By Virginia Furness
LONDON (Reuters) - BNP Paribas (OTC:BNPQY) Asset Management will no longer invest in new bonds issued by companies involved in oil and gas exploration and production, according to a strategy update dated November.
The French asset manager said its policy aimed to support oil and gas companies with their transition to sustainable energy sources, while screening out those companies which are not adapting quickly enough, according to the document.
The firm will no longer buy new bonds issued by oil and gas companies, including diversified companies, but it will continue to invest in their existing debt and equity, subject to certain rules and exclusions. It is unclear whether the new ban will cover new share issuance by these companies.
BNP Paribas Asset Management has $1.8 billion of equity exposure to oil and gas companies across its opened-ended and exchange-traded funds, with TotalEnergies (EPA:TTEF) held in 49 of its funds, according to Morningstar Direct.
Oil and gas companies eligible for investment may be subject to regular reviews to ensure they have "credible climate commitments" and "realistic transition plans," the fund manager said, with those companies not making the grade encouraged to move towards more sustainable, lower-carbon business models.
The move brings the fund manager's policies in line with the practices of the broader BNP Paribas Group which does not participate in bond issuance by companies active in exploration and production since 2023, the firm said in an emailed statement.
Several European financial firms are pulling back from lending to oil and gas firms in response to more sustainability-focused investment rules, investor pressure and internal pledges to reduce carbon emissions.
Pressure group Reclaim Finance welcomed the move, saying the French firm was the first major asset manager in the world to adopt such measures.
"Bonds are one of the most important modes of financing for companies in the fossil fuel sector today," said Lara Cuvelier, the group's sustainable investments campaigner.
BNP Paribas Asset Management already had in place some restrictions on investing in oil and gas companies which operated in the Amazon (NASDAQ:AMZN), the Arctic and in other unconventional oil and gas resources like shale or oil sands.