Report on Environmental and Social Responsibility 07 The bank for a changing world CONTENTS Statement from the Chairman and Chief Executive Officer 2 Compliance within BNP Paribas 81-86 Key figures 3-4 Dedicated teams 82-84 Group's activities in 2007 5-73 • Up-to-date standards 83 • Monitoring financial security mechanisms 83-84 Corporate & Investment Banking 6-21 Business continuity 85-86 Advisory and Capital Markets 11-16 • Organisation of continuity efforts 85 • Equities and Derivatives 11-12 • Operational management of business continuity plans 85-86 • Fixed Income 13-14 BNP Paribas and its stakeholders • Corporate Finance 15-16 87-158 Financing businesses 17-21 Organised dialogue with stakeholders 88-89 • Specialised Finance 17-19 Shareholder information 90-99 • Structured Finance 20-21 Human Resources development 100-126 French Retail Banking 22-33 • Group values underpinning HR management 100 • Human Resources policy framework 101-103 • Individual clients 25-27 • Key challenges of human resources management 104 • Entrepreneurs and freelance professionals 28-29 • Clearly identified operational challenges 105-126 • Corporate and institutional clients 30-32 • After-sales organisation 33 Relations with clients and suppliers 127-137 International Retail Services 34-47 • A closely-attuned relationship 127-132 • Socially Responsible Investment 132-136 • Personal Finance 37-38 • Supplier relations 137 • Equipment Solutions 39-40 Impact on the natural environment 138-150 • BancWest 41-42 • Areas 138-140 • Emerging Markets 43-47 • Levers 141-144 BNL banca commerciale 48-55 • Means of action 145-150 Asset Management & Services 56-71 A partner in society 151-158 • BNP Paribas Private Banking 59-60 • A deep commitment to microfinance 151-153 • BNP Paribas Investment Partners 61-63 • Community initiatives promoting • BNP Paribas Personal Investors 64-65 integration and solidarity 153-155 • BNP Paribas Real Estate 66-67 • BNP Paribas Foundation: • BNP Paribas Assurance 68-69 imaginative and in touch with the world 156-158 • BNP Paribas Securities Services 70-71 Corporate governance 159-191 Klépierre 72-73 The Board of Directors 160-162 BNP Paribas Principal Investments 73 Remuneration 163 The Group's approach to sustainable development 74-80 Summary table of transactions on BNP Paribas Responsability based on core values stock reported by key individuals 164 and guiding principles 75 Report of the Chairman 165-190 A strong commitment to subtainable development 75-76 • Corporate governance at BNP Paribas 165-181 • Global initiatives 75 • Internal Control 181-186 • Finance sector initiatives 76 • Limitation of the powers of the Chief Executive Officer 186 • Internal control procedures relating to the preparation Combining SRI and economic performance 77-78 and processing of accounting and financial information 186-190 • A duty of management 77 Statutory Auditors' report 191 • A group-wide assignment 78 • The internal control mechanism 78 NRE Appendices - Social Chapter 192-196 Recognition from SRI rating agencies 79-80 NRE Appendices - Environmental Chapter 197-200 • SAM 79 Report by one of the Statutory Auditors 201-202 • Vigeo 79 Reconciliation table 203 • CFIE 80 • CapitalBridge evaluation 80 Glossary 204-209 Statement from the Chairman and Chief Executive Offi cer Michel Pébereau, Chairman Baudouin Prot, Chief Executive Offi cer Against the backdrop of the fi nancial crisis, BNP Paribas has continued to report vigo- rous growth across all core businesses. The Group’s performance in 2007 illustrates the robustness of our business model based on a careful balance between retail banking, which accounts for 50% of our earnings, and asset management and corporate and investment banking, which represent one-sixth and one-third respectively. The Group has been rated AA+ by Standard & Poor’s, and this fi nancial strength, coupled with our stringent risk policy, has gone a long way to helping us weather the storm. BNP Paribas’ overall performance is also enhanced by the high standards we have set ourselves in terms of corporate and social responsibility. BNP Paribas Group was ranked no. 1 among Top Renewable Financial Advisers in 2007, maintaining its position as one of the world leaders in renewable energy fi nancing. An agreement on microcredit with the French Development Agency has led to some 420,000 borrowers (78% women), or a total of two million people including family mem- bers, receiving microloans as a result of facilities that we have granted to micro-fi nance institutions. Growing recognition for our corporate and social responsibility policy means that the BNP Paribas share is now among the most popular in European SRI funds(1). Our Group also received a corporate social and environmental responsibility award in the United States in recognition of our employees’ commitment to reconstruction pro- jects in New Orleans. It is with great pleasure, therefore, that we present this Sustainable Development (1) Vigeo - Avanzi SRI Research Report, which puts forward our corporate social responsibility policy and achievements survey, October 2007 / Capital for 2007. Bridge survey, June 2007. 