French environmental organizations Notre Affaire à Tous, Friends of the Earth France, and Oxfam France last week filed what they say is the world’s first climate lawsuit against a commercial bank, suing BNP Paribas over its continued funding of fossil fuels. The lawsuit is part of a burgeoning movement to pressure financial institutions to end their funding of the fossil fuel sector due to the climate emergency. And if these funders refuse to stop their polluting investments, the movement aims to hold them accountable through strategies such as direct action and litigation.

The new lawsuit against BNP Paribas, filed February 23 in the Paris Judicial Court, claims that the French bank is in breach of France’s “duty of vigilance” law. That groundbreaking 2017 law requires large companies to assess risks and impacts of their business activities on human rights and the environment and develop plans to identify and mitigate those risks. The law has been invoked in other lawsuits against corporate polluters including French oil major TotalEnergies and most recently against French food company Danone over its contribution to plastic waste.

BNP Paribas, according to the organizations bringing the lawsuit, is “France’s most polluting bank” and Europe’s largest funder of fossil fuel expansion. While the bank recently pledged to reduce its outstanding financing for oil and gas extraction by 2030, the French nongovernmental organizations (NGOs) say this commitment falls short of immediately halting funding for new fossil fuel projects and lacks any firm exit plan from the oil and gas sector.

Lucie Pinson, director of the research and campaigning organization Reclaim Finance, explained that loopholes in BNP Paribas’ fossil fuel financing policy allow it to still offer financial services to oil and gas clients.

“BNP Paribas says it has not financed any new oil projects since 2016 and is aiming to stop all its financing to the oil sector, but its policy does not cover all of the financial services it provides. So it still issues bonds for oil and gas companies,” she told DeSmog via email.

The French bank’s refusal to end its financing for fossil fuel expansion is incompatible with the Paris Agreement objectives and illegal under the duty of vigilance law, the French NGOs argue. They also say that the financial sector more broadly is on notice.

“The French duty of vigilance law imposes an obligation on multinationals in all sectors to take action to protect human rights and the environment, and to do so efficiently,” Justine Ripoll, Campaigner at Notre Affaire à Tous, said in a press release. “The financial sector has a huge responsibility in our collective ability to comply with the Paris Agreement. This first climate litigation against a commercial bank is undoubtedly the first of many around the world.”

While this is the first climate lawsuit brought against a private bank over its fossil fuel financing, there have been previous cases against banks seeking information about policies relating to climate risks and impacts as well as several complaints against banks brought under the OECD Guidelines for multinational enterprises, explained Catherine Higham, policy fellow at the Grantham Research Institute on Climate Change and the Environment.

“Although the case is breaking new ground, it does so as part of a broader pattern of cases that put financial institutions and ‘portfolio emissions’ in the spotlight. As such, I’d imagine we will continue to see other litigants seeking to develop similar case strategies elsewhere,” she told DeSmog via email.

The French NGOs bringing the case say that it is “part of a global litigation movement that aims to hold the major funders of climate chaos accountable for their legal responsibilities.” It is also part of a broader movement targeting financial institutions, particularly banks, for their ongoing role in propping up the fossil fuel sector. In 2021, a DeSmog analysis found that the majority of the board directors leading the world’s top banks had connections to polluting industries and obstructive lobby groups.

And as DeSmog reported last July, the vast majority of financial institutions have no restrictions in place to limit oil and gas expansion, despite mounting pressure from activists and continued criticism from the world’s top diplomat — UN Secretary General António Guterres — who has called new funding for fossil fuels “delusional.” In a speech to the UN Human Rights Council on Monday, Guterres again called out fossil fuel financiers and also signaled support for climate litigation. “Legal action against companies that destroy the climate is an important step forward,” he said. “Fossil fuel producers and their financiers need to understand a basic truth: the pursuit of mega-profits, while so many people are losing their lives and their rights, now and in the future, is totally unacceptable.”

In addition to legal action, other strategies such as divestment and direct action are part of a growing push to hold banks accountable for fossil fuel financing. Campaigns such as Stop the Money Pipeline and Reclaim Finance are working to pressure the financial sector to abandon climate-wrecking fossil fuels. Campaigners are calling on individuals and institutions to end their relationships with big banks that fund ongoing fossil fuel expansion, for example. And activists are organizing mass protests or days of action demanding an end to fossil fuel finance. The youth climate strike movement Fridays for Future, founded by Greta Thunberg, has announced its next Global Strike on March 3 will focus on the demand to “end fossil finance.” On March 21, the organization Third Act — founded by veteran climate activist Bill McKibben — will host a National Day of Action to “stop dirty banks.”

As the world’s largest banks continue to fund the fossil fuel sector, to the tune of trillions of dollars since the adoption of the Paris Agreement, the calls for accountability from climate advocates are likely to grow, along with the risk of litigation.

“Investments in fossil fuel companies must be conditional on the company having a sound transition plan and spending on renewables must increase. Until that happens, it is inevitable that banks such as BNP Paribas will come under pressure from shareholders, from campaigners, and from legal action,” said Pinson of Reclaim Finance. “It is time the banks woke up to the reality of the risks of climate change and stopped profiting at our expense.”

In response to a request for comment on the new lawsuit, a BNP Paribas spokesperson defended the company’s energy transition plan, noting that today more than half of its financing for energy production goes towards “low carbon energies.”

“These NGOs have chosen to engage in litigation rather than dialogue, which we regret,” said BNP Paribas’ Claire Schiff. “By 2030, BNP Paribas will have transitioned its financing activities to low carbon energy production by more than 80%, well ahead of the transition of the rest of the economy.”

“With respect to our thermal coal exposure, we made total exit decisions in 2019 and our remaining exposure is only residual,” Schiff added. “Regarding oil, we are now leaving exploration-production. In 2030, our portfolio will only retain the remainder of loans to be amortized. Regarding gas, we will reduce our production financing by 30% and focus on supply and low-emission power plants, in line with the European taxonomy, which considers that gas has a role to play in the ecological transition under certain conditions.”

Last year, the European Union approved a controversial proposal to categorize gas and nuclear as green investments under the EU’s regulatory guidelines for investors. 

Sumeyra Arslan, campaigner and researcher with the climate finance organization BankTrack, said that these reductions and commitments do not go far enough.

“While the targets have a high percentage of reduction, they do not cover underwriting services and short-maturity loans repaid before 2030. We believe that this leaves a huge loophole for the finance of fossil fuel companies and projects that are harmful to the environment,” she explained. Additionally, she noted that BNP Paribas can still finance low-emission thermal gas power plants, and that renewables such as solar and wind still make up a relatively minor share of the bank’s total energy financing, at just seven percent.

“As long as banks continue business as usual and finance oil and gas expansion giants, lawsuits will be necessary to hold them accountable,” Arslan said. 

CORRECTION (3/2/23): The original version of this article stated that BNP Paribas could still finance low-emission thermal coal power plants. That has been corrected.