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BNP Paribas Asset Management

PRI reporting framework 2017

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Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

          climate change strategy
        

01.4. Indicate what norms you have used to develop your investment policy that covers your responsible investment approach.

01.6. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

We are aware that ESG issues impact the value and reputation of entities in which we invest. We are therefore committed to incorporate both ESG standards and ESG analysis into our investment criteria to the extent that the integration of such factors is consistent with our fiduciary duty to help our clients achieve their investment objectives and protect their interests.

For corporate issuers, these ESG standards are based on the ten principles of the UN Global Compact. The UN GC principles are supplemented by additional investment criteria for sensitive sectors (that is to say with ESG strong impacts and controversies) and products. These criteria are based on relevant international conventions and regulations, BNP Paribas Group CSR Policies, and voluntary industry standards. In each sector, we highlight both mandatory sector ESG requirements which have to be met for BNPP IP to invest and evaluation criteria.

We are also committed to integrate ESG elements of analysis in our investment decision process in all our investment centres. ESG should be considered as an enhanced risk management that can help improve the knowledge of a company in terms of reputational, operational and financial risks. To do so, we have generalized the access to ESG scores on corporate issuers and ESG sector reviews to all investment centres in order to highlight both the risks and investment opportunities to be found in the ESG dimensions

 

The following principles govern our implementation of ESG Standards in investment processes:

  • Investment universes are periodically screened with a view to identify issuers that are potentially in breach of UN Global Compact Principles and/or mandatory requirements applicable to sensitive sectors and products.
  • This assessment is conducted by our Sustainability Research Team on the basis of internal analysis and information provided by external experts, and in consultation with BNP Paribas Group CSR Team.
  • As a result from this process, BNPP IP establishes and maintains two lists:
    • an exclusion list of issuers that are associated with serious and repeated breaches of UN Global Compact Principles and/or mandatory requirements related to controversial sectors and products.
    • a watchlist of issuers that are at risk of breaching ESG standards and with whom we engage in a dialogue in order to encourage improvements.
  • The exclusion and watchlist are communicated by CIOs to investment teams on a regular basis.As a result, investment teams should not initiate new investments in excluded companies with immediate effect.Existing investments should be divested from relevant portfolios based market conditions but not later than one month after communication by CIOs.
  • The exclusion list applies to all open-ended funds managed by BNP Paribas Investment Partners entities, with exceptions for portfolios which replicate the composition of indices (e.g. ETFs and indexed funds) and to all types of securities (equities, bonds, convertible bonds). It also applies to participation notes and derivatives issued by third-parties on such securities. These restrictions apply to securities negotiated on primary and secondary markets, as well as OTC instruments.
  • Subject to legal and technical constraints, ESG standards also apply to:
    • segregated accounts and mandates (subject to client information or approval where required);
    • funds delegated to external asset managers (subject to amendment of relevant Investment Management Agreements or Investment Guidelines).

 

BNPP IP responsible investment policy is public and can be accessed here: http://www.bnpparibas-ip.com/en/corporate-social-responsibility/our-economic-responsibility/our-responsible-investment-and-esg-policy/


SG 02. Publicly available RI policy or guidance documents

New selection options have been added to this indicator. Please review your prefilled responses carefully.

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

Other, specify (1) description

          Climate change strategy:
        

02.4. Additional information [Optional].

In line with the French regulator's requirements as expressed in the article 173 of the French Law of ecological transition for green growth, we have updated our corporate website with a specific reporting on our integration of ESG risks and climate change risks (here, in French : http://docfinder.is.bnpparibas-ip.com/api/files/520C9B79-2B47-4064-9B6A-B9175171BB01)

 

 

 


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

BNPP IP applies strict investment criteria, ownership practices and implementation principles, to ensure that we deal with ESG requirements in a manner “consistent with our fiduciary responsibilities to act in the best interest of our clients“.

see exhaustive details below in SG 03.3

 

03.3. Additional information. [Optional]

BNPP IP applies strict investment criteria, ownership practices and implementation principles, to ensure that we deal with ESG requirements in a manner “consistent with our fiduciary responsibilities to act in the best interest of our clients“.

When it comes to exercising asset owners’ rights, and engaging with issuers priorhand to exert efficiently our influence as steward of such assets, we pay particular attention to potential conflicts of interests. Enshrined in section 3.6 of the Voting Policy, is our approach to preventing and managing conflicts of interest which aims at preventing undue influence that might stem from differing interests between BNPP IP, BNPP IP’s parent company, and those of our client(s).

As an asset manager owned by a large financial institution, BNPP IP can face several potential conflicts of interest, notably when acting as steward of its clients’ assets (e.g. in its proxy voting and engagement activities), i.e. mainly due to:

  • Employees being linked personally or professionally with a company whose securities are submitted to vote.
  • Business relations existing between the company whose shares are being voted on and another company of BNPP Group.
  • Exercise of voting rights and engagement concerning shares of BNPP Group or of significant participations or holdings of the Group.
    • Potential conflicts of interest are managed to ensure that the Voting Policy standards are followed. On top of the PVC process mentioned in Principle 1, BNPP IP implements several other principles and decision processes, to prevent or manage conflicts of interest, such as:
  • The Voting Policy stresses that voting rights –and related influence in the engagement process- are exercised, in line with our fiduciary duty, “in the best interests of clients in order to protect and enhance the long-term value of their shareholdings”. This principle is paramount in BNPP IP’s approach to stewardship.
  • The detailed Voting Policy which determines the decision process for the exercise of voting rights and engagement is approved at Board of Directors’ level, which comprises independent director(s).
  • Resolutions submitted to vote are examined on the basis of analyses conducted by external independent consultants.
  • Employees are due to respect the gifts and entertainments policy and to declare any other professional activity to the Compliance Officer.
  • “Chinese walls” between BNPP IP entities and the other companies of the BNPP Group ensure that the staff of BNPP IP entities remains independent and neutral in its missions and responsibilities.

 

In addition to the comprehensive mapping of potential conflicts of interest and corresponding means of mitigation, records of more stewardship-specific potential conflicts of interest and their means of prevention or resolution are kept as part of the PVC minutes. Conflicts of interest that could appear as not already managed by the above principles and processes are addressed through an escalation procedure involving top management.


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within portfolio companies.

04.2. Describe your process on managing incidents

          The Sustainability research team is in charge of assessing the ESG profile of companies. When a controversy occurs, the ESG analyst in charge of the sector sends, as soon as possible, an alert to BNPP IP’s investment centres and decides within four weeks, whether the company’s rating should be lowered. The analyst will always try to engage with the company before making a final decision. If the company faces a serious controversy, it could be eventually excluded from the investment universe.
        

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