2 Key fi gures Results (in millions of euros) 31 December 2006 31 December 2007 Total assets 1,440,343 1,694,454 Customer deposits 393,133 445,103 Customer loans (gross) 298,652 346,704 Shareholder’s equity (1) 49,512 53,799 International capital adequacy ratio 10.5% 10% o/w Tier One 7.4% 7.3% (1) Before income appropriation. Number of Group employees (Full-time equivalents) 2006 2007 World 141,911 162,700 Europe (including overseas department and territories) 110,584 126,000 Long-term ratings Standard & Poor’s AA+ Stable outlook upgraded on 10 July 2007 Moody’s Aa1 Stable outlook upgraded on 23 May 2007 Fitch AA Stable outlook reaffirmed on 16 May 2007 Net banking Gross income Net attributable Earnings income (in millions of euros) income per share (in millions of euros) (in millions of euros) (in euros) (***) 7,822 7,308 31,037 8.49 12,273 8.03 27,943 5,852 10,878 6.96 21,854 4,668 8,485 5.51 18,823 17,935 7,231 3,761 6,650 4.28 2003* 2004* 2005** 2006** 2007** 2003* 2004* 2005** 2006** 2007** 2003* 2004* 2005** 2006** 2007** 2003* 2004* 2005** 2006** 2007** 3 The BNP Paribas Group BNP Paribas is a European leader in banking and fi nancial services, with a signifi cant and growing presence in the United States and leading positions in Asia. The Group has one of the largest international banking networks, a presence in over 85 countries, with almost 163,000 employees, including over 126,000 in Europe. BNP Paribas enjoys key positions in its three core businesses: Corporate & Investment Banking (CIB) Retail Banking, comprising three divisions: • French Retail Banking (FRB) • Italian Retail Banking: BNL banca commerciale (BNL bc) • International Retail Services (IRS) Asset Management & Services (AMS) Return on equity Market capitalisation (in%) (****) (in billions of euros) Source: Bloomberg 76.9 21.2 67.2 20.2 19.6 57.3 16.8 (*) 47.2 Under French GAAP. 14.3 45.1 (**) Under International Financial Reporting Standards (IFRS) as adopted by the European Union. (***) Adjusted for the impact of the 2006 rights issue on years 2003 to 2005. (****) Return on equity is calculated by dividing net attributable income (adjusted for interest on undated super subordinated notes deemed equivalent to preferred shares issued by BNP Paribas SA and treated as a dividend for accounting purposes) by average equity attributable to equity holders of the parent at 1 January and 31 December of the period concerned (after distribution and excluding undated super subordinated notes deemed equivalent to preferred shares issued by BNP Paribas SA). 2003* 2004* 2005** 2006** 2007** 2003 2004 2005 2006 2007 4 Activities Corporate and Investment in 2007 Banking French Retail Banking International Retail Services BNL Group's banca commerciale Asset Management and Services Klépierre BNP Paribas Principal Investments invand stment banking Corporate 6 BNP Paribas, London, 10 Harewood Avenue 7 BNP Paribas Corporate and Investment Banking: a robust and diversifi ed business model With almost 16,000 employees, operations in more than 50 countries, 28% of the Group’s revenues and 35% of its pre-tax net income, BNP Paribas Corporate and Investment Banking (BNP Paribas CIB) operates in advisory and capital markets (Corporate Finance, Equities and Fixed Income) as well as in fi nancing businesses (Specialised and Structured Finance). BNP Paribas CIB excels in three particular sectors: • derivatives – it is a leading global player in interest rates, credit, forex, commodity and equity derivatives; • capital markets – it is among the Top 10 European houses for both Equity Capital Markets and Debt Capital Markets (bond issues, securitisation, syndicated loans, etc.); • specialised fi nance – it is a world leader for acquisition, export, infrastructure project, energy and commodity fi nance. Clients – corporates, fi nancial institutions and investors – are at the heart of BNP Paribas CIB’s organisation. Coverage executives are focused on delivering the best mix of services in support of their clients’ strategies, calling on specialists in derivatives, capital markets and specialised fi nance around the globe to deliver world class bespoke and innovative solutions. In 2007, BNP Paribas CIB delivered exceptional results and was successful in weathering the credit liquidity squeeze of the second half of the year through a diversified and client-centric business model which showed resilience and sustainability compared to most of its competitors. Through constant innovation and the drive, commitment and excellence of its teams, BNP Paribas CIB gained increasing industry recognition in 2007 with a fl urry of awards for its capital markets and fi nancing businesses, as well as for its Corporate Finance Division in France and in Asia. BNP Paribas CIB’s focus on emerging markets and Asia paid off with the growth of its market share and signifi cant deals across the business lines in these regions of the world.