Socially responsible investment (SRI) funds have made a spectacular breakthrough in institutional and retail portfolios after being little known to the general public only a few years ago.
- The 2020s will see an environmental revolution; there will be no other choice than to massively invest to resolve environmental problems in both emerging and developed economies.
- Environmental funds investing in growing businesses could well produce returns that are higher than cyclicals, neutral or defensive funds.
- In addition to SRI funds, BNP Paribas Asset Management takes environmental, social and governance (ESG) criteria into account in all its investment decisions in the open-ended funds range (with a few exceptions).
As awareness grows of issues including climate change, water scarcity, population ageing and urbanisation, our SRI funds can meet investors’ increasing demand for greater meaning in their investments. The funds would typically select companies that integrate solutions for environmental protection and societal issues as well as good governance in their business.
SRI: applying sustainable development in financial investments
BNP Paribas Asset Management began developing its SRI expertise as far back as 1997 and now offers investors a broad range of socially responsible funds with a total of EUR 35 billion in assets under management as of the end of December 2017 (source: BNPP AM).
Environmental SRI funds make targeted investments in companies with activities or supplying products and services related to the protection of the environment.
Our Aqua, Climate Impact, Global Environment and SMaRT Food funds, for example, invest in companies that offer hands-on sustainable development solutions. The activities they invest in have potentially more attractive growth prospects compared to the rest of the economy.
Our best-in-class solutions
Our SRI funds aim to have overweight investments in companies that have demonstrated greater social and environmental responsibility in areas such as climate change and human resources, and that comply with the principles of good corporate governance including independent boards of directors and respect of shareholder rights. These criteria can also be applied to issuers (sovereigns, supranational organisations, etc.) of bond and money-market instruments.
Issuers are selected on the basis of proprietary research by our team of extra-financial analysts.
Integrating ESG criteria in all our investments
In addition to offering investors SRI funds, BNP Paribas Asset Management integrates environmental, social and governance (ESG) criteria into all its investment decisions and in its open-ended funds with a few exceptions (such as index funds).
In all its investments, BNPP AM includes ESG-based exclusions based on the 10 principles of the United Nations Global Compact. Specific ESG standards are applied to companies operating in sectors that may have a social and environmental impact. These sector-based policies cover, for example, palm oil, paper & pulp, coal-fired power plants, nuclear energy, mining & asbestos, agrochemicals & water, food safety and tobacco.
Lastly, in accordance with international treaties, industries such as controversial weapons (antipersonnel mines, cluster bombs, nuclear arms and uranium-based arms) are ineligible for investment.