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BNP Paribas Asset Management

PRI reporting framework 2020

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You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » (A) Implementation: Screening

(A) Implementation: Screening

FI 04. Types of screening applied

04.1. Indicate the type of screening you conduct.

Select all that apply
SSA
Corporate (financial)
Corporate (non-financial)
Negative/exclusionary screening
Positive/best-in-class screening
Norms-based screening

04.2. Describe your approach to screening for internally managed active fixed income

All funds comply with our Responsible Business Conduct Policy which: 

  • Excludes companies in severe breach of the UN Global Compact Principles and OECD Guidelines for Multinational Enterprises (OECD MNEs Guidelines).
  • We have a series of sector policies that set out the conditions for investing in particular sectors, products and activities (e.g. agriculture, palm oil, nuclear).

  • We have another set of policies that commit us to exclude particular sectors or activities (tobacco, coal, controversial weapons or asbestos), as we deem them to be in violation of international norms, or to cause unacceptable harm to society and/or the environment, without counterbalancing benefits. These are generally sectors where engagement makes little sense.

Using our proprietary ESG scoring methodology, we avoid investing in a weakly rated entity (lowest decile) without actively engaging particularly on the key issues identified, and we may disinvest from weakly rated entities which do not respond to engagement.

A majority of Sustainable + funds must also exclude companies active in alcohol, tobacco, gambling, pornography, armament sector (if revenue >10% of the activity). 

Sustainable + funds with a Best-in-Class approach: We do not invest in companies belonging to the three lowest ESG scoring deciles.

04.3. Additional information. [Optional]

Implementation:

We are committed to ensuring the consistent implementation of our Responsible Business Conduct policy to all open-ended funds managed or delegated by BNP Paribas Asset Management entities, but related exclusions are not currently applied to all client mandates. This is now the default approach for new mandates, and we will approach existing clients to seek their approval to apply the policy to existing mandates.

Affiliated entities over which BNP Paribas Asset Management or the BNP Paribas Group do not have operational control are invited to adopt this strategy and implement the components of our Responsible Business Conduct Policy. Where we use affiliates or external investment managers for our open-ended funds, we expect them to incorporate Responsible Business Conduct policies in line with our sustainable investment philosophy.

In applying our Responsible Business Conduct Policy, we take into account specific circumstances as they relate to the environmental, social and governance practices of individual issuers. BNP Paribas Asset Management bases its judgment on data gathered from issuers and third-party research providers, and does its best to gather relevant information. However, it is dependent on the quality, accuracy and timeliness of the information collected.

We strive to implement this Policy in the best interest of our clients and operate at arms' length from the BNP Paribas Group and its subsidiaries or affiliate companies.

Our Responsible Business Conduct Policy is publicly available on BNP Paribas Asset Management's website and is reviewed regularly in order to reflect the evolution of ESG standards and market practices.


FI 05. Examples of ESG factors in screening process (Private)


FI 06. Screening - ensuring criteria are met

06.1. Indicate which systems your organisation has to ensure that fund screening criteria are not breached in fixed income investments.

Type of screening
Checks
Negative/exclusionary screening

other description

          Updated exclusions and watchlist are sent to investment teams monthly.
        
Positive/best-in-class screening

other description

          Updated exclusions and watchlist are sent to investment teams monthly.
        
Norms-based screening

other description

          Updated exclusions and watchlist are sent to investment teams monthly.
        

06.2. Additional information. [Optional]

Based on the UN Global Compact Principles, our sector policies and Sustainable + products that are Best in Class or thematic, the exclusion list and the buy list are programmed into our Compliance systems, which can block pre-trade and post-trade activity.

In case of a breach, an escalation process is activated, from on-screen alert messages and emails up to informing the CIO. The portfolio manager then has a maximum time frame of one month to sell the position in the best interest of the client.


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