARGET-SETTING

Value chain

It was decided not to set quantitative net zero targets for
BNP Paribas’ credit portfolio in the agriculture sector, after
taking into consideration the following:

In its approach to the decarbonisation of its agriculture
portfolio, BNP Paribas, like several other financial institutions
and in line with WBCSD recommendations52, focuses on the
Farm segment, upstream from food processing activities. The
Farm segment scope 1 & 2 includes emissions from land usechange up to the farm gate (crop livestock production process
and associated on-farm energy use).

• Agriculture is a very fragmented sector with a large varietyof commodities, different emission profiles per crop, productand country, local patterns of weather and soils, varying
practices with different environmental footprints, etc. The
fragmented client base and the absence of climate data
at client level create important challenges for portfolioalignment.

BNP Paribas’ exposure to agriculture (Farm segment) isessentially resulting from its retail activities in Belgium,
France, Italy and Poland. BNP Paribas’ portfolio is mainly
exposed to farmers involved in growing cereals, with otheractivities such as dairy, pigs’ raising and breeding, poultry
farming, and viticulture. Thus, its portfolio is barely exposed
to cattle farming or rice cultivation, which are two highly
emissive agriculture commodities.

• Other technical challenges include nascent methodologies
and the absence of suitable scenarios for target-setting.
Utilisation of statistical methodologies, which require further
developments, may help assess the emissions profile of theportfolio but would not be precise at the individual client or
farm level.

• The technical challenges listed above are shared bymany banks and very few financial institutions similar to
BNP Paribas have published quantitative climate targets forthis sector so far.
52

Source: FAOSTAT.
Source: World Business Council for Sustainable Development (WBCSD) An Introductory
Guide for Net Zero Target Setting for Farm-Based Agricultural Emissions.

SUSTAINABILITY DRIVERS AND SUPPORT TO THE
SECTOR(v) Breeding and animal welfare: European animal feed ishighly dependent on oleo-protein (70% of European proteins
are imported, including soy, a main driver of deforestation).
Breeding and animal welfare cover efforts to mitigate risks
related to soybean import dependence, to preserve andincrease animal welfare, and to improve animal feed quality.

Holistic approach
BNP Paribas’ roadmap considers official transition strategies forthe agriculture sector at global, European and national levels,of which the COP28 agreement (art. 28), Kunming-Montreal
GBF (target: “excess nutrients lost to the environment by atleast half including through more efficient nutrient cycling anduse; reducing the overall risk from pesticides (…) by at least
half including through integrated pest management, based on
science, taking into account food security and livelihoods”),
the European regulations (Common Agricultural Policy, Fit for
55 and Farm to Fork targets on organic farming and pesticide
reduction), as well as relevant national ones.

The promotion and incentivisation of sustainable practices
are expected to contribute significantly to farmers’ transition
journey.
Current transition support initiatives
BNP Paribas’ support to the sustainable transition of agricultureis already materialized by a pool of experts within BNP Paribas
Polska Bank, on which the Group leverages to build up its panEuropean competence with a dedicated sustainable agriculturecommunity. For instance, BNP Paribas Polska Bank offers aunique solution to its clients to estimate their GHG emissions,and evaluate potential for carbon reduction and storage
in soils, depending on their farming practices (Agronomist
platform, with 30,000 active users).

The sustainable transition of Agriculture cannot be analysed
only through the climate prism, it needs to be holisticallyaddressed (as in the public strategies listed above).
BNP Paribas proposes five inter-related sustainability drivers.
The first three strongly focus on decarbonisation, and the last
two expand the approach to immediately related topics.

In Italy, BNL is active in the financing of biomethane/biogas
plants with EUR 128 million loans granted as of end of 2023
(see Part II. Section 3. BNP Paribas supports the low-carbon
transition of all its clients).

