Dialogue & transparency
Societe Generale’s position in response to Oxfam’s report
We regret the systematic opposition and biased methodology of this latest OXFAM report. This report does not objectively take into account the concrete progress achieved by Societe Generale. We are actively committed to supporting our clients in a pro-active and responsible way with their ecological transition, seeking to achieve carbon neutrality by 2050. The Group has set intermediary targets to both reduce our most carbon-intensive activities and promote the financing and use of renewable energies. After having made a good start with our complete withdrawal from coal in 2030-2040, as well as with our objective of reducing exposure to oil and gas extraction by 10% by 2025, the Group is accelerating in conjunction with other French banks to reduce our exposure to activities notably related to shale oil and gas.
We have carefully read the latest OXFAM report on the banking sector’s carbon footprint. We regret that once again this report does not take into account the major progress made by the banking sector and the companies its supports in terms of ecological transition. The French banking sector has established itself as a leader in green finance, recognised as such by numerous extra-financial rating agencies.
Societe Generale is already committed to achieving the objectives defined by the Paris Agreement. Since 2015, the Group has repeatedly clarified and strengthened its measures to reduce exposure to the most carbon-intensive sectors and support the development of renewable energies. In recent months, we’ve accelerated on our commitments, demonstrating Societe Generale's concrete contribution to collective ambitions for the energy transition.
Societe Generale is one of the founding members of the Net Zero Banking Alliance, which we joined last April. Through this alliance, the Group is committed to aiming for carbon neutrality in all its portfolios by 2050. We prioritise dealing with the most carbon-intensive portfolios, focusing on defining intermediate alignment objectives and supporting our clients in a proactive and responsible manner with their transition.
This is also the sense of the efforts undertaken by Societe Generale, alongside four other European banks under the Katowice agreement, which created a robust, dynamic methodology applicable in all sectors - cf. creation of an open source credit portfolio measurement tool based on the PACTA for Banks methodology of the Think tank 2 Degrees Investing Initiative.
The financial sector acts in support of an economy which is admittedly still very carbon-intensive, so it is no surprise that a leading diversified and integrated banking group’s scope 3 emissions may still appear important. In addition, the CO2 emissions associated with banking activities in no way reflect the logic of supporting our clients with their transition, in which we are thoroughly engaged.
A more appropriate analysis of the Group's action should therefore not focus on the scope3 emissions but rather on the alignment of portfolios at an acceptable pace with regard to climate scenarios, on a bank’s ability to support its most carbon-intensive clients with their energy transition, and in full awareness of the social impacts generated by this transition.
Societe Generale has just announced the strengthening of our energy commitments by extending its efforts to reduce exposure to all shale oil and gas, oil sands, Arctic oil, Ecuadorian Amazon oil, and heavy crude oil, for both upstream pure players and diversified players.
We have one of the strictest thermal coal policies in the banking sector, to ensure our actual withdrawal from the coal industry in 2030 in the countries of the European Union and the OECD, and in 2040 in the rest of the world. Societe Generale is one of the first global banks to announce a concrete, near-term goal of reducing our global exposure to the oil and gas extraction sector by 10% by 2025. We are ahead of the target of actively supporting the development of renewable energies with €120 bn dedicated to financing the energy transition between 2019 and 2023. To achieve the ambitious and necessary objective of limiting global warming to 1.5 ° C, CSR is indeed a central pillar of Societe Generale group's strategy, and at the very heart of our businesses.
We have read the new NGO report the conclusions of which we firmly object to. They are based on a biased methodology (incorrect figures and scope of analysis). We also condemn the sensationalistic and counter-productive approach.
The matter of energy transition requires our whole attention and focus. Societe Generale has been building for over a decade now a framework for managing climate risk that is detailed in the Climate report. This report studies the financial risks arising from climate transition, on one hand, and the impact of financial activities on climate, on the other hand. It is just false to let people think that climate risks are not taken into account today.
Our approach is meant to be progressive and responsible :
- It is about accompanying our corporate clients in their own energy transition. As a matter of fact, Societe Generale is ranked #2 in the financing of renewable energies (IJ Global) and has the ambition to contribute to raising €120 billion between 2019 and 2023 to support the energy transition.
