From january 5, 2020 to january 1, 2022
12.11.2020 | Group
Personal savings play a key role in the economy. Money held in the bank, which some may believe is stagnating, is actually used to finance private and public enterprises. However, the impact of savings doesn't stop there. By choosing certain criteria (environmental, social and corporate governance), individuals are not only deciding how their money should be used, but also that these choices should favour projects with a positive economic impact. Accordingly, it's up to players in the financial sector - banks, insurers and investment funds - to offer products that correspond to these new expectations in order to speed up the transition. BNP Paribas already offers many products and solutions to meet this growing demand for responsible savings and continues to adapt its offer on a regular basis.
Climate change, the health crisis linked to Covid-19, the strengthening of social inequalities, etc…. All environmental, economic and societal indicators across the world point to the need for greater awareness: the time has come for us to reflect on creating a more responsible world. There are two reasons why individual savings can play a key role in the achievement of this goal:
On the other hand, personal savings levels have rarely been so high. In many countries, periods of successive crises and, more recently, periods of lockdown have led savers to hoard. The European Central Bank as well as the OECD, have published studies showing an unprecedented peak in household savings (the household savings rate stood at 16.9% the eurozone in Q1 2020, compared with 12.7% in Q4 2019).
Responsible savings refers to traditional format investment savings products (employee savings, life insurance, securities accounts), but which incorporate extra-financial criteria such as ESG (environmental, social and governance), which characterise sustainable finance. When these criteria, are taken into account, companies with irresponsible business practices or that belong to certain industrial sectors with a negative environmental public health impact can be excluded from these savings products’ investments. Preference is given to companies that are both the best performers and which have a real positive impact, such as certain socially responsible investment funds or the social and solidarity-based economy (SSE).
However, there are still two main obstacles to the expansion of responsible savings:
Too few individuals know little or nothing about these products. It is up to financial players to educate savers and to the regulators to give them clear and transparent labels so they can better understand and compare in order to generate greater confidence.
In making their investment choices, investors rely on three main criteria: reliability, liquidity and profitability.
"A fourth requirement has been added, across all generations, and this is a need for meaning," adds Laurent Monet, Head of Marketing Epargne France at BNP Paribas. Responsible SRI funds do in fact demonstrate strong growth and resilience and sometimes even perform better in times of crisis than traditional funds. During the economic crisis caused by Covid in early 2020, the CAC 40 in France fell by 17.5% while socially responsible investment funds lost only 6.5%. Dominique Brisse, savings and insurance advisor at BNP Paribas in France, noted the same performance: "Between 31 August 2015 and 31 August 2020, the CAC 40 increased by an annualized 3.57%, the index of our Aqua thematic fund by 9.01% and the index of our Smart Food fund by 3.82%."
Background: socially responsible investment funds
In order to enable clients to make informed choices in terms of socially responsible investment, we can direct them towards thematic investment funds. These funds finance positive impact companies and projects:
- Funds with environmental themes: energy transition, energy efficiency, sustainable food and agriculture, waste management, etc.
- Funds with social and societal themes: well-being at work, job creation, inclusive education, sustainable mobility solutions
Within the Group, BNP Paribas Asset Management builds and manages these thematic funds, many of which have been awarded labels: the SRI label, Finansol and Greenfin in France, FNG-Siegel in Germany, Austria and Switzerland, Towards Sustainability in Belgium, LuxFlag in Luxembourg, etc. There is now a range of funds to meet many of these environmental and societal challenges: BNP Paribas Smart Food, BNP Paribas Climate Impact, BNP Paribas Energy Transition and BNP Paribas Human Development.
Engaging with clients: retail banks, wealth advisers and insurers, employee savings schemes
Steering individual savings towards responsible investment requires advice from financial specialists: retail banking networks, private banks such as BNP Paribas Wealth Management, employee savings specialists such as BNP Paribas Epargne et Retraite Entreprises, and insurers such as BNP Paribas Cardif.
For example, BNP Paribas Wealth Management provides its clients with tools to help them make responsible investment decisions in line with their convictions. For example, it offers the MyImpact simulator. Using a simple and quick questionnaire accompanied by a full explanation of the concepts of sustainable development, the programme enables clients to assess their profile as responsible investors and provides them with advice on the most appropriate investments in terms of responsible investment and philanthropy. Another example is Clover, a methodology for assessing funds and asset managers that steer these funds based on sustainable development criteria. Using this tool, clients can decide how much "sustainability" they wish to give to their investments.
"We offer our clients not only sustainable investment solutions, but
also education and advice to guide them towards the most relevant
choices," says Eléonore Bedel, Global Head of Sustainable Investment at BNP Paribas Wealth Management.
Leader in the SRI market in France and in sustainable theme funds in Europe, BNP Paribas has placed sustainable finance at the heart of its strategic choices and regularly makes new commitments in order to further this form of investment. BNP Paribas Cardif has therefore decided to increase its positive impact investments to €11.5 billion by the end of 2024 by investing an additional €5 billion in activities with a positive environmental and social impact. In addition, at the end of 2019, in France, BNP Paribas Cardif held €6.7 billion invested in unit-linked products considered as "Socially Responsible Investments", including € 4.3 billion in labelled products.
We offer our clients not only sustainable investment solutions, but also education and advice to guide them towards the most relevant choices
We are equally involved in promoting sustainable investment through BNP
Paribas Asset Management, which is positioned as number 1 in SRI in
France in terms of both funds and assets under management and is at the
forefront of responsible asset management. The BNP Paribas Group asset
manager is ranked 8th worldwide and 4th in France by RIBI (Responsible Investment Brand Index).
This index assesses the asset management sector on its commitment as a
responsible investor and the ability of asset managers to translate this
commitment into the core of their corporate identity. BNP Paribas'
asset manager is also regularly recognised for its involvement through
its voting policy.
As Antoine Sire, Director of Corporate Commitment at BNP Paribas, puts it: "BNP Paribas Asset Management is one of the two global investors that vote the most climate resolutions at company shareholders' meetings."
- 1,000 labelled responsible funds in Europe in 2020
- + 34% increase in sustainable investments worldwide since 2016
- $30.7 trillion of sustainable assets worldwide in 2018
- €36.7 billion in SRI assets under management at BNP Paribas Asset Management
- €6.5 billion in positive impact investments at BNP Paribas Cardif in 2019
- At the end of 2019, in France, BNP Paribas Cardif held €6.7 billion invested in unit-linked products considered as "Socially Responsible Investments".
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