(i) Biomethane, biogas and digesters, (ii) agrivoltaics and onfarm solar: these renewable energy generation technologies
hold promise for decarbonising on-farm energy use. With
growing recognition from governments of their potential(and associated with subsidy schemes), adapted green
financing solutions for such projects, at both farm andcooperative level, can have a significant impact on the
sector’s decarbonisation.

Furthermore, BNP Paribas leverages its in-depth knowledgeof European tech and innovative companies to support
entrepreneurs enabling the Agri-Food transition throughdedicated set-ups, namely in France (WAI), Belgium (IHubs),
Poland (Innovative Companies), covering nearly a hundred
AgTech/FoodTech companies. Additionally, BNP Paribas
invested in the capital of AgTech and FoodTech companies,
such as Klim, a German carbon farming platform that supports
the agroecological transition of farmlands through carbon
credits in setting projects within the food production value
chain, and Agriodor, a French producer of biobased alternatives
to chemical pesticides for agriculture.

(iii) Sustainable agriculture practices which contribute to soilpreservation and enhance soil fertility while increasing
carbon sequestration53 and minimising pollution (incl.
acidification, eutrophication and pesticides). These practices
are based on agroecology concepts such as organic farming
or regenerative agriculture54.
(iv) Sustainable water management: Rising stress on water
resources have implications on agri-food systems as 72% of
global freshwater use is for agriculture. Sustainable water
management aims at reducing the dependency on water byadapting crop and plant variety, increasing diversificationand providing water solutions to develop better irrigation
practices.

• While more work is required to precisely assess the emission
intensity of BNP Paribas’ portfolio, a preliminary analysis
shows that BNP Paribas’ agriculture portfolio is likely to beless emissive than the sector average due to its low exposure
to cattle and rice.

As of 31 December 2022, exposure to the Farm segment
represented less than 0.4% of BNP Paribas' total gross exposure
to credit risk.

51



60

53

Regenerative agriculture principles aim to minimize soil disturbance, increase soil cover,
diversify crop rotation and intercropping, minimize the use of external inputs (such assynthetic fertilizers and pesticides), increase natural and ecological habitat (such ashedges, buffer strips, etc.) and integrate organic matter and livestock elements.

54

61

Source: https://www.mckinsey.com/industries/agriculture/our-insights/the-agriculturaltransition-building-a-sustainable-future#/.

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

2

OVERVIEW OF BNP PARIBAS MAIN CLIMATE-RELATED METRICS,
TARGETS AND ALIGNMENT PROGRESS

SectorGross exposure tocredit risk
Share of
Exposure
BNP Paribas
in-scope
total exposure
(€bn)
(%)55

6.556

Climate methodology
Emissionscope

GHG
considered~0.4%[2023]IEA NZE scenario
Wood Mackenzie

7.157

n.a

Power

34.3

~1.9%
[2023]

1

Automotive

13.1

~0.7%
[2023]

3

Steel

4.6

~0.3%
[2023]

1, 2 & partially 3

CementAviation

Shipping

Commercial
Real Estate

Residential
Real Estate

CO2
CH4

1, 2 & 3

Financed Emissions

CO2

Asset Impact

S&P Global

Commodities Research Unit

1 (Gross) & 2

CO2

1 & 3, cat. 3(airlines) or 3,
cat.13 (lessors)
Well-to-Wake

CO2
N2O
CH4

PACE

13.5

~0.7%
[2022]~0.5%[2022]

1 & 3, cat. 3
Well-to-Wake

CO2
N2O
CH4

DNV

1, 2, and, whenapplicable, 3 cat. 13(downstream leased
assets)

CO2
N2O
CH4
F-gases58

CRREM V2.02~1.4%[2022]CRREM V2.02

1&2

CO2
N2O
CH4
F-gases58

165.8

Public client disclosures

MPP Prudent scenario
Public client disclosures

Asset Impact
Public client disclosures

EPCs collected from clientsand external providers

56

Sector exposure corresponding to the value chain segments considered for the alignment metrics.
Credit exposure to upstream Oil and Gas, based on the portfolio financing indicator in the report on theapplication of the PACTA methodology.

