BNP AM

The official blog of BNP Paribas Asset Management

World Environment Day 2022 – Acting on behalf of one Earth

While the challenges Earth faces are daunting – a rapidly heating-up climate, habitat loss and extinction for thousands of species and pervasive pollution – we have the solutions and the technology to transform our economies and societies to make them more inclusive, fairer and more connected. The good news is the answers are increasingly affordable.  

So, to echo this assessment from the United Nations on this year’s World Environment Day, we believe all financial stakeholders, including asset managers and investors, should align their business strategies with global and national sustainability goals, including the UN SDGs,[1] the Paris Agreement and the upcoming Biodiversity Framework.

As we argue in our latest Sustainability Report

  • We need to first stabilise total demand for natural resources and then reduce it in the context of a growing population
  • Natural resource productivity should be substantially improved or, where possible, substitutes be found
  • We need to drastically reduce the ecological impact per unit of production and move towards a net-zero impact
  • We must develop a circular economy that allows natural resources to recover and to regenerate themselves. 

Improving the environmental impact of investments

At BNP Paribas Asset Management, we aim to improve the environmental impact of our investments. We have two targets with respect to our water and forest footprints: 

  • Improve the water efficiency of our investment portfolios, especially in water-stressed areas, and measure and disclose the water footprint of our portfolios. We encourage water-intensive companies operating in water-stressed areas to significantly improve their water efficiency while ensuring water access to local communities.
  • Support global efforts to end forest loss by 2030. We want portfolio companies to adopt No Deforestation, No Peat and No Exploitation (NDPE) commitments for agricultural commodities (palm oil, soy, paper, timber and beef products) and commit to an NDPE approach in non-agricultural sectors (mining, metals, infrastructure, etc.) by 2030. 

Biodiversity and ecosystem restoration

On the threats to biodiversity, we encourage companies to close the gaps that exist in current disclosures on activities that may impinge on biodiversity – and the wider environment.[2]

We recognise the need for better models to help investors reorient capital towards nature-positive pathways and to raise investor awareness of the need for ecosystem restoration and preservation.

For us, it is quite clear that continuing on a business-as-usual basis is not an option. Mankind must change course. Consumption patterns and production methods must be reoriented. In parallel with the shift to a low-carbon economy, this transition marks the most significant investment opportunity of our lifetimes. According to the WEF, these ‘positive pathways’ are estimated to bring USD 10 trillion in business value and create 395 million jobs by 2030.

The financial sector – Doing our part

Investors and asset managers can play a fundamental role in guiding the trillions of dollars needed to preserve and restore ecosystems. Doing so can unlock multiple co-benefits. Biodiversity preservation can go hand in hand with effective efforts at climate change mitigation and adaptation.

Asset managers can help by incorporating biodiversity into wider financial strategies and by setting biodiversity disclosure, reporting and loss targets – particularly for priority industries that either depend on a functioning biodiversity or whose activities significantly affect it. They range from agriculture & food to clothing and from distribution to mining & exploration.

Read about the BNPP AM ESG scoring framework, our sustainable investment approach, our exclusion policy and other sustainability topics in this report.

References

[1] More at https://sdgs.un.org/goals  

[2] Also read SUSTAINABLE BY NATURE: OUR BIODIVERSITY ROADMAP

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.

The views expressed in this podcast do not in any way 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.

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