BNP Paribas partners with Baringa for climate scenario planning

31 March 2021 2 min. read

Banking giant BNP Paribas has inked a partnership with UK-headquartered management consultancy Baringa, for help with developing a comprehensive model for climate risk assessment. 

Baringa’s Climate Change Scenario Model is a fully configurable risk assessment tool that enables climate scenario planning – complete with clear indicators on climate risk for each individual asset in a portfolio, irrespective of asset class. 

The model leverages data insights from years of experience in supporting energy transitions across the private and public sector, and has so far been applied to over $12 trillion in assets worldwide through partnerships with financial services institutions. BNP Paribas is the latest bank to hop on board. 

BNP Paribas is developing climate scenario models

For Baringa, the partnership is a significant boost, as a breakaway from its current visibility with mainly UK-based banks and insurers. “We are thrilled to be working with BNP Paribas – as one of the largest global banks, and an organisation that is recognised for its commitment to sustainability and climate,” said Colin Preston, Baringa’s head of financial services sector & climate change.

Indeed, BNP Paribas is among several global financial services institutions that have recognised their role in the global sustainability agenda. The Paris-headquartered bank’s operations are on track for carbon neutrality, topped off with a spike in funding for the global energy transition to renewables – partly to invest in innovative startups that enable the shift. 

And many banks are following suit, although the road ahead is long. Baringa estimates that another $300 trillion of infrastructure investments are needed by 2050 to mitigate climate change. Yet, investment is not the biggest barrier for banks – risk management is. 

A recent Mazars report on the global banking sector found that most banks have put climate change and environmental, social and governance (ESG) issues high on their corporate agenda, but few have the tools in place to concretely assess and manage ever present climate risks. This is where Baringa’s tool delivers value. 

“Climate scenario analysis is a critical strategic capability for BNP Paribas,” said Antoine Bezat, head of stress testing methodologies and models at the bank. “Baringa’s Climate Scenario Model stands out for its breadth of sector and asset coverage, the integration of transition and physical risk, and the ability to provide risk metrics down to the individual asset level.” 

According to Preston, Baringa has big plans for the new partnership. “We will help BNP Paribas to accelerate and embed practical and usable climate analytics across its organisation, feeding into its climate strategy, and into all key decision making and reporting. This will pave the way for others to follow across the industry.”