57
58

62

-80%

5.3
[Q3 2022]

3.5 (-34%)[Q4 2023]<3.7[2030]-30%

27.3[Q3 2022]

15.9 (-42%)[Q4 2023]

8.2[2030]-70%<146[2025]-30%

gCO2/km WLTP

IEA NZE 2050

121[2025]

183[2020]

151[2023]<137[2025]-25%

tCO2/t crude steel

IEA NZE 2050

1.2
[2030]

1.6[2022]

1.5[2023]<1.2[2030]-25%

tCO2e/t aluminium

IAI 1.5 Degree Scenario

8.9[2030]

6.2[2022]

5.8[2023]<5.6[2030]-10%

tCO2/t cementitious product

IEA NZE 2050

0.47[2030]

0.67[2021]

0.64[2022]<0.51[2030]-24%

gCO2e/RTK(Revenue Tonne Kilometre)

MPP Prudent scenario

785[2030]

956[2022]<785[2030]-18%

Annual Efficiency Ratio (AER)
in gCO2e/dwt.nm(deadweight tonne times
nautical miles)

IMO Revised Strategy
Det Norske Veritas (DNV)

5.4[2030]

8.3[2022]

5.6 - 6.4[2030]-32% to -23 %kgCO2e/m2

CRREM V2.02

13.5[2030]

28.4[2022]

16.7 - 19.5
[2030]-41% to -31%

kgCO2e/m2

CRREM V2.02

Emission intensity

Public client disclosures

EPCs collected from clientsand external providers

35.5[2022]*As of Q4 2023, the Oil and Gas exposure reduction targets by 2025 are achieved. Please see the results p. 45.

55

<1.0
[2030]

148[2023]

Commodities Research Unit
IEA NZE scenario

3.0 (-40%)[Q4 2023]

208[2020]

IAI 1.5° scenario
IAE NZE scenario

5.0[Q3 2022]332[2025]

Public client disclosures
CO2
PFC

Reduction(target vs.
baseline)[year]IEA NZE 2050

IEA NZE scenario
CO2

Target[year]

gCO2/kWh

Asset Impact~0.1%[2022]~8.5%[2022]

MtCO2eIEA NZE scenario
CO2

Update(% change)[quarter-year]

BenchmarkBaseline[year][quarter-year]

IEA NZE 2050

IEA WEO 2022

2.7

27.2

Gross exposure
to credit risk (EUR bn)

Scenario

IEA NZE scenario

1&2

10.5

Upstream Gas Financing

Units

Alignment progress

2006 IPCC Guidelines~0.04%[2023]

0.7

MetricUpstream Oil Financing

Oil & Gas*

Aluminium

Data sources

BenchmarkDrawn exposure to upstream and refining companies.
Subject to data and methodology availability.

63

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

Metrics

Power Generation operational metrics

POWER GENERATION
Metric

2020

2021

2022

2023

2025 Target

Share of coal (%)

10

8

7

5

<5

Share of renewables (%)

57

62

60

65

>66

AUTOMOTIVEMetricAutomotive operational metrics

Baseline

Greenhouse gas emissions tonnes of CO2 equivalent
per full time employee (tCO2e/FTE)

3.21 tCO2e/FTE in 2012

Metrics

2021

2022

2023

2025 Target

Investment portfolios (NZAM and NZAOA commitments)

4

7

14

15

>25

 BNP Paribas Asset Management, member of NZAM
Carbon footprint (scope 1 & 2) of its investments in scope

Metrics

Baseline

2030 Target

Transitioning in the energy sector financing

Alignment of its investments with net zero

Baseline

2019-

Financing to low-carbon, primarily renewable,energy production

EUR 40 billion by 2030
representing 90% of the financed energy mix

Financing to thermal coal

EUR 0.4 billion at end-September 2023

Completing the exit from the thermal coalvalue chain in European Union and OECD
countries (and by 2040 worldwide).

