The sustainable investor for a changing world

Sandro Pierri CEO letter

We are facing a critical period for the global economy. In the recent and coming weeks, the world’s nations are meeting to tackle two interlinked crises: biodiversity loss and climate change.

I believe it is clear to us all that the magnitude and immediacy of these challenges requires urgent – and measurable –action from governments, industry and finance.

Failing that, the accelerating loss of a healthy, functioning environment and of the world’s ‘natural capital’ are set to hit a pivot-point of no return – in many cases, within years, not decades.

The consequences of inaction are dire, not only for the environment and society but also for our economic future. Our economic health relies on a functioning and stable environment, and how we work together now will dictate the future we enjoy.

Tackling the biodiversity crisis

The climate crisis cannot be solved separately from the biodiversity crisis, and without a global policy framework that sets the right level of ambition with clear targets, we are unlikely to be able to reverse the loss of our natural capital.

That is why, as we announced in our biodiversity roadmap in May, we worked with other institutional investors ahead of the recent Part 1 COP15 Convention on Biological Diversity in Kunming, China. We expressed our interest – via a statement backed by 78 financial institutions managing more than USD 10 trillion – in a determined outcome for these critical negotiations.

While COP15 resulted in the broad-brush Kunming Declaration, we still need more clarity to help put us on a path to well-defined outcomes. Together with you, our clients, we need to ensure that our voices are heard, and that our message is clear: that we need progress without obstruction or delay. And that we will use our role as shareholders and influencers to push back against corporate lobbying seeking to hinder progress in the months leading towards Part 2 of COP15 next Spring.

This approach is reflected in the core commitments we are taking as an organisation. At BNP Paribas Asset Management, we embrace our role in managing our clients’ assets with the utmost responsibility. We believe this is not only an opportunity; it is also our obligation to use our capital and influence to work towards a more sustainable future.

As one example, BNP Paribas Group was a co-chair of the working group that established the new Taskforce for Nature-related Financial Disclosures (TNFD), with active participation from BNP Paribas Asset Management. The TNFD is developing a reporting framework to allow financial institutions to understand our impacts and dependencies on nature. We believe the TNFD’s work will allow financial markets to align with a nature-positive future.

Ramping up climate commitments on the road to Net Zero

While countries representing some 60% of global GDP have committed to Net Zero targets, many of the tangible policy changes needed to get us there have yet to materialise. We need clear, short-term targets from key emitters on coal power wind-downs, halting deforestation, a timeline to hit ‘peak meat’, and the electrification of transport.

To articulate our full support to policymakers, we joined other investors in issuing the 2021 Global Investor Statement to Governments on the Climate Crisis.

We are also a strategic partner to the Principles for Responsible Investment’s Inevitable Policy Response (IPR) project. This group recently published a Forecast Policy Scenario that forecasts a path to achieving a 50% chance of limiting warming to 1.8°C, anticipating the basket of changes that policymakers will implement, driven by the combination of investor, corporate and civil society pressure.

However, a 50% chance of 1.8°C could still mean catastrophic climate change. So, the IPR has also published a Required Policy Scenario, which highlights the additional policy action required to bring us down to the safer level of 1.5°C – aligned with the goal of achieving net zero emissions by 2050.

These scenarios will help inform our investment decision-making processes and identify new investment opportunities on your behalf. They will also help guide our stewardship strategy in engaging with companies and policymakers to encourage them to take the steps required to safeguard our future – and your investments. We believe these scenarios will further strengthen the signal we have already sent to policymakers ahead of COP26 – strong policy action to address climate change is needed now.

Developing innovative solutions and deepening our expertise – for you

Many of our clients are also making net zero commitments, and we are fully focused on providing you with the support you need to achieve your aims. We have invested significantly in our Environmental Strategies Group, which actively manages a growing range of thematic funds. We plan to continue to broaden our range of Paris Agreement-aligned and sustainability-themed investment solutions to enable you to allocate to attractive investment solutions aligned with, and contributing to, a sustainable future.

We have further strengthened our world-class Sustainability Centre – the engine of our sustainability strategy. Its expertise in stewardship, climate change, biodiversity, equality, ESG and impact investing closes the circle on our complete investment process, as its research outputs complement the work of our investment portfolio management and client teams – all the teams that manage your assets.

In closing, it is important to me as CEO to assure you of our unwavering focus on striving to deliver sustainable, long-term returns for you. The scale of the challenge we are facing underlines the importance of partnership as never before.

Those long-term returns depend on Earth having a viable future, and helping to realise that future is fundamental to all we do, and who we are. If you have time, I would suggest you read our 2020 Sustainability Report, which highlights how we are ‘walking the talk’.

On your behalf, we will continue to use our insights to help make more sustainable investment decisions in the near term, while using our capital allocation and influence to push companies and policymakers towards creating a more sustainable future for the long term.

Kind regards,
Sandro Pierri

CEO, BNP Paribas Asset Management