TotalEnergies: BNP Paribas hearing

I swear.

None. None at all.

Mr. President, Mr. Rapporteur, thank you. We will, as an introduction, present several dimensions of our activities as a bank serving the energy transition. First, Yannick Jung, our Head of Global Corporate and Institutional Banking, will tell you what our commitments are, how they are being implemented, and will illustrate a number of financing achievements, such as those from last year. Laurence Plessis will present, over time, how our various policies in all sectors—coal, gas, oil—have evolved progressively or definitively, how all of this was established over time, and what underpins our current trajectory, which shows we are relatively well advanced compared to many other global banks. And then Sébastien will conclude the presentation by discussing all the other sectors, since energy is just one sector among many sources of emissions, and our bank has policies on all the major emitting sectors beyond energy production. I propose that Yannick present our initial achievements.

I can address both questions. On the first, we are very involved—I was about to speak of this—in everything related to the development of this low-carbon ecosystem around green molecules: green hydrogen, green ammonia, transport, storage, and all the thinking around electrification of uses, whether in mobility with batteries and charging stations, or in heavy industry—steel production, for example, where one can switch to using green electricity. BNP Paribas is very involved in this. The choice we made in building our aggregates—the 32 billion I mentioned as of September 2023—was to limit ourselves strictly to primary energy. The way we account for our activity may evolve over time as these technologies mature.

On the second point: the footprint of the revenues we generate from the oil and gas sector in the broad sense—not just oil and gas production and exploitation, but also gas transport through pipelines, storage, equipment suppliers, the entire industry—the footprint in BNP Paribas revenues is less than 0.2% of our consolidated revenues worldwide. That is the current figure. It is down about 10 percentage points from last year. For 2023, revenues were about 10 percentage points higher than in 2022, and we expect them to reduce further by about 20 percentage points this year based on projections. We are really in the immaterial range.

Yes. And you are absolutely right to note that—what is it—it is not forbidden to think that you invest in things that are profitable. The impact on your results, what I wanted to convey, was that this financial commitment is ultimately not that large.

Exactly. It is the same type of shift. We will always be in energy production financing. It was almost entirely fossil fuel and is becoming almost entirely low-carbon, and will become exclusively low-carbon by perhaps 2035. We are changing—it is a learning process, a learning curve. It is complicated, it requires people resources who are much more specialized because the domain is less well-known. And this immaterial investment must be made because otherwise we cannot analyze the great projects of tomorrow—battery factories, et cetera. Without this expertise, a project may exist but nobody takes it on. Our role in these domains is often to be the structurer—the one who analyzes and structures the project and syndicates portions to other banks. That gives us these global leadership positions in financing and in green bonds, which is what we have sought to illustrate on this second page.

You see a map of Europe showing 17 major renewable energy projects across Europe—including two in France—where BNP Paribas intervened as the debt structurer. These 17 projects, situated in several countries, represent over 15 GW of production capacity, enough to supply the annual electricity needs of more than 15 million European households. I won't describe each project, but I want to highlight two. The first is Dogger Bank—the fourth from the left, top row—the world's largest offshore wind farm, a 3.6 GW project in the UK that will supply 6 million British households. BNP Paribas played enormous and varied roles in this operation; I can say with all modesty that it would probably not have existed without our involvement.

The second project is in France—the third from the left, bottom row. It involves three offshore wind projects off Saint-Nazaire, Fécamp, and Courseulles-sur-Mer in Calvados, developed by EDF Renouvelable. We have been working on these since 2014—that gives you an idea of the gestation time for such industrial projects. The first wind farm off Saint-Nazaire is only just beginning production. Through these projects with EDF Renouvelable, we helped establish the development framework for the entire French offshore wind industry. Our involvement in renewables goes beyond these large projects—across our French regions, we have helped develop and finance dozens of projects. And as a large international bank, our scope extends beyond Europe: in 2023 we helped finance what is today the world's largest renewable project, Sunvia in the United States.

