Credit Agricole is look to re-invent its lending business

Source: Reuters/STEPHANE MAHE Credit Agricole’s logo is displayed outside a Reze bank.

Author: Simon Jessop

Reuters: London On Wednesday, French lender Credit Agricole outlined goals for increasing lending for renewable energy sources while reducing its exposure to financing emissions from the oil and gas sector.

The decision was made in response to mounting regulatory and investor pressure on the industry to align lending with the international climate objective, which is to limit global warming to 1.5 degrees Celsius over pre-industrial levels by the middle of the century.

The second-largest listed lender in the nation, Credit Agricole, stated in a strategy update that it anticipated emissions associated with its loans to the oil and gas sector to decrease by 30% by 2030 while those associated with lending to the auto sector would decrease by 50%.

The bank promised to publish decarbonization plans by the end of 2022 for other energy-intensive industries like steel, cement, power, commercial real estate, and shipping.

In 2023, the ones for residential, agricultural, and aviation would follow, covering a total of 60% of the bank’s credit exposure.

The bank also stated that it wanted to increase its investments in renewable energy, increasing its portfolio of loans by 65 percent by 2025 to reach 14 Gigawatts, or the equivalent amount of electricity used by about 5 million households on average.

Reclaim Finance, a non-profit organization, supported the initiative to set targets for the two sectors, which was a condition of Credit Agricole’s membership in the Net-Zero Banking Alliance, a group of banks undertaking climate action, but stated that further action was required.

Director Lucie Pinson stated, “We appreciate Credit Agricole’s announcement, which for the first time acknowledges the need to phase out oil and gas and to support their 2030 decarbonization ambitions with actions to immediately decrease emissions in the real world.

“We call on Credit Agricole to solidify this objective by ending direct and indirect funding for new oil and gas fields, as it did for coal, and become the first French bank to do so.”

(Matthieu Protard contributed additional reporting; Emelia Sithole-Matarise edited the article.)