• Sustainable finance

Socially Responsible Investment: reconciling performance and positive impact

Putting finance in the service of society as a whole. Socially Responsible Investment (SRI) funds are funds that include Environmental, Social and Corporate Governance (ESG) criteria in their decision-making process. What are the selection criteria used by SRI? What do they guarantee to investors and how should you choose a fund to invest in? Find out below.

Guaranteeing a responsible investment with ESG criteria  

Socially Responsible Investing refers to the application of sustainable development principles to financial investments. In addition to financial performance, this form of investing aims to support activities with a strong social and/or environmental value

To achieve this goal, SRI portfolio management integrates Environmental, Social and Corporate Governance (ESG) criteria into every asset assessment and selection operation. This provides a standard of reliability for investors:

  • Environmental criteria assess a company’s impact on the environment (greenhouse gas emissions, water resources or waste, etc.);
  • Social criteria assess a company’s impact on employees, customers and suppliers (in terms of human rights);
  • Corporate governance criteria assess the company’s organization and management.   


What makes a good Socially Responsible Investment? 

Labels to ensure transparency and clarity

Providing a guarantee of transparency and credibility, official labels have sprung up as SRI products grow more numerous—the French government’s SRI or “Energy and Ecological Transition for the Climate” labels, the Finansol label for solidarity finance, and so on. These deliver useful reference points to investors and savers. 

By mandating the regular publication of reports, these labels help track the extra-financial performance of investments, based on various indicators: CO₂-emissions savings, number of jobs created, solidarity finance activities, etc. 

In this respect, BNP Paribas Asset Management was one of the first asset managers to sign the Montreal Carbon Pledge, an initiative encouraging signatories to measure and track the carbon footprint of their management portfolios.

Approaches tailored to individual needs

Investors in SRI funds can opt for different approaches based on their priorities. For example, a thematic approach privileges targeted investments within a single industry, while the best-in-class approach invests in companies with the best practices in every sector. 

The profitability imperative—reconciling performance and positive impact 

While SRI enables individuals to invest based on their values and learn more about the impact of their investments through labels, it also meets financial performance targets. Studies show that SRI funds deliver a similar level of profitability to conventional funds. Better still, the oldest SRI index to date, MSCI-KLD 400, created in 1990 in the United States, has consistently outperformed its counterpart, the Standard & Poor’s 500. The LFR Euro Développement Durable fund has grown by 45.3% since 2009, a performance comparable to the Euro Stoxx 50 fund.

SRI’s current success is also tied to sectors targeted by investments. In fact, they frequently invest in today’s high-growth industries: renewable energies, sustainable real estate, SSE, etc.

BNP Paribas Asset Management—a key player in SRI

To enable its customers to pursue meaningful investments and savings, BNP Paribas’s asset management arm has rolled out a wide range of responsible funds on key themes that comply with the principles of the United Nations Global Compact for sustainable development.

In all, BNP Paribas Asset Management handled €34.6 billion in SRI assets, representing an increase of 38.4% over one year (compared with 6.4% for other assets). Proving the Group’s long-term commitment to developing and promoting its range of responsible products, 22 of its funds received an SRI label in 2017

Finally, while its traditional clientele is largely institutional, BNP Paribas is now France’s top provider of SRI solutions to individuals, who are becoming much more attuned to sustainable development challenges. 

BNP Paribas Asset Management's responsible funds

BNP Paribas Aqua

BNP Paribas Aqua invests in multinationals linked to the water industry.

BNP Paribas Développement Humain

 invests in European companies that contribute to basic human needs (access to healthcare, food) and solving today’s major challenges (aging population, urbanization, etc.).- BNP Paribas L1 SMaRT Food invests in food companies working to solve critical challenges facing society (food waste, recycling food containers, improving water management, etc.).

BNP Paribas L1 SMaRT Food

BNP Paribas L1 SMaRT Food invests in food companies working to solve critical challenges facing society (food waste, recycling food containers, improving water management, etc.).

Solidarity savings

BNP Paribas Asset Management manages nearly €1.5 billion in solidarity savings assets (end of 2016), including a portion directed to five solidarity funds, such as BNP Paribas Social Business France, which combine to represent €97 million euros invested in 18 social enterprises.

Photos: Header ©EcaterinaLeonte - Content: ©Laura Pashkevich / ©Joshua Resnick / ©GaudiLab

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