<1.85 tCO2e/FTE by 2025

Targets

Reducing by 30% by 2025 and by 50% by 2030
Reaching 60% by 2030 and 100% by 2040
of investment in companies that have already achieved carbon
neutrality, are aligned or in the process of alignment

2023

Carbon footprint (scope 1 & 2) of equity and corporate bondportfolios held directly

2020

Reducing by at least 23% by 2024

Carbon intensity (scope 1 & 2) of office buildings held directly

2020

Reducing by at least 12% by 2030

Emission intensity of the Power Generation activities held
directly in its equity and bond portfolio

2022

Achieving an emission intensity of under 125 gCO2/kWh by
2024

2025 Target

Engaging with clients to support them in their low-carbon transition
Amount of support to the transition of large corporate customers to low-carbon from January 2022

Metrics

1.56 tCO2e/FTE BNP Paribas Cardif, member of NZAOAEUR 32 billion at end-3Q2023, i.e.
almost 55% of BNP Paribas’ financing toenergy production

Metrics

2025 Target

Reducing own operational emissions

2020

Share of electrified vehicles (%)

2023

EUR 104 billion

2023

EUR 200 billion

2025 Target

Financing a more sustainable economy
Amount of sustainable loans

EUR 83 billion

EUR 150 billion

Amount of sustainable bonds

EUR 67 billion

EUR 200 billion

Amount of asset under management in open-ended
funds distributed in Europe under article 8 & 9according to the SFDR

EUR 254 billion

EUR 300 billion

6465

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

APPENDIX: TCFD INDEX
Recommended disclosures

BNP Paribas Climate Report references

Part II – GOVERNANCE AND IMPLEMENTATION

Pages

Section - 3 BNP Paribas supports the low-carbon
transition of all its clients

Part II – GOVERNANCE AND IMPLEMENTATION: A growing mobilizationto accelerate the energy transitiona) Describe the board’s
oversight of climaterelated risks andopportunities.

I - GOVERNANCE

Section - 1.1 The Board of Directors oversees the management ofclimate-related issues
This section illustrates the Board’s processes and frequency to discussand approve BNP Paribas’ climate strategy. It provides insight on the
Board’s internal organization, compensation policy and relations withspecialized committees to address climate-related risks and takeadvantage of related opportunities.

16

Part I – STRATEGY
Section – 3 BNP Paribas' business modelis resilient to various climate scenariosc) Describe the resilienceof the organization’s
strategy, taking into
consideration different
climate-related scenarios,
including a 2°C or lower
scenario.

Part II – GOVERNANCE AND IMPLEMENTATIONb) Describe management’s
role in assessing andmanaging climate-relatedrisks and opportunities.

Section - 1.2 Management proposes and implements the Group’s
climate strategy

18-24This section presents the impacts of climate-related risks andopportunities on the Group’s businesses (with examples of businesscases on pages 19-24).

17

This section explains how the management submits a climate strategy
proposal to the Board, how the responsibility to implement this strategy
is transmitted.

14This section summarises our assessment on the resilience of theGroup’s strategy.

Part II – RISK MANAGEMENT
Section - 2.3 Assessing potential impacts of climate risks throughclimate scenario analyses and stress testingThis section presents the multiple ways in which the Group uses different
climate-related scenarios, including a 1.5°C scenario (among others
IEA’s NZE scenario), to assess the resilience of its strategy. Selectedbenchmark scenarios include those from IEA (NZE), NGFS and IPCC.

34-36

Part I – STRATEGYa) Describe theclimate-related risks
and opportunities theorganization has identified
over the short, medium,and long term.

