We prefer to engage directly to gain a better understanding of the companies in which we invest. We also consider that having the opportunity to create a dialogue with companies provides another avenue to foster responsible practices.

We believe that meaningful engagement with issuers can enhance our investment processes and better enable us to successfully manage long-term risk for our clients by promoting strong ESG practices in the companies in which we invest on their behalf.  Notably, this commitment to engagement extends beyond our actively and passively managed equity investments, to our fixed income and private loans business and includes engagements with sovereigns. Our long-term investment horizon places a company’s corporate governance arrangements and the quality of its senior management teams at the heart of our investment decisions. Sound governance is critical for the long-term operating and financial performance of a company, and is therefore a centrepiece in our engagements during and outside the voting season.

Individual engagements

BNPP AM maintains an active program of direct corporate engagement on a wide range of governance, social and environmental issues. These engagements are designed to enhance the long-term value of our shareholdings and to foster corporate governance best practices, social responsibility and environmental stewardship. 

Collaborative engagements

Collaboration with other long term investors and key stakeholders can help us achieve our common aims, particularly with respect to mitigating systemic risks. We have a long-term commitment to working with other like-minded investors and participate in investor networks to learn from our peers and to raise the standard.  
When collective action is likely to enhance our ability to engage with a company, and it is permitted by law and regulation, we will work with other asset managers depending on the issue of concern and the alignment of views within the investor group. 
We are an active member of formal and informal groups and initiatives internationally that facilitate communication between shareholders and companies on corporate governance, social, ethical and environmental matters. We also engage collectively on matters of public policy.

In order to ensure that our stewardship activities are effective, consistent, and supportive of our overall objectives as fiduciaries, we base all of these efforts on a Global Sustainability Strategy, supported by a Corporate Stewardship Strategy and a Public Policy Stewardship Strategy, each of which is approved at the highest levels of the firm. 

Investor-issuer dialogue is the foundation of good stewardship – it allows for trusting relationships to be built over time, permitting candid solution-oriented discussions about issues that might not otherwise be addressed. Dialogue, however, is a two-way street and there are times when stronger measures are necessary to encourage a company to come to the table and discuss our concerns.
 
When a step-up of monitoring activity is required to ensure protection and enhancement of our clients’ interests and shareholder value, BNPP AM can decide to, inter alia, make public statements, propose shareholder resolutions, call an extraordinary general meeting or intervene jointly with other institutions.
 
These decisions are taken on a case-by-case basis, to ensure that our concerns have been properly heard and dealt with.

For example, in 2019, we co-filed a shareholder resolution with other shareholders of Exxon Mobil. The resolution sought disclosure of the company’s carbon emissions targets in order to align with the Paris Agreement, limiting temperatures to 2 degrees Celsius.

The resolution was not proposed at the general meeting, as the Securities and Exchange Commission (SEC) granted the company’s request to exclude the proposal from its proxy statement. We signed a letter to the SEC to express our dissatisfaction with this decision, in concert with other shareholders managing $9.5 trillion in assets. We voted against the full board in order to express our concerns to the company over its strategy on climate change, and remain in dialogue with Exxon Mobil as part of the Climate Action 100+ (CA100+) collaborative engagement.

Twice a year all portfolio managers within BNP Paribas AM are updated on our list of companies that are not eligible for investment and on the list of companies that are under surveillance in the context of our Responsible Business Conduct policy. Once a month we update our ESG corporate scoring list and is sent to all investment teams. Portfolio managers have access to written profiles of the companies which includes research/engagement elements.

The results of the proxy voting engagement are shared with portfolio managers and presented to the proxy voting committee.

When a company our portfolios invest in faces a severe controversy, the company is temporarily put under surveillance. During the surveillance period, maximum of one month in length, ESG analysts examine the controversy and the reaction of the company. They  will attempt to engage with the company in order to assess its reaction and management of the issue. The analyst will communicate their analysis and decision as to whether or not to downgrade the company to the investments teams.

Our annual Sustainable Investment Report includes a section on Stewardship where we provide a summary of all engagements undertaken during the relevant period, including numerous company case studies. We plan to increasingly post Stewardship updates on our website.

We keep a detailed file for all engagement activities undertaken by our Sustainability Centre, collaborative or individual. The file is updated on an ongoing basis. In addition, numerous investment teams also undertake regular engagement with companies (or other entities such as sovereign issuers), and these engagements increasingly include a number of relevant ESG considerations or concerns. Individual teams track their own engagement statistics, and we are working to coordinate and report these figures at a firm-wide level which will reflect an even higher level of engagement undertaken across BNPP AM as a whole.