LONDON • BNP Paribas SA will cease funding and advising tobacco companies, the latest financial firm to distance itself from the industry over health concerns.
The French bank will halt transactions and investments related to the sector and “progressively disengage” from relationships with tobacco clients, Laurence Pessez, the bank’s global head of corporate social responsibility, said in an interview in Paris.
The decision applies to all types of products and services, though the bank will honour all contractual commitments, she said.
The lender joins a number of institutions that are shunning sectors they consider unethical or socially irresponsible.
France’s largest insurer Axa SA said last year it would stop investing in tobacco and divest of its assets in the industry, while Bank of New Zealand said this year it would stop investing in weapons, nuclear energy and tobacco companies. Last month, BNP Paribas also said it would cease funding shale and oil sand projects as part of its initiative to tackle climate change.
“This decision is effective from now and the withdrawal of course will be progressive to the extent that we want to honour our commitments with our clients,” Pessez said. “Smoking is recognised by the World Health Organisation as the main cause of avoidable death in the world.”
BNP’s new position applies to firms that draw their revenue mainly from tobacco, including manufacturers, wholesalers and traders, the Paris- based bank said in a statement after Bloomberg News reported the decision last Friday. Triggering the move was a recent decision by the UN Global Compact to exclude tobacco firms from its initiative for a responsible economy.
Pessez declined to comment on any clients or specific deals that might be affected. BNP Paribas doesn’t disclose exposures to the tobacco sector or the impact on revenue from its boycott, she said.
The bank previously funded and worked on deals for clients including British American Tobacco plc (BAT), Imperial Brands plc and Philip Morris International Inc, people with knowledge of the matter said, asking not to be identified as the names aren’t public.
Investment banks often use funding as a means to win lucrative advisory mandates on deals with companies.
BNP Paribas dropped out of a syndicate of banks financing BAT’s US$55 billion (RM226.6 billion) purchase of Reynolds American Inc this year, according to a person with knowledge of the matter.
BNP Paribas — along with other French and global banks — continues to finance other industries that draw scrutiny on ethical grounds such as defence.