To complete the picture—and returning to your question, madam—beyond green electricity generation, we are also involved across the entire industrial value chain, in the electrification of uses and in the development of green molecules, hydrogen and ammonia, and in the mobility sector in particular. I believe Mr. Tavarès, when he came to present, spoke about the ACC project—the joint venture between Stellantis, Mercedes, and TotalEnergies—a very fine French, even European-scale industrial project to produce batteries for electric vehicles. BNP Paribas is the principal bank for the ACC project. In the same vein, I want to mention a second project in industrial application: H2 Green Steel in Sweden—the first large-scale green steel mill in Europe, which will use green energy to produce steel, resulting in a product with a carbon footprint up to 95% lower than traditional production. BNP Paribas helped put together a multi-billion financing that was signed at the end of last year. I hope this gives you a concrete idea of how we engage alongside our clients to help them in their energy transition toward a low-carbon economy. I will now hand the floor to my colleague Laurence Plessis.

Just before you continue, Sébastien, I want to correct a figure I gave you. The weight of the entire oil and gas sector across all of BNP Paribas is less than 1.3% of our global revenues—it remains immaterial. The figure I cited earlier was more specifically for my own activities. I wanted to give you the footprint for BNP Paribas as a whole.

I would say that in general terms, the oil and gas sector is quite different from other sectors. If we look at the oil and gas sector, the reality is that the pure oil and gas business—in any case with current price levels—is extremely profitable. Typically, when you look at the historical part of one of these large companies, the cash flow generated—the capacity to invest—allows not only to repay past financings, not only to make investments, but also to pay taxes, distribute dividends, and buy back shares. I say this because it is typical of this sector. So fundamentally, these companies need external financing for two reasons: when there are large new projects, it is a sector tradition and habit to structure project-specific financing. You can see this in Africa, in the United States, everywhere in the world. And in these cases, there is generally a very significant proportion of North American or Asian banks—typically Japanese—that provide the financing. European banks are generally collectively, I would say, on the way out. That is project financing in the sense of bank-provided financing.

Then there are bond issuances. I would say they do much less than before—much less—because the level of profitability is such that the need is much smaller. When you analyze the cash flows of these companies, and I believe this is very true for the major European players—TotalEnergies, BP, Equinor, Shell, Eni, Repsol—who have a more or less significant but growing low-carbon component, you could imagine they would issue green bonds specifically to finance these low-carbon objects. That is not currently the practice of these companies. Their practice—probably to maintain an approach equivalent to their North American competitors—is to make conventional bond issuances. We withdrew from these conventional issuances because we were told: you can see this is general-purpose money and it could go anywhere.

The reality and analysis of cash flows at this point may suggest that is not entirely accurate. But we went around to all of them and explained that for us, if it was to finance low-carbon, they might as well do it with green bonds when possible. They do that when— for reasons of their own, which can be of any nature—they don't, we are not present. So I would say Europe is more advanced in terms of its desire for transition, and probably in terms of regulation has a more structured body of rules that pushes and frames. There are other geographies—the United States, India, China, Indonesia—where, simply due to certain demographic factors, you can think of India, the fact remains that even in absolute terms coal will decrease in the mix, but in absolute terms...

