(Bloomberg) -- BNP Paribas (PA:BNPP) SA will cease funding and advising tobacco companies as the French lender seeks to distance itself from the industry over health concerns.
The bank will halt transactions and investments related to the industry and “progressively disengage” from relationships with tobacco clients, Laurence Pessez, the bank’s global head of corporate responsibility, said in an interview in Paris. The decision involves all types of products and services, though the bank will honor all contractual commitments, she said.
The lender joins a number of other institutions that are shunning the sector. France’s largest insurer Axa SA said last year it would stop investing in tobacco and divest all its assets in the industry, while Bank of New Zealand said this year it would stop investing in weapons, nuclear and tobacco companies. Last month BNP Paribas also said it would stop 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 honor our commitments with our clients,” Pessez said. “Smoking is recognized by the WHO as the main cause of avoidable death in the world.”
The bank had previously funded and worked on deals for clients including British American Tobacco (LON:BATS) Plc, Imperial Brands (LON:IMB) Plc and Philip Morris International Inc (NYSE:PM)., 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 $55 billion purchase of Reynolds American Inc (NYSE:RAI) this year, according to a person with knowledge of the matter.
Paris-based BNP Paribas -- along with other French and global banks -- continues to finance other industries that draw scrutiny on ethical grounds such as defense.
“We naturally respect the law and international agreements,” Pessez said.
BNP Paribas ranked third in managing bridge loans to companies globally this year and ninth in advising on corporate bonds, according to Bloomberg data.