ESG integration is the first level of consideration of sustainable development in traditional financial management (also known as ‘mainstream’). In addition to traditional financial analysis, environmental (E), social (S) and corporate governance (G) practices become a selection criterion.
At BNP Paribas Wealth Management, we do this in several ways:
1. excluding companies whose behaviour is harmful to human beings and the environment.
2. taking into account the financial risks associated with companies' poor ESG practices, without excluding them from the investment universe. This consists in analysing:
• the direct or indirect impact of a company's business on the environment (E).
• the impact of its business on employees, customers, suppliers and civil society (S).
• how the company is run, administered and governed (G).
3. encouraging the improvement of companies' ESG practices through the vote of resolutions at annual general meetings and/or engagement (dialogue with companies on their ESG practices).
The investor does not wish to invest in companies that violate major international treaties (human rights, labour law, etc.) or which operate in controversial activities. He/she aims to avoid the financial and/or reputational risk associated with poor ESG practices.
In addition, companies that have already proactively integrated ESG best practices have shown greater resilience, or even a long-term improvement, in their performance. The investor therefore sees these companies as a better investment opportunity: they are stronger over the long term and often have better valuation margins that are not visible through the traditional financial lens.
• All our main asset classes are analysed on the basis of (at least) ESG criteria. We are developing methodologies for alternative instruments (private equity, alternative funds).
• Certain investments will no longer be offered to our clients if the former do not comply with minimal responsibility policies.
A system of clovers that reflects the level of sustainability for financial investment.
Equities and bonds, funds, structured products, etc.