That's what seems to be the reality — they have no choice but to increase coal use while waiting for nuclear or low-carbon energy to take over. So we're not in the same cycles. North America doesn't have the same regulatory constraints that Europe develops around, for example, combustion vehicles — that doesn't exist there. Yet that hasn't prevented the US from being the world leader in electric vehicles. And it hasn't stopped the United States from setting records each year in the number of conventional thermal power plants built. The US still leads in nuclear, solar, and better technologies. Each region has its own culture. What's certain is that banking regulators differ significantly. In the United States, the bank supervisor doesn't consider that climate transition is something they should get involved in regarding banks. There may be a physical risk issue at the end of the day — flooding, tornadoes — creating physical impacts that could damage assets on which banks have exposures. But they're not in the logic of supervising banks for climate transition the way Europe is. The ECB, the SSM, is much more active. The question is that it be done sustainably and that bank portfolios be looked at in a genuine logic. Today, when you do a stress test on a banking portfolio that will wind down in five years, you can't assume it will still be there in thirty years. These calculations are always very complicated and fragile because the data isn't all available and modeling the evolution of things isn't easy. I would say Europe is the most determined from the standpoint of its parliament, its laws, and its regulations, even if there are nuances between countries. Other regions are less regulated in this area, but they're progressing. Look at China on electric vehicles — they've made giant leaps in infrastructure. And the United States leads in whatever technology they pursue. These are different cycles, different cultures. I'm not saying the situation is favorable — I won't pretend everything is going well — but these are very different realities. Oil and gas companies wanting to issue bonds or obtain corporate financing have a source of funding that is virtually limitless, with no problems. This probably means they don't see a practical interest in green bonds when conventional bonds do the job. It's more a matter of practicality and the underlying reality of what we're financing. Some sectors are complicated — cement, steel — it's not so simple to overhaul technologies and migrate from one to another. But investments are advancing and improving. In automotive, the main issue is batteries and mineral resources, plus distribution networks and hydrogen infrastructure. Hydrogen isn't shown here but clearly we need low-carbon energy. There's debate about green versus pink hydrogen — I consider nuclear to be low-carbon, and hydrogen can be produced in large quantities since France and Europe have nuclear, as do the US and China. An entire industry will emerge to fill niches — agricultural machinery, heavy trucks, certain buses, even large cars will need hydrogen. This requires capillary infrastructure, recharging stations. It's complicated because it falls between private enterprise and the public sphere. Overall, we can include maritime transport, aviation, commercial and residential real estate — the good intentions and investment levels are strong. One sector that's probably more difficult than others is agriculture, because it's very fragmented with great diversity of actors of all sizes. Progress there will be slower, requiring cultural care to ensure it advances in good order without triggering backlash. The economic reality is that energy costs — like money and interest rates — are absolutely cardinal elements in economic life. Energy costs are essential for the capacity to develop. Today in Europe, energy prices, even after the worst of the crisis following the Russia-Ukraine war, remain significantly higher than in China or the United States. Energy is at the base of the efficiency of many industrial sectors and, frankly, of employment.

