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09.09.2016 | Sustainable finance
What is Socially Responsible Investing (SRI)? How can banks manage and offer these services to customers? Does it have a real impact? Anthony Finan, Distributor Manager at BNP Paribas Investment Partners and CSR delegate, answers our questions.
I am in charge of business development, as well the investment and savings branches of asset management for individual customers and distributors.
The challenges of this business: ensuring that the savings of our individual customers are managed efficiently, and that our offer meets their needs and adapts to changes in the market.
We must take a structured approach to our SRI management, in order to build a product line that includes SRI principles, and a team of dedicated experts, who define our methodology and perform ESG (Environmental, Social and Governance) analysis.
ESG analysis aims to identify companies with the best environmental, social and governance practices, along with those offering solutions to social and environmental challenges. Investing in these businesses serves to finance the green economy and the social economy.
“ over the long term, these investments provide concrete solutions to environmental and social challenges ”
Anthony Finan, Distributor Manager at BNP Paribas Investment Partners and CSR delegate
SRI is the application of sustainable development principles to financial investments. In addition to financial performance, SRI management also aims to generate social and/or environmental value.
That means evaluating and selecting assets by taking into account new criteria like the direct or indirect impact of the company’s activity on the environment, its employees, customers, suppliers, etc.
SRI offers two complementary approaches that can be employed in combination:
Finally, SRI funds can take on an aspect tied to the specific nature of their investments. For example, “solidarity-based” SRI funds invest 5-10% of their assets in social or solidarity-based businesses, or solidarity economy projects.
That was the case originally with the best-in-class approach: institutional customers were able to align their investment practices with their values. But over the past few years, through the thematic approach, interest in SRI has grown among individual customers. SRI funds focusing on concrete challenges (such as access to water, healthcare, food, etc.) help give meaning to their savings.
So at BNP Paribas Investment Partners, nearly 60% of our SRI sums are held by individual customers, while these funds received the largest share of savings last year.
Employee savings plans have also embraced SRI and social finance, of which it is a key distributor.
SRI has grown among individual customers. SRI funds focusing on concrete challenges (such as access to water, healthcare, food, etc.) help give meaning to their savings.
This remains a financial investment: we carry out a rigorous asset management activity, by combining risk analysis and earnings forecasts. And we expect a return on our investment.
But over the long term, these investments provide concrete solutions to environmental and social challenges. For example, by favoring sectors that are less energy-intensive or that use alternative energies, they help finance the energy transition!
We measure their impact through extra-financial indicators, which our customers can review: including a portfolio’s carbon footprint or job creation rate, as well as the level of independence of the boards of directors for each company in the portfolio.
We need to cast aside our preconceptions! SRI is not reserved for institutional customers, it does not exclusively pertain to asset management, and it does not mean sacrificing financial performance, etc.
It is an investment like any other, practiced with the same vigilance, and ESG analysis even helps identify certain specific risks, which may impact the company’s activity in the medium or long terms.
SRI also makes it possible to identify opportunities in sectors and businesses where new products, services or production methods will create added value.
SRI is not reserved for institutional customers, it does not exclusively pertain to asset management, and it does not mean sacrificing financial performance, etc.
We pursue a different approach tailored to each customer type:
Based on the thematic approach, some of our products are seeing a lot of success with our customers: BNP Paribas Aqua for water, BNP Paribas Human Development (social theme), BNP Paribas Responsible Real Estate and the newest addition to our line, PARVEST SMaRT FOOD, an innovative fund that invests in the entire sustainable food value chain.