BNP Paribas Corporate and Institutional Banking today announced it has been licensed the Solactive Sustainable Development Goals World Index – a new equity index which enables investors to gain exposure to companies which have been identified as making a significant contribution to the advancement of the United Nations’ Sustainable Development Goals (SDGs). The bank plans to issue structured products tied to the indices later this year.
The United Nations’ SDGs are a set of 17 goals established to guide international cooperation to achieve sustainable development, end poverty and tackle climate change. They were adopted by UN member countries in September 2015 and require active participation from governments, corporations and investors.
The index consists of 50 global companies which have a clear, positive net impact on sustainable development. Eligibility for inclusion is based on Vigeo Eiris’ Equitics© methodology which maps the SDGs against the companies’ products, services and behaviours. Companies for whom sustainable products such as renewable energy or essential medicines represent a significant proportion of activity are eligible. Each company is rated with regards to their impact on people and the planet, and their business practices. For each sector, the leader is included. A further three levels of filtering are embedded into the process: a carbon footprint exclusion filter is applied based on the companies’ carbon emissions and energy transition strategies. Companies with major involvement in disputed activities such as nuclear, tobacco or firearms are also left out, as well as companies involved in critical controversies such as human rights violations. Solactive, the index provider, then applies volatility and diversification filters to reach the final composition.
Neven Graillat, head of sustainable investment solutions, BNP Paribas Global Markets, said: “The 2030 agenda for sustainable development is a transformative global framework for people, the planet and prosperity, and applies to each and every one of us over the next 15 years. Financial markets must support commercial innovations to deliver on the SDGs, and we believe that investors and corporations have a major role to play. This is the idea behind the Goal 17 Partnership for the Goals. Sustainability is at the core of BNP Paribas’ strategy – we want to deliver long term solutions for our clients and do business which has a positive impact on society and the environment. So we are pleased to have licensed this unique set of indices which will enable investors to allocate their capital towards companies that are leading the way in terms of advancing the UN’s SDGs.”
Henning Kahre, head of research at Solactive AG, said: “We at Solactive see increasing demand for indices offering ESG compliant access to markets as a result of long-term initiatives such as UN’s SDGs. For the Solactive Sustainable Development Goals Index suite we combine our expertise in ESG focused index design with strong and experienced partners in the space, on the ESG research as well as on the product side. Furthermore, this new index series adds a Smart Beta layer on top of the initial universe of stocks, combining two of the most relevant themes in the indexing industry these days.”
Michael Notat, head of Global Markets at Vigeo Eiris, said: “This new SDGs index is a great mean to invest in long term value creation though a precise selection of companies based on their business behavior, the nature of their activities with regard to SDGs and their carbon strategy. It brings together a set of companies that are committing not only to sustainable growth in their products and services but as well in their way of doing business.”
The index is designed to fit the needs of a range of investors from retail to institutional in several regions including the Americas, Europe and Asia-Pacific. A second set of European indices is also available.
BNP Paribas is one of the largest underwriters of sustainable investment globally. In total, BNP Paribas has lead managed more than EUR12bn in green bonds including more than EUR1bn in equity-linked (converted as at 31 August 2016 exchange rates). It also launched the World Bank’s first equity-index linked green bond in 2014 and has launched or licensed 12 ethical equity indices since 2013. To date, the bank has financed or advised on more than EUR7.2bn in renewable energy projects across the globe. Last November, BNP Paribas committed to more than doubling the amount of capital it allocates to renewable energy to EUR15bn by 2020.
BNP Paribas is a leading bank in Europe with an international reach. It has a presence in 75 countries, with more than 189,000 employees, including more than 146,000 in Europe. The Group has key positions in its three main activities: Domestic Markets and International Financial Services (whose retail-banking networks and financial services are covered by Retail Banking & Services) and Corporate & Institutional Banking, which serves two client franchises: corporate clients and institutional investors. The Group helps all its clients (individuals, community associations, entrepreneurs, SMEs, corporates and institutional clients) to realise their projects through solutions spanning financing, investment, savings and protection insurance. In Europe, the Group has four domestic markets (Belgium, France, Italy and Luxembourg) and BNP Paribas Personal Finance is the leader in consumer lending. BNP Paribas is rolling out its integrated retail-banking model in Mediterranean countries, in Turkey, in Eastern Europe and a large network in the western part of the United States. In its Corporate & Institutional Banking and International Financial Services activities, BNP Paribas also enjoys top positions in Europe, a strong presence in the Americas as well as a solid and fast-growing business in Asia-Pacific.
Fully integrated in the BNP Paribas Group, BNP Paribas Corporate and Institutional Banking is a leading provider of solutions to two client franchises: corporates and institutionals, and operates across EMEA (Europe Middle East Africa), APAC (Asia Pacific) and the Americas. The bank is a global leader in Debt Capital Markets and Derivatives. It is a top European house in Equity Capital Markets and it has leading franchises in Specialized Financing. In Securities Services, it is a top five House worldwide. BNP Paribas CIB strives to service the global economy by providing solutions to its clients in financing (ECM, DCM, specialized financing), flow banking (trade finance and cash management), financial advisory (M&A, project finance), global markets (interest rates, credit, foreign exchange, equity derivatives), risk management, and securities services.