Section - 2.1 Climate change and its consequences are identified as risk
drivers for BNP Paribas

10-12Part III – RISK MANAGEMENT
Section - 2.2 Identifying the climate-related risk drivers

Section - 2.2 The energy transition also represents opportunities for
BNP Paribas
The tables “Examples of potential impacts of transition risks”, ‘Examplesof potential impacts of physical risks” and “Examples of potential
climate-related opportunities for BNP Paribas”, classify potential
transition and physical risks, and opportunities, over the short, medium
and long-term for BNP Paribas.

a) Describe theorganization’s processes
for identifying andassessing climate-relatedrisks.

13

Part I – STRATEGY
Section - 1.1 On track for sustainability within the 2025 Strategic Plan
II - STRATEGYThis section presents how climate-related risks and opportunities aretaken into account into the Group’s strategy, especially in its 20222025 strategic plan.

b) Describe the impact
of climate-related risks
and opportunities on theorganization’s businesses,
strategy, and financial
planning.

Section - 1.2 Timeline: BNP Paribas’ strong commitments to combat
climate change

5

66

37-38

III – RISKMANAGEMENTb) Describe theorganization’s processes
for managing climaterelated risks.

6-7

8-10

30-33

Section - 2.4 New tools to further assess
and monitor climate riskThis section describes how BNP Paribas monitors climate-related risks
at country level and develop new tools to assess physical risks

Section - 1.3 Committed to a net zero economy by 2050: BNP Paribas
monitors its financing and investment activities
These sections present the Group’s main commitments and targets
on climate (especially the long-term target of contributing to a net
zero economy by 2050), which have significant impacts on the Group’sbusinesses and financial planning.

All risks and transmission channels and their time horizons identified aspart of the BNP Paribas inventory process are described. An assessment
conducted by the Industry Research team to anticipate and mitigate
risks is developed as well.

c) Describe how
processes for identifying,assessing, and managing
climate-related risks
are integrated into theorganization’s overall risk
management.

Part III – RISK MANAGEMENT
Section 3 – Focus on key risks

38-39

This section presents key risks (credit risk, operational risk and marketrisk) and illustrates how they are managed.
Part III – RISK MANAGEMENT
Section – 2.1 Insertion of climate risk management in the risk
framework of the GroupThe climate-related risk management process is addressed through the
Risk Appetite Framework, Risk identification and measurement, and Risk
monitoring.

67

28-29

IV - METRICS, TARGETS & ALIGNMENT PROGRESS: MONITORING THE ACCELERATION TO NET ZERO BY 2050

Glossary

Part III – RISK MANAGEMENT
Section – 1 Detailed exposures per sector

Section – 2.2 Identifying the climate-related risk events

Section – 2.3 Assessing potential impacts of climate risks throughclimate scenario analyses and stress testinga) Disclose the metrics
used by the organization
to assess climate-relatedrisks and opportunities inline with its strategy andrisk management process.

These sections present metrics used by the Group to assess climaterelated risks, in line the associated risk management processes

30-33

34-36

This section summaries the main metrics used by the Group to assessclimate-related risks and opportunities.

ADEME: Agence de l'Environnement etde la Maîtrise de l'énergie (French publicagency for energy efficiency)
AER: Annual Efficiency Ratio

BEV: Battery Electric Vehicle
C2A: Climate Analytics and Alignment

Section - 1.1 Net zero alignment update of credit portfolio

Section - 2 Overview of BNP Paribas' main climate-related metrics,
targets, and alignment progress

ACPR: Autorité de contrôle prudentiel et derésolution (French Prudential Supervisory
and Resolution Authority)

ALMT: Asset and Liability Management
Treasury

Part IV - METRICS, TARGETS & ALIGNMENT PROGRESS:

The credit portfolio’s alignment methodology along with the sectorspecific target setting approach are disclosed with metrics selected by
BNP Paribas to assess risks and opportunities related to climate topics,
in line with its strategy.

