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Investment Titan Trumpets ESG Commitment

Tom Burroughes, Group Editor , 21 March 2019


The investment house, which oversaw about $452 billion of client money at the end of last year, says it is expanding and deepening its ESG strategy.

BNP Paribas Asset Management, part of Paris-listed BNP Paribas, has launched a "global sustainability strategy" which operates across the entire group. It highlights how wealth managers are embracing an investment trend that takes note of how economic activity affects the environment and society.

The group, which at the end of last year oversaw €399 billion ($452.9 billion) of assets under management, making it one of the biggest players in the field, said that its strategy concentrates on three themes: energy transition, the environment, and equality. It intends to start measuring how well it has achieved targets by 2020.

BNPP AM will integrate environmental, social and governance factors into its investment processes, including investment philosophy, research and idea generation, portfolio construction, risk management, engagement, voting, disclosure and reporting.

The rise of ESG-themed investment ideas plays to concerns about man-made global warming, pollution and the destruction of forests and other habitats; firms are also trying to use their economic muscle to force producers of goods such as firearms, tobacco and carbon-heavy energy to change. Advocates of ESG investing say that it is as robust as more conventional ways of deploying money and is, in fact, more resilient in the longer term. The area is still relatively young and some investors have complained that data helping to drive decisons is patchy.

The French group said that it will improve how it stewards investments, such as its engagement with the firms in which it invests, and how it deals with policymakers and regulators.

The organisation said that it follows the UN Global Compact principles; it has a set of sector policies to define the conditions for investing in particular sectors, and a guide for screening requirements and engagement.  The sector policies are applied across all open-ended funds. One example of this is BNPP AM’s recently-published tighter exclusion policy1 for companies engaged in mining thermal coal and generating electricity from coal.

There is also a set of targets, such as the "carbon intensity" weights of its imvestments, the water usage of investments and a ratio of women on company boards.

“We are at a crossroads: now is the time for decisive action by the financial community to play its part in helping to achieve the sustainable future we need, as laid out by [the] Paris Agreement and the Sustainable Development Goals," Frédéric Janbon, chief executive of BNP Paribas Asset Management, said.

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