BNP Paribas Asset Management (‘BNPP AM’) announces the launch of BNP Paribas Social Bond fund, investing in bonds aimed at financing projects with positive social impacts. The fund is classified as Article 9 under SFDR and launches during a period of record growth for the sustainable bond market, in particular social bonds.
The launch is in line with BNPP AM's Global Sustainability Strategy, of which achieving equality & inclusive growth is one of three priority areas, alongside accelerating the energy transition and protecting the environment. Managed using a rigorous proprietary methodology, bond and issuer selection are aligned with BNPP AM's sustainable investment standards, drawing on the expertise of its bond management teams and its Sustainability Centre. The fund combines BNPP AM’s long-standing expertise in green bonds (BNP Paribas Green Bond fund was launched in 2017) and its in-depth knowledge of social issues, with the BNP Paribas Inclusive Growth fund launched earlier this year.
BNP Paribas Social Bond fund invests in three main areas:
- A minimum of 75% in bonds labelled social or sustainable, promoting access to essential services such as water or health, affordable housing, employment, food security, socioeconomic progress or basic infrastructure.
- A maximum of 25% in bonds issued by socially responsible companies, selected according to a rating model developed by BNPP AM that assigns an ‘inclusion score’ to issuers, ranking them on their social practices aimed at reducing inequalities.
- A maximum of 10% in microcredit instruments that help provide small businesses and individuals in emerging markets with access to financial services.
Social bonds are the fastest growing segment of the sustainable bond universe, accounting for 30% of total Green, Social and Sustainability Bonds in 2020. This growth is expected continue, driven in large part by sovereign or quasi-sovereign issuers and by the expansion of social bond programmes to finance more projects aimed at countering inequalities.
Arnaud-Guilhem Lamy, Head of Euro Aggregate Bond Strategies at BNP Paribas Asset Management and manager of BNP Paribas Social Bond fund, comments:
"The growing importance of bonds within thematic management, historically more geared towards equities, and the emergence of social considerations among investors are two major developments in our industry. The launch of BNP Paribas Social Bond fund reflects both of these, and enables capital to be directed towards activities with a positive social impact, such as unemployment benefit programmes or social housing. Our rigorous methodology brings real added value, by evaluating not only the quality of the issuer but also that of the projects being financed."
Key fund characteristics
Fund name: BNP Paribas Funds Social Bond
Launch date: 23 November 2021
Management company: BNP Paribas Asset Management Luxembourg
Registered for sale in: Belgium, France, Germany, Greece, Italy, Luxembourg, Netherlands, Portugal, Spain, Switzerland
Classic, capitalisation - LU2355551313
Institutional, capitalisation - LU2355551826
Privilege, capitalisation - LU2355551669
Benchmark: Bloomberg Barclays Global Treasury Euro Hedged 3-7 years
SFDR* category: Article 9
* Sustainable Finance Disclosure Regulation. Regulation 2019/2088 of the European Parliament and of the Council of 27 November 2019 on the information to be provided with regard to sustainable development in the financial services sector. Article 9 - product with a sustainable investment objective.
** Synthetic Risk & Return Indicator, measured on a scale of 1 (lowest) to 7 (highest). SRRI is calculated periodically calculation and can therefore change over time. Regular consultation of the fund's KIID is recommended.
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As at November 2021.
HEAD OF EURO-AGGREGATE BOND MANAGEMENT STRATEGIES
Arnaud-Guilhem is responsible for euro-aggregate's bond management strategies and is also an expert in socially responsible investment (SRI) for bond management. Prior...