What's going on?

French banking giant BNP Paribas announced on Wednesday that it would no longer finance companies or projects linked to oil production from shale or tar sands � as part of its efforts to increase support for renewable energy.

What does this mean?

Both shale and tar sands oil production are regarded by many experts as damaging to the environment. Admittedly, BNP doesn�t actually have that many investments in either of those areas, and it also won�t stop extending loans to such companies entirely: it will still work with companies for whom shale and/or tar sands drilling are only a minority part of their business.

Still, both form a significant part of North American oil production, especially as shale drilling has soared over the past decade � so this is a notable move by BNP, which wants to keep supporting the energy sector financially, but primarily by funding more �sustainable� activity (it hopes to invest �15 billion in the sector by 2020).

Why should I care?

The bigger picture: Investment managers are being forced to take account of �values�.


Investing with your values in mind is a growing trend (like, say, certain university endowment funds do), as more attention is being paid to companies� track records regarding the environment, social responsibility, and good governance (in fact, one of every five dollars invested in America today targets sustainable investments). This is seemingly starting to affect at least some companies� behavior and corporate decision making.

For markets: Investing sustainably may make financial sense as well.


There�s a consensus between most economists and scientists that humans are currently consuming more than we can sustainably produce � and at some point, the way we both consume and produce (and so, the way we spend our money) has to change. Investors are anticipating this long-term change in the global economy, thinking that any corporation who�s preparing for this change today will be best poised to reap profits when it occurs in the future.