BNP Paribas Investment Partners (BNPP IP), part of BNP Paribas Group, has a long-standing history of actively supporting Socially Responsible investing (SRI).
As a responsible global investor, the first step in Environment, Social and Governance (ESG) investing is the integration of ESG criteria into our investment process, enabling us to look at non-financial factors and assess how they affect financial performance. Beyond this we also invest thematically, focusing on companies that offer solutions in order to add social or environmental value over and above ESG investing. In other words we move from assessing ESG risks and effects on financial performance to seeking companies that are actively involved in searching for solutions to these risks. For example, looking at water risks, from a thematic perspective we would seek to identify companies involved in water treatment, based on sound ESG foundations.
In terms of our product offering, BNPP IP launched an SRI fund back in 1997, one of our SRI milestones. Since 2006, we were one of the founding members of the United Nations Principles of Responsible Investments (UN PRI), adopted ESG standards based on the 10 principles of the United Nations Global Compact, which covers human rights, labor, environment and anti-corruption.
In March 2016, BNPP IP signed a partnership deal with UK’s Pension Management Institute – focused on advising the Institute how to ESG criteria in their investment decisions. This further reaffirmed BNPP IP’s position as a strong advocate for ESG investments.
The BNPP IP Asia Pacific Equity team has adhered closely to the Group’s SRI principle. We proactively communicate with our SRI team in Europe to ensure that we are aligned in terms of ESG investment views. In parallel, we also constantly engage with corporates and external ESG professionals to ensure our investments align with continuous development of existing ESG investment standards. Voting at general shareholder meetings is also one of the vital channels between us and corporates we are invested in to promote good ESG practices. These efforts are indispensable to ensure ESG criteria being fully integrated into our investment process.
As a general rule of thumb, companies that fail to meet minimum ESG standards are “ineligible” for our portfolios and added to a watch list. In addition, the team keeps abreast of the methodologies and ESG developments by participating in seminars organized by index providers.
Given the concept of ESG investing is relatively new in Asia Pacific, we understand the importance of raising ESG awareness among the universe of listed companies in the region. For example, we send questionnaires to companies we invest on behalf of our clients to learn about their ESG practices beyond regular disclosures (annual reports and sustainability reports). We find this exercise mutually beneficial to BNPP IP and corporates that we invest in. Most importantly, this allows us to get a sense of their attitude towards ESG principles, hence allowing us to further strengthen our structural market development (SMD) analysis, our investment process. Integrating ESG standards into SMD analysis not only creates sustainable long term investment returns to our clients; ultimately, it also protects them from reputational, financial and operational risks.