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FORWARD THINKING | PODCAST – 16:00 MIN

Talking Heads – Presenting our new Global Sustainability Strategy 2023-2025

In this article:

    We published the first iteration of our Global Sustainability Strategy (GSS) in 2019. It laid the foundations for the implementation of sustainability across our organisation. An incredible amount has happened since then. The fundamentals of our approach, however, remain the same. We have now updated our strategy to detail our objectives from 2023 through to 2025. This edition sets out the full scope of our ambition on sustainability.

    In this podcast, Jane Ambachtsheer, Global Head of Sustainability, presents our Global Sustainability Strategy 2023-2025. She discusses with Andrew Craig, Co-head of the Investment Insights Centre,  how recent developments in sustainability-related investing are reflected in the evolution of our strategy.

    You can also listen and subscribe to Talking Heads on YouTube and read the transcript.

    Talking Heads brings you insights on topics that matter to investors, analysis of the world and financial markets, and conversations with our investment experts, all through the lens of sustainability. 

    XXX BNP AM

    Read the transcript

    This is an audio transcript of the Talking Heads podcast episode: Presenting our new Global Sustainability Strategy, 2023-2025 

    Andrew Craig: Hello and welcome to the BNP Paribas Asset Management Talking Heads podcast. Every week, Talking Heads will bring you in-depth insights and analysis through the lens of sustainability on the topics that really matter to investors. In this episode, we’ll be discussing the new edition of our Global Sustainability Strategy. I’m Andy Craig, Co-head of the Investment Insights Centre, and I’m delighted to be joined by Jane Ambachtsheer, Global Head of Sustainability. Welcome, Jane.  

    Jane Ambachtsheer: Hi. Thanks, Andy.  

    AC: This week, we launched our updated Global Sustainability Strategy. Could you talk us through what the strategy is, why we have written a second version of it, and what we expect to achieve with it? 

    JA: This is a one-stop shop to communicate our overall ambition and approach to sustainable investing. The first edition took us from 2019 through 2022, and we updated it to cover 2023 to 2025.  

    It sets out our ambition on sustainability – our view on the critical elements we are working towards to achieve a more sustainable economic future, which enhances our ability to deliver sustainable returns to clients. It covers our focus areas and how we’re integrating different elements into our investment approach.  

    AC: In the years since the first edition was published, the world has changed. The context for sustainability investing has changed profoundly. What are those changes and how do you see them as we look ahead? 

    JA: While our commitment and ambition around sustainability has not changed, there have been some fundamental shifts in the market and in the geopolitical context within which we’re operating.  

    One is the introduction of the Sustainable Finance Disclosure Regulation in Europe, which has implications for us and other asset managers across the region.  

    We’ve had to revise our definition of sustainable investments and finalise our methodology, integrating fund classification and the SFDR categories that our funds relate to.  

    Another focal point is net zero. We’ve seen the launch of the Glasgow Financial Alliance for Net Zero, which involves hundreds of financial institutions making commitments to net zero. BNP Paribas Asset Management is a signatory to the Net Zero Asset Manager Initiative and we’ve published our net zero roadmap showing how we are committed to evolving our investment approach around net zero alignment.  

    In terms of headwinds, we’ve seen geopolitical disruption in Europe, the Middle East and elsewhere, and a lot of volatility for some of the sustainability themes and markets. That has caused disruption.  

    We’re seeing a lot of progress towards the [net zero] transition, but not as much nor as quickly as needed. We see a combination of headwinds and tailwinds that our industry needs to make sense of and navigate short term, while keeping our focus on our objective of using our influence and investments to help push towards a net zero, environmentally sustainable and more inclusive economy.  

    AC: Can you talk about what has really changed in terms of the sustainability strategy since 2019? 

    JA: Some things have changed, some have stayed the same. We have six pillars to our sustainability approach, and they remain the fundamental building blocks that we use to integrate sustainability into our investment approach, our products and our operations.  

    Just to quickly talk through the six pillars: 

    The first is our forward-looking perspective – our focus on the energy transition relating to our net zero commitment; healthy ecosystems where we have a strong focus on tackling biodiversity loss, deforestation; and equality and inclusive societies. We will be publishing our equality roadmap this year.  

    The next pillar is our Responsible Business Conduct policy. This articulates expectations for responsible business conduct and the management of sensitive sectors. It focuses on avoiding regulatory and stranded asset risk and covers our policies on topics such as coal, oil & gas, and deforestation.  

    The third pillar is environmental, social & governance (ESG) integration – the insights that we’re able to develop with investment teams by pulling together qualitative and quantitative ESG information to develop points of views on companies. This can be translated into how we build our investment universes, our focus on risk and portfolio construction, right through to the reports we generate for our different portfolios. ESG integration is a core component of our approach.  