IV – METRICS ANDTARGETS

26-27

41-61

CCCA: Collective Commitment to Climate
Action
CCIRC: Comité de Contrôle Interne, desRisques et de la Conformité (Internal
Control, Risk and Compliance Committee)

62-65

Section – 1.4 BNP Paribas reduces its own operational emissionsb) Disclose Scope 1, Scope2, and, if appropriate,
Scope 3 greenhouse gas(GHG) emissions, and therelated risks.

This section discloses the Group’s operational GHG emissions, i.e.
scope 1, scope 2, and scope 3 cat. 6 (business travels).

Section - 2 Overview of BNP Paribas' main climate-related metrics,
targets, and alignment progress

62-63c) Describe the targets
used by the organization
to manage climate-relatedrisks and opportunities
and performance against
targets.

These sections present the main targets used by the Group toassess and manage climate-related risks and opportunities and theperformance in 2023 against these targets. In particular, it displays the2023 alignment progress updates in NZBA sectors in addition with new
sectors, with a description of the benchmark methodology and targetsetting approach.

NZAM: Net Zero Asset Manager initiative

GDP: Gross Domestic Product

NZBA: Net Zero Banking Alliance

GFANZ: Glasgow Financial Alliance for Net
Zero

NZE: Net Zero Emissions

GHG: Greenhouse Gases

NZE 2050: The IEA’s Net Zero Emissions by
2050 Scenario

IATA: International Air Transport Association

CO2e: Carbon dioxide equivalent is thenumber of metric tonnes of CO2 emissions
with the same global warming potential
as one metric tonne of another greenhouse gas
COP: Conference of Parties
CoR: Cost of Risk

CSR: Corporate Social Responsibility

IAI: International Aluminium InstituteIAM: Integrated Assessment Model

ICAAP: Internal Capital Adequacy Assessment Process
ICE: Internal Combustion Engine
ICT: Information and Communication
Technology
IEA: International Energy Agency
IMO: International Maritime Organization
IPCC: Intergovernmental Panel on Climate
Change
IPCC (AR6): Sixth Assessment Report of
the Intergovernmental Panel on Climate
Change
IPS: Investment & Protection Services
IT: Information Technology
km: Kilometre

EAD: Exposure At Default

KPI: Key Performance Indicator

EBA: European Banking Authority

Kunming Montreal GBF: Global Biodiversity Framework

ECB: European Central BankEMEA: Europe, Middle East, Africa

kWh: Kilowatt-hour
LCTG: Low-Carbon Transition Group

PACE: Platform for Analysing Carbon
Emissions
PACTA: Paris Agreement Capital Transition
Assessment
PFC: Perfluorocarbons
PHEV: Plug-in Hybrid Electric Vehicle
RAS: Risk Appetite Statement
RAF: Risk Appetite Framework
RCP: Representative Concentration
Pathway
REIT: Real Estate Trust Investment
REMIND: Regional Model of Investment
and Development
RTK: Revenue Tonne Kilometre
SAF: Sustainable Aviation Fuels
SBTi: Science-based Targets Initiative
SME: Small and Medium-Sized Enterprise
SMI: Sustainable Markets Initiative
t: tonne or metric tonne
TCFD: Task force on Climate related Financial Disclosures
UN: United Nations

