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BNP Paribas Asset Management

PRI reporting framework 2017

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (C) Implementation: Integration of ESG issues

(C) Implementation: Integration of ESG issues

LEI 10. Review ESG issues while researching companies/sectors

10.1. Indicate if E, S and G issues are reviewed while researching companies and/or sectors in active strategies.

ESG issues

Coverage/extent of review on these issues

Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

10.2. Additional information. [Optional]

As explained above, the ESG Research Team analyses all sectors within the economy (incl. activities such as tobacco or defence even when they are excluded for SRI funds), and scores on ESG  all companies (World Developed Markets) and ranks them each against their peers from the same geographical area (Europe – analysis which includes a discussion with the company - ; North America and Asia Pacific – Japan, Singapore, Australia and New Zealand).  This analysis includes, of course, companies’ exposure and management of any controversial matter.

For non-Developed Markets companies that are not included in an SRI fund, the analysis is based on whether or not they comply with the UN GC principles and the ESG controversies they might face.


LEI 11. Processes to ensure integration is based on robust analysis

11.1. Indicate which processes your organisation uses to ensure ESG integration is based on a robust analysis.

11.2. Describe how ESG information is held and used by your portfolio managers.

11.3. Additional information.[Optional]

Since 2014, through the ESG correspondents, we have started sharing the deliverables of the ESG Research to all the mainstream portfolio managers, namely ESG sector reviews and  ESG scores for corporate issuers and sovereign issuers.

In 2016 we integrated the ESG scores to Thinkfolio our front office tool. We also developed an IT solution to store our ESG research and ESG companies profiles. the objective is to have the largest number of portfolio managers using these tools in their investment decision process for a better understanding of the ESG risks associated to each companies they invest in.

 


LEI 12. Aspects of analysis ESG information is integrated into

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

12.1. Indicate which aspects of investment analysis you integrate ESG information into.

12.2a. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis and/or portfolio construction.

          we integrate ESG as a quality/risk factor for a company to be put in balance with its financial grade given by the fundamental analysis
        

12.3. Describe how you integrate ESG information into portfolio construction

we encourage mainsteam portoflio managers to underweight/ not invest in the companies with the worst ESG rating (namely decile 10 according to our inhouse research) and to favour companies with the highest ESG rating.

In 2015 we have also introduced a CO2 footprint calculator to help portfolio managers understand the impact of their stock picking and sector allocation to their final CO2 footprint. it has been complemented in 2016 with the adoption of a climate change strategy (http://docfinder.is.bnpparibas-ip.com/api/files/C7415B62-3F41-4D20-88BF-DDBBA97CC75F) to progressively make our investments compatible with a 2°C compatible scenario.

12.4a. Describe the methods you have used to adjust the income forecast / valuation tool

as mentionned above, the ESG scores are now progressively integrated by portfolio managers to their quality/risk assessment of companies. Depending of the investment centers they give a specific % of depreciation/appreciation depending of the score.

12.5. Additional information.


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