So, regarding the reality we face and the image that some have of us — first, you need to refer to those who assess us broadly, not just some organizations that are purely local or narrowly focused. When you look at the global universe and those who judge global banks' positioning on these sectors, you'll see we're always very well ranked, if not systematically ranked among the best. I say this simply because that's what these rankings show. There's a large list of very qualified, very expert organizations — you'll tell me they express themselves in English, but translations are available — who rank us at the top. That's a fact and it corresponds to our reality. Now, in the image we try to project, there's often a form of what I'd call an abuse of language. In a bank, what matters is the stock of credit. You can make a ten-year loan of ten, or make a one-year loan of one every year for ten years. We know that in many methodologies that attribute enormous figures to us, they count the same thing multiple years in a row — a credit renewed annually gets counted ten times in succession, so over a long period you see big numbers. Let me give another example: during the 2020 crisis — the pandemic — there was disruption in the energy market, and you need to ensure liquidity on the exchange. Even a company like TotalEnergies needed to demonstrate it had liquidity, because with price surges, liquidity needs could become enormous. They asked us, along with Crédit Agricole I believe, to set up a backup line — call it a precautionary line — of eight billion. The line was eight billion, shared between us two, syndicated to other banks. It had a duration of, I believe, 365 days. It was never drawn. Yet many of those who paint a rather terrible picture of us say that with eight billion we were financing exploration and production projects around the world. It was never drawn, it was only 365 days, and I can tell you that at the time we were doing our duty as a bank — during a crisis, a bank provides liquidity. During the first three months of COVID — so March to May 2020 — BNP Paribas originated across all sectors, primarily in Europe, 400 billion — 400 billion in bond issuances, syndicated financing, and equity issuances. At peak, we did about 60% of the market during that period. So we mobilized 400 billion. A bank is also made for that. We did eight billion — or four, our half — and they said, and continue to say, they pinned on us in long-term statistics the fact that with those four billion we probably financed projects in Mozambique, Uganda, who knows. It's false, but that's how it is. We receive letters from certain organizations, including French ones, that are essentially complaints telling us what we do and asking if we could do a bit better. We can always do better. The problem is that we are a company, and we need to define an objective and be left some freedom in how we reach it. You can't design the detail of a technology in a parliament — that doesn't exist. You can set constraints. What is our technology? It's an instant-in-time set of objectives that are multiple — finding the right path, relying on the right technologies corresponding to different types of financing. Our reality is what it is. It started long ago — the curve begins in 2012, the coal policy dates to 2010. We didn't wait to be pressured or reprimanded. This comes from far back. We have a very strong will to transition. The numbers are the numbers, but people can always say they're not the right numbers. Maybe we're not very good at communicating — maybe I, as just a mining engineer, don't have sufficient communication talent. But there's reality and there's a form of representation. Between us, those who say we could do better — when they look at what others do in North America and Asia, they see that even if it's not 100% perfect, it's still so much better. That's my response to your first point. I don't believe that additional regulation is the solution. We have enormous regulation in France and Europe. It's very demanding, very constraining — it's both very good and at some point the perfect is the enemy of the good. How are these reports you mentioned constructed? I have a solid scientific background — they're contestable from A to Z because of the assumptions, how the numbers are read, how they're interpreted. We've never been consulted. No one came to us to verify. It's someone looking from the outside and asking if the factory in front of them meets standards. I think it's somewhat superficial. These reports shouldn't guide us. What matters is obtaining financing infrastructure with clear objectives that correspond to what our sphere — French and European — wants to achieve. As Yannick said, we've always aligned our policies with French rules, European rules, global rules, and everything from the International Energy Agency. Let us set objectives, judge us on achieving those objectives, and allow us the capacity to act. If you want to charge more capital for brown and less for green — that's not a good idea. Because at the end of the day, we'll have everything in green. And if my portfolio is all green, it's a bit riskier than if it's all brown — that's a fact. If you demand the same prudential profile for new green projects as for oil and gas projects, you won't do any — they don't exist. You're on a learning curve. The supervisor and the ECB aren't favorable to that either, because the transition from one to the other involves additional risk that will last a certain time — maybe fifteen or twenty years. Take companies like Ørsted — they had issues with their offshore wind. It's a serious company, but offshore wind is complex. Visit these installations — they're very impressive. Don't stay too long. Go see the great battery factories — very impressive. Different risk profiles. There's a political will that says we must transition because otherwise we create an inequitable, dangerous, unfit, threatening world. Companies that can act must commit, and we are committing. Over twenty years, our stock of credit to the economy will go from 10% low-carbon to 90%. Do we know how to reach 100% by 2030? That's what I ask Yannick every day, but he says some projects are stubborn and will extend past 2030. So I prefer to say we'll be at 10% fossil and 90% low-carbon in 2030, and wait a bit rather than claiming 100% by 2030. I'm setting a realistic objective and we'll meet it. But when I'm essentially low-carbon in the energy sector, I need sufficient capital to support a risk profile that may be a bit more complex. As a bank, I don't think it's a good idea to strip capital from this activity, because a banker likes to be stable. The idea of returning capital while entering a different environment you need to learn about — it's not a good idea. Not because it'll be hard and you'll be charged more for the old stock — but because when entering an