Public HTML RI reports - PRI reporting framework 2020

BNP Paribas Asset Management

PRI reporting framework 2020

Basic information [OO 01 - 09] Asset class implementation gateway indicators [OO 10 - 12] Peering questions [OO LE 01 - HF 01]

Strategy and Governance

Objectives and strategies [SG 05 - 06] Governance and human resources [SG 07 - 08] Promoting responsible investment [SG 09 - 11] Outsourcing to fiduciary managers and investment consultants [SG 12] ESG issues in asset allocation [SG 13 - 15] Asset class implementation not reported in other modules [SG 16 - 17] Innovation [SG 18] Communication [SG 19]

Indirect – Manager Selection, Appointment and Monitoring

Listed Equity and Fixed Income Strategies [SAM 01] Selection [SAM 02 - 03] Appointment [SAM 04] Monitoring [SAM 05 - 07] Outputs and outcomes [SAM 08 - 09]

Direct - Listed Equity Incorporation

ESG incorporation in actively managed listed equities [LEI 01 - 10] Implementation processes [LEI 01 - 10] (A) Implementation: Screening [LEI 04 - 06] (B) Implementation: Thematic [LEI 07] (C) Implementation: Integration of ESG factors [LEI 08 - 10] ESG incorporation in passively managed listed equities [LEI 11] Outputs and outcomes [LEI 12 - 13]

Direct - Listed Equity Active Ownership

Overview [LEA 01] Engagement [LEA 02 - 08] Outputs and outcomes [LEA 09 - 11] (Proxy) voting and shareholder resolutions [LEA 12 - 21]

Direct - Fixed Income

ESG incorporation in actively managed fixed income [FI 01 - 12] Implementation processes [FI 01 - 03] (A) Implementation: Screening [FI 04 - 06] (B) Implementation: Thematic [FI 07 - 09] (C) Implementation: Integration [FI 10 - 12] ESG incorporation in passively managed fixed income [FI 13] Fixed income - Engagement [FI 14 - 16] Outputs and outcomes [FI 17 - 18]

Confidence building measures

Confidence building measures [CM1 01 - 07]

Export Public Responses

You are in Strategy and Governance » Investment policy

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.

Yes

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

Select all that apply

Policy components/types

Coverage by AUM

Policy setting out your overall approach

Formalised guidelines on environmental factors

Formalised guidelines on social factors

Formalised guidelines on corporate governance factors

Fiduciary (or equivalent) duties

Asset class-specific RI guidelines

Sector specific RI guidelines

Screening / exclusions policy

Engagement policy

(Proxy) voting policy

Other, specify (1)

          Climate change; Forward Looking Perspective

Other, specify(2)

Applicable policies cover all AUM

Applicable policies cover a majority of AUM

Applicable policies cover a minority of AUM

01.3. Indicate if the investment policy covers any of the following

Your organisation’s definition of ESG and/or responsible investment and it’s relation to investments

Your investment objectives that take ESG factors/real economy influence into account

Time horizon of your investment

Governance structure of organisational ESG responsibilities

ESG incorporation approaches

Active ownership approaches

Reporting

Climate change

Understanding and incorporating client / beneficiary sustainability preferences

Other RI considerations, specify (1)

Other RI considerations, specify (2)

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

Within our Global Sustainability Strategy we have developed investment beliefs; these investment beliefs are supported by our clear understanding of risk. Risk is multi-dimensional and should not be viewed solely in financial terms such as variability around a benchmark, or the risk of capital loss, but also in terms of reputational damage or, more broadly, the risk of generating unexpected or unsatisfactory outcomes. It contains a number of key pillars described below, including sustainability:

Emphasis on risk management
Long term
Research driven
Global perspective
Augmented investment approach
Sustainability

In 2019, we enhanced our investment philosophy with the development of a more detailed set of six investment beliefs focused on sustainability:

We are long-term, forward-looking investors.
Our fiduciary duty is aligned with sustainable investment
Stewardship is an opportunity and an obligation.
ESG integration helps us achieve better risk-adjusted returns
A sustainable economic future relies on sustainable investment practices.
Walking the talk is critical to achieving excellence.