- It is about steering our financing portfolios towards the goals of the Paris Agreement with specific indicators and objectives. For the energy sector, these indicators include a monitoring indicator of the financial exposure to oil and gas extraction along with a target to reduce its overall exposure to the oil and gas extraction sector by 10% by 2025 (more restrictive than the SDS scenario of the IEA 2020) and a monitoring indicator of the financial exposure to thermal coal with a target of exiting thermal coal by 2030 for companies in the European Union or OECD member countries, and 2040 for those in the rest of the world.
- Lastly, it is about working in a transparent fashion with all the other stakeholders of the banking sector, regulators, supervisors, academics, and the civil society to share common methodologies. In Europe, the framework created for sustainable finance is especially demanding and Societe Generale answers proactively all requests and consultations for its operational deployment. In 2020, the Group has thus volunteered to participate to two climate-related stress-tests organized by the EBA and ACPR (French).
Regarding the report methodology and its results, the approach does not take into account the selectivity of our sectorial portfolios nor the transition strategy of our corporate clients. Those specific distinguishing points are crucial in the definition of the realistic and concrete approach that Societe Generale has on transition.
We also disagree with the very mere principle of comparing in one single indicator information of very different nature, that are the value of the company’s equity and the gross exposure, and extrapolate on the financial solidity of our company.
We are fully aware of our responsibility and role that the banking sector has to play. The energy transition is at the center of the strategic ambitions of Societe Generale.
Together, let's say yes to solutions and no to excessive behaviour!
As COP 24 draws to a close, and with the urgency of climate change and the sustainability of the energy transition at the centre of discussions in France and the rest of the world, are we really on two opposite sides?
Societe Generale is an ally of all those engaged in combating climate change with concrete actions
Societe Generale is convinced of the urgency we are facing and supports the collective objective of keeping global warming below 2°C. We have been taking concrete measures since 2015. We support our customers, individual and corporate alike, in helping them achieve their energy transition projects. We provide a vast amount of financing for renewable energies, with a contribution to the energy transition of €100 billion between 2016 and 2020. We have stopped all financing of coal and oil from bituminous sands or extracted in the Arctic. We will continue to steer our activities in line with responsible transition scenarios and as part of a proactive approach to achieve continued progress.
We say stop the excess, the attacks and the scenes that make scapegoats of our staff.
We cannot accept that excessive behaviour and violence against our staff members becomes commonplace. We say yes to dialogue and no to provocation and attacks! The demonstration on Friday, 14 December at our main branch in Paris comes after several months of smear campaigns at branches across France seeking to blame Societe Generale members of staff. There is nothing to justify attacking the reputation and security of our staff, trolling them on social media and transforming their places of work into public sideshows. Excessive behaviour creates more excessive behaviour and wastes time dividing us instead of working together to find realistic solutions to a complex problem. Spreading exaggerated, simplistic and frankly incorrect information is simply playing into the hands of climate sceptics. Let's continue to engage in constructive dialogue.
We want to work together to speed up a realistic energy transition for the benefit of all.
Precisely because we are well aware of the importance of the many elements that are at stake, we reject all dogmatic approaches and temptations of dramatisation. Renewable energies will take years to replace fossil fuels. Not because we don’t finance them but because, notably, the energy produced, which often depends on climatic conditions, cannot yet be stored or transported on a large scale. The complete rejection of fossil fuels is therefore unrealistic. While the reduction of coal is the first priority for all of us, gas, including shale gas, is a necessary transition energy. When it is extracted and processed according to strict environmental standards, US shale gas is useful for the energy transition because it enables a faster exit from coal. This is a priority in the US and Asia in particular, notably in China and India where demand for energy is increasing to ensure vital economic growth as well as political and social stability. A realistic approach means taking into account both the urgency of climate change and the legitimate needs of global economic growth, notably in developing countries. It also means knowing how to listen and adapt. After numerous constructive discussions with the NGO Amis de la Terre, we made a decision to discontinue all direct financing of imports of US shale gas into France. We will assess our support of the Rio Grande project in Texas, which is at the feasibility study stage, between now and the end of the first half of 2019, and our support will depend on strict compliance with our environmental and social policies. The energy transition will only be effective and acceptable if it takes into account in a global and socially fair manner the requirements of balanced and sustainable growth for the benefit of all the people of our planet.