BNP Paribas Asset Management launches first Inclusive Growth thematic fund

February 23, 2021
  • BNP Paribas Asset Management (‘BNPP AM’) renames BNP Paribas Human Development fund as BNP Paribas Inclusive Growth fund and changes investment strategy focused on diversity and inclusive growth.
  • Inclusive Growth fund invests in companies combining financial performance with proactive approach to reducing social inequalities.
  • ‘Inclusion score’ based on a proprietary methodology allows companies to be rated and selected for high-conviction portfolio of 40-60 equities.

BNPP AM has restructured the BNP Paribas Human Development fund, now renamed BNP Paribas Inclusive Growth, and managed using a new investment strategy focused on inclusive growth[1],  It aims to generate returns through investment in companies with a proactive approach to reducing inequalities in income, education, gender, ethnicity, geographic origin, age or disability.

Combining social factors and financial return

The restructured fund is fully aligned with BNPP AM's Global Sustainability Strategy, of which equality & inclusive growth is a key pillar, along with energy transition and the environment (collectively the ‘3 Es’).  Equality & inclusive growth forms an essential component of companies' ESG[2] scores and the importance of the social dimension is clearly highlighted in the current global economic and health crisis.

BNP Paribas Inclusive Growth invests in companies that contribute positively to diversity and inclusion.  Its investment strategy is based on five key social challenges identified as major causes of inequalities:

• protecting the most vulnerable members of society
• promoting social mobility
• developing a quality offering accessible to the greatest number of people
• respecting business ethics
• promoting decarbonisation and biodiversity

BNP Paribas Inclusive Growth is based on the strong conviction that inclusive growth creates sustainable financial performance and better management of long-term risk, thereby offering institutional investors and savers attractive returns while contributing to an economy that creates opportunities for all.

Inclusion score based on unique and proprietary methodology

BNPP AM has developed a proprietary methodology that combines its quantitative research expertise with the non-financial data analysis capabilities of its team of ESG experts.  This methodology enables all stocks in the universe to be scored out of 100, using ESG indicators associated with a specific range of inclusive growth criteria.  These include employment contracts, working conditions, equal pay, employee diversity, percentage of female managers, talent management, professional training, product and service offering for low-income consumers and executive remuneration policy.

The final ‘inclusion score’ enables the identification of companies that are inclusive growth leaders within the investment universe.  It incorporates an enhanced weighting for social factors, which account for 65% of the overall score, compared to 20% for governance criteria and 15% for environmental.  Companies that score below 20 are automatically excluded from the investment portfolio.  This approach enables BNP Paribas Inclusive Growth to meet all of the UN Sustainable Development Goals, with four being prioritised: SDG 1 (no poverty), SDG 5 (gender equality), SDG 8 (decent work & economic growth) and SDG 10 (reduced inequalities).

Maria Luz Diaz Blanco and Anne Froideval, Portfolio Managers of the Inclusive Growth fund, comment:

"By integrating specific performance indicators, such as employee turnover rate or board diversity, our proprietary model allows us to filter the investment universe to identify the leaders.  Our selective approach means that we can build a high conviction equity portfolio of 40-60 stocks from around 1,000 companies initially analysed.  This allows us to meet the expectations of our clients who are looking to generate a positive impact on tomorrow’s society while generating long-term value."

Delphine Riou, ESG Analyst at BNP Paribas Asset Management, comments:

"The BNP Paribas Inclusive Growth fund is a continuation of BNPP AM's work on the social theme and responds to the demands of our clients.  We believe that companies that implement the best practices of diversity and inclusion with their employees, their customers or their suppliers can achieve better financial results.  This finding resonates all the more strongly during the Covid-19 crisis, which accelerated the emergence of social considerations in investment decision-making."

Key fund characteristics  

Name                                                      BNP Paribas Inclusive Growth
Legal structure                                       Sub-fund of BNP Paribas Funds SICAV registered under Luxembourg law
Management company                          BNP Paribas Asset Management Luxembourg
Delegated management company         BNP Paribas Asset Management France
Custodian                                                 BNP Paribas Securities Services - Luxembourg branch
Launch date                                           5 December 2014
Base currency                                        Euro
Share classes and ISIN codes               Classic Capitalisation           LU1165136174
                                                               Classic Distribution              LU1165136257
                                                               I Capitalisation                     LU1165136844
                                                               N Capitalisation                    LU1165136505
                                                               Privilege Capitalisation        LU1165136687
                                                               Privilege Distribution           LU1165136760
Registered for sale in                            UK, Austria, Belgium, France, Germany, Greece, Hungary,
                                                               Italy, Luxembourg, Netherlands, Spain, Switzerland
Benchmark                                            MSCI World (NR)
SRRI* score                                            6

* Synthetic Risk and Reward Indicator (on a scale of 1 (lowest) to 7 (highest))
These internal guidelines are provided for information only and are subject to change.

- ENDS -

Footnotes

  1. ^ [1] The OECD defines inclusive growth as economic growth that is distributed fairly across society and creates opportunities for all, https://www.oecd.org/inclusive-growth/#inequality-puts-our-world-at-risk
  2. ^ [2] Environment, Social and Governance

BNP PARIBAS ASSET MANAGEMENT UK Limited, ‘the investment company’, is authorised and regulated by the Financial Conduct Authority.  Registered in England No: 02474627, registered office: 5 Aldermanbury Square, London, England, EC2V 7BP, United Kingdom.

 

This material is produced for information purposes only and does not constitute:

1.          an offer to buy nor a solicitation to sell, nor shall it form the basis of or be relied upon in connection with any contract or commitment whatsoever or
2.          investment advice.

This material is issued and has been prepared by the investment company.  It contains opinions and statistical data that are considered lawful and correct on the day of their publication according to the economic and financial environment at the time.  This document does not constitute investment advice or form part of an offer or invitation to subscribe for or to purchase any financial instrument(s) nor shall it or any part of it form the basis of any contract or commitment whatsoever.

This document is provided without knowledge of an investors’ situation.  Prior to any subscription, investors should verify in which countries the financial instruments referred to in this document refers are registered and authorised for public sale.  In particular financial instruments cannot be offered or sold publicly in the United States.  Investors considering subscriptions should read carefully the most recent prospectus and Key Investor Information Document (KIID) agreed by the regulatory authority, available on the website.  Investors are invited to consult the most recent financial reports, which are also available on the website.  Investors should consult their own legal and tax advisors prior to investing.  Given the economic and market risks, there can be no assurance that the financial instrument(s) will achieve its investment objectives.  Their value can decrease as well as increase. In particular, changes in currency exchange rates may affect the value of an investment.  Performance that is shown net of management fees and is calculated using global returns with time factored in, with net dividends and reinvested interest, and does not include subscription-redemption fees, exchange rate fees or tax.  Any gross of fees performance included in this material do not reflect the deduction of commission, fees and other expenses incurred.  Returns will be reduced after the deduction of such fees.  Past performance is not a guarantee of future results.

This document is directed only at person(s) who have professional experience in matters relating to investments (‘relevant persons’).  Any investment or investment activity to which this document relates is available only to and will be engaged in only with Professional Clients as defined in the rules of the Financial Conduct Authority.  Any person who is not a relevant person should not act or rely on this document or any of its contents.

All information referred to in the present document is available at www.bnpparibas-am.com.

This is a Marketing Communication for Professional Investors only.  No assurance can be given that any forecast, target or opinion will materialise.

As at February 2020.

Contact