In connection with the COP24, held in Poland from 3 to 14 December, French daily l’Opinion, published an exclusive dossier: “Climate and biodiversity: why is the financial sector scaling up?” Frédéric Janbon, CEO and Board Member of BNP Paribas Asset Management Holding, is one of eight key observers to address the need to move to a low-carbon world. Read his opinion column below:
At BNP Paribas Asset Management, we believe in a low-carbon, responsible, and inclusive economic growth model, essential in delivering sustainable long-term returns on the investments entrusted to us by our clients. Since 2011, we have been applying ESG (Environmental, Social, Governance) criteria to all our open funds by way of sectoral policies and the exclusion of businesses that breach the Global Compact of the United Nations. Starting in 2020, all our investment procedures will include precise and demonstrable ESG criteria.
New global challenges, such as global warming, the increase in social inequality, the exhaustion of natural resources, and the destruction of biodiversity can have a serious impact on the performance of businesses. Those businesses that best adapt to the great upheavals of our century represent investment opportunities.
Our role as an investor is to assess whether businesses are managing such risks and whether they are capable of profiting from the market opportunities created. Such an analysis requires reliable and comprehensive information from the businesses themselves.During the negotiation of the Paris Agreement in the context of the COP21 in 2015, we committed to align our investments with a global warming target of no more than 2°C. In order to do so, we undertook to assess and disclose the carbon footprint of our portfolios.
While the carbon footprint is an important indicator, it is however not sufficient to analyse properly the exposure of our investments to the risks associated with global warming. It is a snapshot of the past. We have to move to a forward-looking analysis. To be able to do so, it is necessary for the businesses in which we invest to provide us with the data required for our risk assessment purposes and information on their future carbon intensity targets, as well as their strategy for aligning their activities with the Paris Agreement targets.
Yet only six out of the twenty largest electricity generators in the world have published a carbon intensity target through to 2030. Only three oil and gas producers have carbon content targets for the energy produced by them across their entire value chain. In order to encourage businesses to improve their transparency, we have two tools at our disposal: votes at their Annual General Meetings and shareholder commitment.
We modified our voting policy to be able to refrain from voting to approve the accounts of businesses that do not disclose their carbon footprint, their 2°C strategy, or that refuse any dialogue on theimpact of their activities in terms of global warming. We also strengthened our commitment to encourage businesses to change their practices, either individually or through collective action.
For example, we are engaged in dialogue with seven businesses in the context of the Climate Action 100+ initiative, launched during the One Planet Summit held in Paris in December 2017. This initiative requires the 100 businesses across the world that emit the most greenhouse gases to improve their transparency, reduce their emissions along their entire value chain, and have their boards pay more attention to climate considerations. We take part in the work of the Task Force on Climate-related Financial Disclosure (TCFD) and in other working groups that seek to make public policy more compatible with climate goals. We are therefore a member of the technical group set up by the European Commission to assist with the implementation of its sustainable finance action plan.
We give precedence to commitment and dialogue over exclusion, as the latter does not make it possible to change practices. Our ambition is to support the necessary move to a low-carbon world, which will be an indicator of more sustainable and inclusive growth. In order for this to happen, we are focusing on three areas. These appear to us to be inseparable from such growth: the energy transition, the preservation of the environment, and social equality.”