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Responsible banking 04 Dec 2018

BBVA, committed to sustainable financing at the UN Climate Change Conference in Katowice

BBVA joined ING, BNP Paribas, Société Générale and Standard Chartered in a joint commitment to adapt their lending portfolio to the Paris Agreement on Climate Change.  In an open letter to the global leaders and heads of state currently meeting at the 24th session of Conference of Parties to the United Nations Framework Convention on Climate Change (COP24) in Katowice (Poland), these banks committed to finance and design financial services that are needed to support clients as they transition to a low carbon economy.

BBVA CEO Carlos Torres Vila supports this commitment, which fits with the bank’s sustainability strategy. “”One of the goals of our Pledge 2025 is to progressively align our activity to the Paris Agreement. Participating in this forward looking initiative will be a fundamental step to achieve it,” he explained.

In this letter on the climate change challenge, BBVA expresses to the international community its role in helping to transition to a more sustainable world. One of the key drivers entails progressively channeling financial flows to projects that are in line with the Sustainable Development Goals (SDGs) and the Paris Agreement. The idea is to ensure that the funds are in consonance with the path to sustainability and the fight against climate change.

The commitment initially affects the sectors that produce the most carbon dioxide emissions (energy, automobile, shipping and aviation). The banks will work together to analyze data the clients use to produce energy, as well as future investments, in order to determine what technological changes are necessary and how they will reduce carbon dioxide emissions. “It’s an approach that goes beyond not providing financing to certain clients. It’s more about helping them to work on transitioning to more sustainable models,” explained Antoni Ballabriga, Global Head of Responsible Business at BBVA.

“The new methodology allow us to discuss our clients’ future plans for sustainability in greater depth”

“We willl apply advanced methodologies, such as the one developed by the global think tank 2° Investing Initiative, which designs long-term risk metrics using sustainable criteria. Thanks to the use of open-source methodologies, we will collaborate with our clients to develop the best strategies and investment plans so that they can adapt and, all together, we manage to mitigate climate change,” added Ballabriga.

These simulations make it possible to create a comprehensive projection for five years from now regarding the client’s technological transition in a certain industry. They also allow for comparisons with the scenarios foreseen by the International Energy Agency in order to determine whether the client is in line with the Paris Agreement.

This new methodology is a crucial step toward the application of science-based targets in our loan portfolios in key sectors. It will also allow us to discuss our clients’ future plans for sustainability in greater depth,” concluded Antoni Ballabriga.

BBVA and the other signatory banks are hoping that other banks will join them in this commitment, made public at the 24th session of the Conference of Parties to the United Nations Framework on Climate Change in Katowice – known as COP24. This meeting is key to design the instruments that make it possible to tackle the challenges posed by climate targets. At the event, the 197 signatory countries of the Paris Agreement will decide on the next steps to limit the global carbon footprint.

For the participating countries, COP24 is the deadline to adopt a rulebook that will determine how the implementation of the Paris Agreement will be governed. This will mark a milestone in each country’s road map. The summit began on December 2nd and will conclude on December 14th.

BBVA understands its role in this journey to sustainability and therefore, through the Principles for Responsible Banking, for example, has put in place a series of mechanisms and standards that steer its business toward a sustainable future.

As a proactive actor in this context, the bank launched Pledge 2025. This commitment will help the bank align its business to limit global warming to less than 2ºC and strike a balance between sustainable energy and investment in fossil fuels. The initiative is based on three areas: financing, management and engagement. Therefore, BBVA commits to mobilizing €100 billion in green financing, sustainable infrastructure, social entrepreneurship and financial inclusion. The bank will also mitigate social and environmental risks, minimizing direct and indirect impacts that are potentially negative. Furthermore, BBVA will involve its stakeholders (clients, investors, employees, regulators, suppliers, etc.) to promote greater contributions from the finance sector to sustainable development.

Over the past two years, one out of every three euros lent in the world in the form of sustainable corporate credit has BBVA’s signature. The bank also recently signed the first green loan in South America with Ferreycorp – a loan whose price is linked to the Peruvian company’s performance in certain indicators of environmental and social sustainability. With this operation, BBVA reached a total volume of €13.37 billion in green loans, making the bank a global leader in sustainable financing.

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