Sustainable Investment: Serving the planet and performance
It is now agreed that the global warming, the population increase and the loss of biodiversity will put the world under unprecedented pressure. The challenges are to estimate the extent of the consequences on the Earth's habitability and on the stability of the financial world, and to use all possible levers to limit the negative impacts on our livelihood.
We believe that within a few years, sustainable investments will become mainstream, and that ESG criteria will be fully integrated into the risk, return and liquidity criteria traditionally considered by investors. The good news is that sustainable & responsible investments have demonstrated to perform at least as well as traditional investments over the long term. They have also shown greater resilience during the recent Covid-19 crisis. Each customer can therefore find an interest in this approach, whether for ethical or financial reasons. Or both.
The sanitary crisis is likely to accelerate the development of sustainable investing. Recent months not only demonstrated a better resistance of sustainable assets, they also showed a growing awareness of populations on social and environmental issues. In addition, many public aids aimed at boosting economies are subject to compliance with environmental criteria, thereby favouring the companies engaged in this transition. For the European Union alone, at least 30% of the EUR 750 bn in the European recovery plan are related to the fight against global warming.
The climate emergency and the extremely strong pressure on natural resources are calling into question entire industrial sectors that need to rethink their business models. The highest growth margins will be recorded mainly in the energy transition sectors, but also in the circular economy and in the Blue Economy, as awareness grows about the need to preserve the oceans.
Chronologically, the energy transition was one of the themes integrated the sooner in the new generation of responsible funds. Multisector or thematic, decarbonisation of the economy is now the common base of most of the responsible investment products.
The circular economy is an absolute necessity to ensure the sustainability of the supply chains and the livelihood of individuals, in a context of increasing consumption due on the one hand to the increase in population (multiplied by 4 since 1950, with projections of 11 Bn people by 2100), and on the other hand to the increase in the middle class. We believe that companies that rethink and create new production models will be the winners of tomorrow. Those who can be more energy efficient and more frugal on the use of raw materials, who can turn their waste into resources, or offer new models no longer based on the sale of a property but on the provision of a service, will not only benefit from better operational efficiency. They will ensure their survival over the long term.
As for the Blue Economy, this is an increasingly important issue. Safeguarding oceans is a major challenge from a health and environmental prospective, but also from an economic point of view with a strong growth potential. It embraces topics as diversified as energy, food, health and waste management. It has been estimated that its contribution to the global GDP would double by 2030. New financial products are emerging on this theme, such as the Blue Economy ETF recently launched by BNP Paribas Asset Management.
Our customers have the extraordinary power to impact the world. However, they are often lost facing the huge amount of responsible investment products available on the market (not all of which, moreover, live up to the promises they make). Our mission is to guide them in their investment choices and enable them to align their investments with their convictions.
This philosophy is embedded in our DNA, with the first Responsible Investments team created at Wealth Management in 2006, and now more than 15 experts in positive impact solutions serving our clients.
Assuming our pioneering role, we offer our clients an innovative journey based on:
• The integration of the ESG dimension into all our services. In addition to a responsible mandate for discretionary portfolio management that has been existing for more than 10 years, we launched at the end of 2019 the Sustainable Advisory, an investment advisory service that takes into account the environmental and social preferences of our clients in addition to the usual financial criteria. Customers choosing these services receive a sustainability analysis of their portfolios through a sustainability report that complements the financial report,
• a in-house sustainability rating methodology that enables us to assess the social and environmental quality of the investment products that we propose to our clients,
• an open architecture that allows us to select the best sustainable and impact investing products available on the market. We can also leverage on our asset manager's 20 years of experience and 25 ESG experts. BNP Paribas Asset Management has committed to incorporate environmental, social and good governance criteria into all its investments from 2020 on.
At the forefront of sustainable finance, we innovate continuously and pave the way for positive banking. We pursue our goal of making sustainable investments the new standard and empower our clients to impact the world.