For many, data is the curse of sustainable finance. Either there is not enough of it or too much. It is expensive, inaccurate, untimely and not comparable. Yet while everyone in the industry complains about it, in the banking sector at least a few can claim to be really grappling with the problem.
Many of the biggest names in sustainability are happy to rely on external environmental, social and governance (ESG) data providers while waiting for some kind of standardization or consensus to emerge. And those that have put the effort into data development are for the most part keen to keep it proprietary.
Shortlisted
BNP Paribas has taken a different approach. Not only has the French bank put data at the heart of its sustainable finance strategy and devoted substantial resources to developing its data collection and processing capabilities, it has also committed to making it open source and publicly available.
Constance Chalchat, head of company engagement for BNPP corporate and institutional banking (CIB), says this is essential for the credibility of the market.
“Transparency and reliable data are crucial to ensuring that sustainable finance remains a positive force,” she says. “To combat greenwashing you need accurate, standardized data and comparability within a sector.”
Data is key to ensuring that BNPP’s clients are “as credible as possible” when they come to market with a sustainable finance transaction, she adds. “We want to make sure that their commitments are strong and seen as very material and that we are able to – as far as possible – measure the impact of the transaction.”
The French group started on its ESG data journey early, introducing corporate social responsibility screening for corporate clients in 2014. Two years later, it began aggregating ESG information from internal sources and external providers, and this data lake subsequently evolved into a sophisticated data platform.
“The entire group of BNP Paribas is connected to our central ESG data platform,” says Karinne Chapel, chief sustainable data and digital officer for the CIB. “This means that data is harmonized and streamlined, and whenever a specific business is asking for specific information, we can make sure it benefits the rest of the bank.”
Internal information is still supplemented by external data – BNPP is one of the largest purchasers of ESG data – and the platform uses artificial intelligence to mine unstructured documents and provide real-time insights, as well as forecasting.
“Most corporate reported data is stale by the time you use it,” says Chapel. “At best, data providers will provide real-time data on controversies. We are going a step ahead and trying to find data and design algorithms and models to be able to forecast the data, for example to predict the path of carbon dioxide emissions for a given client.”
The ESG data platform also incorporates tools such as CSRevolution, which allows relationship managers to view BNPP’s internal risk assessment for individual corporates, as well as ratings from external providers such as Sustainalytics, Vigeo Eiris and CDP. Users can also compare companies against sector peers and see a full history of their sustainable finance activities.
Transparency and reliable data are crucial to ensuring that sustainable finance remains a positive force
The procedure for internal ESG risk assessments has also recently been enhanced, replacing multiple frameworks across the group with a single process that combines an industry-specific client questionnaire with checks on compliance with sectoral policies and analysis of controversies.
In the context of its energy transition commitments, BNPP is now going further. Last year the bank began a line-by-line review of its portfolio to assess the actions required to achieve alignment with the Paris Agreement.
In-depth client engagement has been key to the process, says Chalchat. “When it comes to portfolio alignment, you can get a lot of off-the-shelf data from data providers and you can get more refined data from consultants,” she says. “But a lot of data still lies within the corporates.”
She adds that this gives BNPP an edge over many peers that are still assessing their portfolios using proxies or sectoral averages.
This commitment to accurate, granular data has also been the driver for partnerships with physical databases and local data collectors operating in countries such as Brazil. Doubtful data is also verified through on-the-ground ‘deep dives’.
Another defining characteristic of BNPP’s approach to ESG data is its commitment to transparency, as exemplified by its work on open-source data platform OS Climate. “For us data shouldn’t be a moneymaking business or a power tool,” says Chalchat. “It has to be shared, transparent and reliable, so that it’s an enabler of fast transition.”
This innovative and collaborative approach to data sets BNPP apart from its global peers and makes it a worthy winner of this year’s award for world’s best bank for ESG data and technology.