In a fast changing world, our focus is on achieving long-term sustainable returns for our clients. In line with this, BNPP AM is committed to integrating sustainable investment practices across all its strategies

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

In a fast changing world, our focus is on achieving long-term sustainable investment returns for our clients. In line with this, BNP Paribas Asset Management (“BNPP AM”) is committed to integrating sustainable investment practices across its strategies. We believe this is in the financial interest of our clients, and of the economy at large. This commitment incorporates two key components:
First, our full range of investment strategies will adopt a sustainable investment approach. This means that they will integrate the key elements of sustainable investment: comprehensive research and integration of environmental, social and governance (ESG) factors; investor stewardship; responsible business conduct and product-based exclusions; and a focus on three thematic areas to promote a sustainable future.

In 2019 we launched our Global Sustainability Strategy. We committed to integrating sustainable investment practices across our investments.

Our “Global Sustainability Strategy” details our approach to sustainable investment, setting clear objectives and commitments, and focussing on three key sustainability themes: energy transition, the environment and equality and inclusive growth (the ‘3Es’).

It reinforces our commitment to invest for the long term, and to engage with companies and regulators to promote best practice, as well as raise awareness about the role that finance can play in achieving a sustainable world.

For BNP Paribas Asset Management, sustainable investment includes four pillars (1.ESG Integration, 2.Stewardship, 3.Responsible Business Conduct and 4.Forward looking perspective). Together, these approaches strengthen the way we invest, including how we generate investment ideas, construct optimal portfolios, control for risk and use our influence with companies and markets.

Below some details on the four pillars:

1. ESG integration:

In order to enhance investment decision making by assessing the environmental, social and governance (ESG) risks and opportunities of each investment

2. Stewardship:

Because we believe that meaningful engagement with issuers (including voting) can enable us to further understand and manage ESG risks on behalf of our clients, while public policy engagement aims at promoting a regulatory framework that enables the development of a low-carbon and inclusive economy, including the pricing of externalities and high quality corporate reporting.

3. Responsible business conduct policies and product-based exclusions:

In order to avoid reputational, regulatory and stranded asset risk, we exclude those companies deemed in violation of the UN Global Compact Principles or the OECD Guidelines for Multinational Enterprises and have put in place a series of sector policies that set out the conditions for investing in some specific sectors and guide our screening requirements and engagement.

4.Forward-looking perspective – the ‘3Es’ (Energy transition, Environmental sustainability, Equality & Inclusive growth):

The 3Es: are used to enhance our investment decision-making and guide our stewardship efforts, as we believe the energy transition, environmental sustainability and equality are necessary conditions to a healthy economic future. Requirements and engagement.

“If we are to successfully address the challenges of today – and secure a prosperous and sustainable economy for tomorrow – long-term investors must rise to the occasion as ‘future makers’, using the leverage that our investments and our voice bring to positively influence the world around us. We relish this opportunity and look forward to partnering with our clients and financial sector peers to achieve what should be a joint aim: a sustainable future.”
JANE AMBACHTSHEER - Global Head of Sustainability

01.6. Additional information [Optional].

Please find below a detailed explanation of our Investment Beliefs on Sustainability:
1. ESG integration helps us achieve better risk-adjusted returns
Sustainability is a long-term driver of investment risks and returns. We believe sustainability is imperfectly understood, under-researched and inefficiently priced, with inconsistent levels of disclosure. Against this background, we will make better investment decisions if we systematically and explicitly integrate ESG factors into our investment analysis and decision-making.

2. Our fiduciary duty is aligned with sustainable investment
We have a duty to our clients to make well-informed investment decisions, taking reputational, operational and financial risks into careful consideration. ESG factors are a key element of this.