    Stewardship is the next pillar – how we vote, engage with companies and undertake public policy advocacy. We have a bold approach to stewardship and our stewardship team in partnership with our investment teams devotes a lot of work, time and effort to it. It’s about engaging with the companies we invest in to focus on numerous issues from climate-related disclosures, adopting net zero business plans, and ensuring that we’re seeing strong levels of diversity across investee company boards and senior management positions.  

    The fifth pillar concerns investment solutions for sustainability. This looks at how we can help to direct capital towards sustainable solutions. It includes our sustainable thematic or labelled funds and our impact strategies. This is an area we’ve really been focusing on over the last few years to expand our range across active and passive strategies in public and private markets. It’s an area that includes things such as our recent acquisition of IWC (International Woodland Company), which allows us to create investment opportunities in the private, sustainable timber and agriculture sectors.  

    Our sixth pillar concerns our operations – how we implement our own corporate social responsibility (CSR) strategy and ‘walk the talk’: are we living the values and the practices that we’re asking [investee] companies to implement? We have a strong focus on our own culture and making sure that we’re implementing those things from our own perspective.  

    These elements have remained in the updated sustainability strategy.  

    AC: So, what is new in this edition? 

    JA: What’s new is the ambition we have on specific topics for the next couple of years.  

    Among our near-term focus areas and priorities there are four elements: 

    First, our culture. We are putting a huge amount of focus on this and making sure that we are creating a sustainable culture internally. Among the initiatives is focusing on volunteering, providing opportunities for our staff to get engaged. For example, we do a lot of work in the communities where we operate to support disadvantaged youth through mentoring, opportunities and internships.  

    Category two is around bold stewardship – maintaining and building our position as a stewardship leader with robust and credible policies. We are increasingly working with policymakers to advocate more sustainable outcomes and the implementation of real-world policies that will enable capital to flow to achieve the transition we’re working towards.  

    The third category concerns being science-led and transparent in our approach to data and research. We are highly focused on making sure we’re open about how we do things such as creating our net zero triple ‘A’ framework, which means identifying companies that are achieving, aligned or aligning with net zero. This is transparent in terms of how we define each category, how we link in with the institutional frameworks that have been produced by groups such as the Institutional Investor Group on Climate Change. We often partner with academics to achieve some of these outcomes.  

    The fourth category is to continue to mobilise capital towards sustainable solutions. I mentioned the recent acquisition of IWC. We will continue to provide investors with new investment opportunities in the medium term. There are a couple of areas in particular: 

    1. A strong focus on emerging markets. We know that most incremental emission reductions need to take place in emerging markets to move towards a net zero future. We have a large footprint in numerous emerging markets either through BNP Paribas Asset Management, via direct investment offices or some of our joint ventures. Using that presence is an area we’re focusing on. It has the potential for significant impact. 
    1. Speaking of impact, that’s the next mid-term focus – to continue to evolve our framing of impact investing, to meet the needs of clients who want to allocate investments for impact, but also to measure our impact as an organisation and to report on that.  

    I should close with some internal priorities.  

    The first is around ESG data. We have a significant ESG data programme internally, which is a top priority to make sure we have clear, comprehensive, high-quality data to achieve all our objectives – be it safety, implementation, ESG analysis, net zero alignment or measuring alignment and misalignment with the [UN] Sustainable Development Goals. It’s an ambitious programme and something we’re going to continue to invest in.  

    The second internal priority is education. We’ve had thousands of hours spent by colleagues to undertake sustainable certifications across different markets, and we’re investing in our Investment Academy to make more information and knowledge sharing available to clients.  

    Finally, on the theme of knowledge sharing, we have a strong focus on strategic communications and making sure we make the most of all the knowledge and information that we have in different teams, but also communicating clearly and accessibly both to our colleagues across markets and to clients.  

    We have a lot going on. We’re excited about continuing on our path towards our ambition to be ‘the sustainable investor for a changing world’

    AC: Thank you very much. 

    JA: Thanks so much for having me. 

    Disclaimer

    Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.
    Environmental, social and governance (ESG) investment risk: The lack of common or harmonised definitions and labels integrating ESG and sustainability criteria at EU level may result in different approaches by managers when setting ESG objectives. This also means that it may be difficult to compare strategies integrating ESG and sustainability criteria to the extent that the selection and weightings applied to select investments may be based on metrics that may share the same name but have different underlying meanings. In evaluating a security based on the ESG and sustainability criteria, the Investment Manager may also use data sources provided by external ESG research providers. Given the evolving nature of ESG, these data sources may for the time being be incomplete, inaccurate or unavailable. Applying responsible business conduct standards in the investment process may lead to the exclusion of securities of certain issuers. Consequently, (the Sub-Fund's) performance may at times be better or worse than the performance of relatable funds that do not apply such standards.
    Private assets are investment opportunities that are unavailable through public markets such as stock exchanges. They enable investors to directly profit from long-term investment themes and can provide access to specialist sectors or industries, such as infrastructure, real estate, private equity and other alternatives that are difficult to access through traditional means. Private assets do, however, require careful consideration, as they tend to have high minimum investment levels and may be complex and illiquid.

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