environment you know less well, you need more capital. Having proportionate capital is equitable. The incentive is already there. The supervisor already gives this incentive because these new projects — battery factories didn't exist five years ago. Northvolt, which we helped structure — we were the bank that structured the Northvolt project in Sweden, the first to launch — we had to hire people we didn't have: chemists, mechanical engineers, electricians, people we didn't have at all. We had to recruit very high-level people who could have been project sponsors themselves, to understand and assess whether we could commit and structure. It's a different risk profile. I'm not a representative of the nation, I'm not a member of Parliament, I'm just a company — but a company necessarily follows a collective project because otherwise it doesn't exist. The collective framework we've set in Europe is transition. Everyone wants to transition, but its expression differs. Our proposition is what's on our balance sheet, and we transform it fairly quickly because twenty years is a short time to do this without making life impossible for the economy. It pushes some counterparties into difficulty but doesn't put them in a position where they can't work anymore. That's very important — do sustainable things while trying to accelerate. As for bond issuances, which is the other part of our activity, conventional oil and gas financing — we don't do that anymore, it's clear and simple. Does it correspond to reality based on cash flow analysis of these companies today? I think not, but that's not a problem. Now, infrastructure. In the curve Yannick presented at the beginning, it was fairly linear from 2012, rising continuously. We decided to disclose our trajectory when we had more than 50% low-carbon and less than 50% fossil, to show we were on a virtuous trajectory. We accelerated. What happened between late 2022/early 2023 and late 2023/early 2024? Two very important things: Europe decided once and for all that nuclear was a genuine transition energy — it had been in limbo, and the decision was made almost in the weeks before the Russia-Ukraine war. Then EDF resumed a very industrial direction on nuclear, restarting installations, accelerating, rethinking the future fleet. All this leads to a simple analysis: since nuclear will play a major role, and gas as the other transition energy will play a lesser role — when we said 30% gas at the start of 2023 while oil was at 80%, it's because we didn't know how much gas we could do without. A year later, we see nuclear is back. It remains complicated — it's a very difficult industry, and future investments are long and costly — but nuclear will have a larger share. So the 30% will be much more than 30%, meaning we'll arrive at the right place faster. Our decisions are not autonomous — we're completely embedded in the European economy. If Europe says nuclear is transition energy, if the main actor EDF and the French state move forward and make progress, gas necessarily contracts. The acceleration we see between late 2022 and late 2023 is partly not our merit — it reflects the fact that nuclear will have a greater place, allowing us to deliver a higher objective. On gas infrastructure — the problem is these infrastructures are fungible. You can fill a bottle with mineral water or with sparkling water or wine — it's fungible. What happened? The war broke out, Russian gas was missing, Europe needed gas, and it was replaced by gas that could be supplied in quantity — which was shale gas. That's an element of fact; nobody desired it, but that's how it happened. Our intention is not to systematically finance gas terminals and infrastructure on a regular, ongoing basis. That's not part of our roadmap. I don't think we're working on many new projects of this nature right now. But given our size in the European banking system — during the 2020 crisis, we did more than 60% of originations; American banks weren't there anymore — if we hadn't been there, I don't know what would have happened. We're cautious. We know nuclear will come — restarting existing plants and building new ones is not simple. Gas — we don't know, there could be another crisis. We don't rule out studying such projects if, for energy independence or sustainability reasons, it becomes necessary — but it's not our central focus. That's why you won't see us often in that situation. And finally, you mentioned some large projects. We're no longer in the upstream oil and gas sector — it's been a long time. These were long-term decisions dating back to 2012. Being good in low-carbon is the future of the bank — true for energy but also for all other sectors. In ten years, our successors will have a client portfolio that corresponds to what's demanded, not one from the past century. It's in our interest to take this step. It's a bit like the automotive industry shifting — some producers will only make pure electric. We'll make practically pure low-carbon for all sectors. We'll accompany even the most difficult sectors — cement, steel, aviation. We ourselves invest equity in projects for fuels that will address these questions. There's our reality, and the representation of it. I understand some people use it for political discourse and encouragement — perhaps that's necessary, I don't contest it. But you can count on us. Our situation today is very real, and the commitments taken will be honored, except in extraordinary circumstances.

So, I believe TotalEnergies recently invited us to participate in a Yankee bond — US dollar — in April. We did not participate, and it is not our intention to participate in future issuances of this kind. The subject is closed. TotalEnergies knows us well, we know them well — they know this is no longer part of our intentions. So that matter is settled. We are not shareholders of TotalEnergies as BNP Paribas. We are a bank; we don't hold TotalEnergies shares. We don't vote at TotalEnergies' general meeting. We have an Asset Manager that manages money on behalf of third parties, some of which — very marginally — may be invested in TotalEnergies securities. The investment managers' decisions are their own; the bank doesn't participate in those decisions. So I can't answer your second question — I'm not even sure I know the details of the resolutions proposed at TotalEnergies' general meeting. We won't vote since we're not shareholders. On the third point, I'll let Laurence answer because it concerns the norms applied to these products, and naturally our vocation is to respect all norms applicable to everything we commercialize. There's no doubt we'll respect the norms, but perhaps Laurence can elaborate on this.

So — first, we're very modest. We're not going to claim to be the best bankers in a new field that's developing fast, with lots still to learn. But our clients — we help them at different levels.