3. Stewardship is an opportunity and an obligation.
As long-term investors, we believe that we should use stewardship (which encompasses proxy voting, company engagement and policy advocacy), to influence companies and the world for the better. We believe that engagement is generally more effective than exclusion – although divestment can be a last resort.

4. We are long-term, forward-looking investors.
We analyze the past in order to better anticipate future developments while considering the economic model which will best serve us in the long term – one focused on low-carbon, sustainable and inclusive growth.

5. A sustainable economic future relies on sustainable investment practices.
The way we invest and engage with companies and regulators can help shape the world around us. We believe managing ESG risks will help promote greater market stability and more sustainable long-term growth while delivering the same, or better, financial returns.

6. Walking the talk is critical to achieving excellence.
As a sustainable asset manager, our corporate practices and disclosures should match or exceed the standards we expect from the entities in which we invest. That is why this is a priority for us. We are exploring how we can integrate sustainability considerations more fully across all aspects of our business, including how we manage our facilities and engage our employees.

SG 01 CC. Climate risk (Private)

SG 02. Publicly available RI policy or guidance documents

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

Policy setting out your overall approach

URL/Attachment

URL

URL https://docfinder.bnpparibas-am.com/api/files/1FC9FC6C-0DA8-468E-90B3-016DDB5CD270

Attachment (will be made public)

Attachment

Global_Sustainability_Strategy_EN.pdf

Formalised guidelines on environmental factors

URL/Attachment

URL

          Climate change; Forward Looking Perspective

URL/Attachment

URL

URL http://docfinder.is.bnpparibas-ip.com/api/files/C7415B62-3F41-4D20-88BF-DDBBA97CC75F

We have attached the actual documents above, even though they are also available on our website below:

https://www.bnpparibas-am.com/en/sustainability/as-an-investor/

In 2018/2019 we have been working on a new set of policies which clearly outline our sustainable investment approach and underpin our Global Sustainability Strategy.

Responsible Business Conduct
ESG integration guidelines Policy
Stewardship Policy & Public Policy

Our Responsible Business Conduct (RBC) is already available on our website, please find the link below:

https://docfinder.bnpparibas-am.com/api/files/D8E2B165-C94F-413E-BE2E-154B83BD4E9B

Also, we have enhanced our reporting in relation to ESG analysis and integration as well as on climate change in line with French regulation as requested by article 173 of French Law of Ecological Transition for Green Growth

(please see: https://docfinder.bnpparibas-am.com/api/files/9B8A91FD-D198-45D4-8B78-D375AC8B82DA - please note that the document is in French).

SG 03. Conflicts of interest

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

Yes

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

All employees are required to identify any potential conflict of interest and report it to their manager and to Compliance. The following is a non-exhaustive list of typical examples of situations where conflicts may arise:

BNPP AM vs. client conflicts: selection/use of brokers, on errors' handling, suitable client solutions;

BNPP AM employee vs. client conflicts: where gifts and entertainment (including non-monetary gifts) are received that may influence behaviour in a way that conflicts with the interests of BNPP AM's clients.

Client vs. client conflicts: where BNPP AM allocates executed orders, carried out on behalf of more than one client/fund, in such a way that may result in a disadvantage to one or more clients/funds.

All employees are bound by the Code of Conduct of BNP Paribas Group, which imposes obligations to work in clients' best interests by: providing them with the most suitable products and services with regard to their aims, resources, knowledge and experience; giving clients clear, honest and non-misleading information and, if so requested, an opinion; provide quality service; treating clients fairly; behaving transparently.

03.3. Additional information. [Optional]

The summary of our Conflict of Interest Policy can be found at:

http://bnpparibas-ip.jp/bnppip/pdf/stewardship/conflict_of_interest_policy_summary.pdf?20180501

The specific details of the conflict of interest policy as relates to voting can be found in BNPP AM Voting Policy and Guidelines (address below):

http://docfinder.bnpparibas-am.com/api/files/4A9D6883-8110-46B2-9560-173E31568323

SG 04. Identifying incidents occurring within portfolios (Private)

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