LDV: Light-Duty Vehicle

UNEP FI: United Nations Environment
Programme Finance Initiative

LNG: Liquefied Natural Gas

URD: Universal Registration Document

EU: European Union

Midcap: Mid-capitalization companies

EV: Electric Vehicle

Mission Possible Partnership

WBCSD: World Business Council for Sustainable Development

F-gases: Fluorinated greenhouse gases

MJ: Megajoule

FC: Fuel-Cell vehicle

Mt: Megatonne

EPC: Energy Performance Certificates
ESG: Environmental, Social and Governance68

NZAOA: Net Zero Asset Owner Alliance

CH4: Methane

dwt.nm: deadweight tonne times nautical
miles

51-57

gCO2e/MJ: Gram of carbon dioxide equivalent per mega joule

NGFS: Network of supervisors and central
banks for Greening the Financial System

N2O: Nitrous oxide

DNV: Det Norske Veritas

Section – 1.3 2024 new portfolio alignment targets

gCO2/kWh: Gram of carbon dioxide perkilowatt-hour

NEST: Network of Experts in Sustainability
Transitions

OECD: Organisation for Economic Cooperation and Development

CRU: Commodities Reasearch Unit
44-50

gCO2/km: Gram of carbon dioxide perkilometre

GW: Gigawatt

CRREM: Carbon Risk Real Estate Monitor

Section – 1.2 Alignment progress update on 2022 and 2023
commitments

g: Gram

NACE: Nomenclature statistique desActivités Economiques (Classification of
Economic Activities)

Gt: Gigatonne

CO2: Carbon dioxide

Part IV - METRICS, TARGETS & ALIGNMENT PROGRESSFTE: Full-Time Equivalent (Employee)

MWh: Megawatt-hour

CGEN: Comité de gouvernance, d’éthique,des Nominations et de la RSE (Governance, Ethics, Nominations and CSR
Committee)

CII: Carbon Intensity Factor
10

FSTF: Financial Services Task Force

MW: Megawatt

CEO: Chief Executive Officer

CIB: Corporate and Institutional Banking
Part I – STRATEGYFPSO: Floating production storage andoffloading

69

WLTP: Worldwide harmonized Light
Vehicle Test Procedure

Disclaimer
This report was prepared in May 2024.
The figures included in this report are mostly unaudited (CSR Dashboard KPIs data are audited).
This report includes metrics and historical statements, which are subject to methodology and data uncertainties, as well as a number ofjudgements, estimates and assumptions, which had to be made on these complex and evolving matters. It also includes forward-looking
statements based on current beliefs and expectations about future events. Forward-looking statements include projections and estimates andtheir underlying assumptions, statements regarding plans, objectives and expectations with respect to future events, operations, products andservices, and statements regarding future performance and synergies. Forward-looking statements may be largely dependent on external
factors that are not under BNP Paribas’s control, in particular in relation to carbon emissions of entities financed by BNP Paribas and its
subsidiaries. In addition, forward-looking statements rely on methodologies and data, whose quality and availability are subject to changes.
Forward-looking statements are not guarantees of future performance, results or occurrences and are subject to inherent risks, uncertainties
and assumptions about BNP Paribas and its subsidiaries and investments, developments of BNP Paribas and its subsidiaries, banking industry
trends, changes in political, social and/or economic conditions globally, in particular energy prices, technological innovations, climate-related
events, as well as in regulations or in BNP Paribas’ principal local markets, and other unforeseen events or conditions. Those events are
uncertain; their outcome may differ from current expectations which may in turn significantly affect expected results. Actual results may
differ materially from those projected or implied in these forward-looking statements. Any forward-looking statement contained in this reportspeaks as of the date of this report.
BNP Paribas undertakes no obligation to publicly revise or update any forward-looking statements in light of new information or future events.
However, forward-looking statements included in this report may be superseded by information contained in future BNP Paribas’s publications
such as reports, statements, or press releases.
The information contained in this report as it relates to parties other than BNP Paribas or derived from external sources, such as information
related to Scope 3 emissions, has not been independently verified and no representation or warranty expressed or implied is made as to, andno reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Neither
BNP Paribas nor its representatives shall have any liability whatsoever in negligence or otherwise for any loss however arising from any useof this report or its contents or otherwise arising in connection with this report or any other information or material discussed.

The ESG Transparency and Performance team within Group CSR expresses gratitude to all BNP Paribas' employees who
contributed to the production of this report.
Design and publishing: BNP Paribas
Design, publishing and production: BNP Paribas internal agency.
Photo credits: Adobe Stock

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