BNPP AM unveils roadmap to deliver Paris-aligned investment portfolio by 2025

BNPP AM unveils roadmap to deliver Paris-aligned investment portfolio by 2025

Multinational investor BNP Paribas Asset Management (BNPP AM) has boosted its sustainable investment strategy, setting out further details of how it intends to align its entire €399bn portfolio with the goals of the Paris Agreement by 2025.

The company said its new Global Sustainability Strategy, which was released this week, took it another step further in contributing to a low carbon future and was fully aligned with its focus on "delivering long-term sustainable investment returns for clients".

Built around the three key sustainability themes of the energy transition, the environment, and equality, the strategy sets out how BNPP AM plans to engage with companies in its portfolio, including fossil fuel firms, on climate issues and governance.

Under the strategy, every company the asset manager invests in will need to demonstrate how it is working towards the Paris Agreement's 2C goal by 2025, the company said.

Frédéric Janbon, CEO of BNP Paribas Asset Management, said enhancing its climate action commitments was in the interests of its clients as well as being central to its fiduciary responsibility.

"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 Paris Agreement and the Sustainable Development Goals," he said. "This is central to our firm's strategy and our ability to deliver sustainable, long-term investment returns for our clients."

It follows the release last week of the asset manager's enhanced coal investment policy, which means that from 2020 it will exclude companies that derive more than 10 per cent of their revenue from mining thermal coal, and/or which account for one per cent or more of total global production. Coal-fired power generators with a carbon intensity above a certain threshold will also be excluded under the policy.

After stepping up efforts to reduce its exposure to thermal coal assets, BNPP AM suggested the next phase of its strategy would be to increase its engagement with companies in other carbon intensive industries, such as oil and gas, steel and cement.

In the meantime, it plans to publish a new report covering its engagement activity later this year.

The France-based investment giant also plans to integrate environmental, social and governance (ESG) factors into all of its investment processes - including research, risk management, engagement, voting disclosure, and reporting - and has set up an ESG validation committee to oversee the process across the firm.

Pledging that all of its investment strategies will be "sustainable" by 2020, BNPP AM said every one of its investment processes and strategies would be reviewed and approved by the ESG committee by the end of this year.

In addition, a set of objectives and performance indicators covering carbon intensity, water risk, deforestation and boardroom diversity have been developed by the asset manager, which it aims to align with its portfolios before measuring and reporting on its climate risk exposure by 2020.  

Moreover, in a bid to foster a climate-aware culture across the firm, the investor has expanded its ESG expert team while additionally setting up an ESG focused training programme for all staff.

Jane Ambachtsheer, BNPP AM's global head of sustainability, said that as an asset manager the firm had an influential role to play in the low carbon transition.

"Through our Global Sustainability Strategy, we aim to set the standard for leadership in sustainable investment," she said. "Beyond helping us to articulate and communicate our sustainable investment approach and ambition, we are defining clear objectives and targets against which we can measure success and our impact for clients and the economy."

The new strategy follows similar moves this week from employee-owned asset manager Neuberger Berman, which yesterday launched a new climate strategy aimed at analysing the risks facing its $300bn portfolio "as the world transitions to a lower carbon economy.

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