Dive Brief:
- BNP Paribas Asset Management will stop investing in new bonds issued by companies focused on oil and gas exploration and production, including diversified players, according to a November investment strategy update.
- The French bank’s asset management arm, which currently oversees 591 billion euros (over $619 billion) in assets, told ESG Dive over emailed comments Monday that the revised strategy was in line with the practices of BNP Paribas Group. The financial group has refrained from participating in bond issuance by such companies since 2023.
- The decision is also in alignment with the subsidiary’s sustainable investment strategy, which “aims to align its investments towards a net-zero trajectory,” a BNP Paribas Asset Management spokesperson said. The fund takes ESG considerations into account when making investment decisions and aims to “promote a low carbon, environmentally sustainable and inclusive economy,” per its website. It utilizes a “single-minded sustainability approach,” the asset management arm’s CEO Sandro Pierri is quoted as saying on the site.
Dive Insight:
The new policy will place oil and gas companies on either an exclusion list or a watch list based on an assessment conducted by BNP Paribas AM’s Sustainability Center, which will factor in the environmental, social and governance practices of individual issuers, per the update.
The former category will target issuers violating the United Nations’ Global Compact Principles on human rights, labor, environment and more, or mandatory requirements related to sensitive sectors such as mining, agriculture and coal. The latter category will include issuers whom the bank may engage with to support improvements on environmental and social policies.
BNPP AM said the exclusion and watch list will apply to all types of securities, such as equities, bonds and convertible bonds, but not to short sales of securities.
Though BNP Paribas’ asset management arm will no longer buy new bonds issued by oil and gas companies, it will continue to invest in their existing debt and equity, subject to certain rules and exclusions, per the strategy update.
Reclaim Finance, a non-governmental organization that campaigns for using finance to fight climate change, said BNP AM is the first major global asset manager to adopt such a measure and hailed the new policy as a “historic step.”
“This measure is crucial, as bonds are one of the most important modes of financing for companies in the fossil fuel sector today,” Reclaim Finance’s Sustainable Investment Campaigner Lara Cuvelier said in a Nov. 27 statement.
However, the NGO noted that the policy did not extend to companies involved in transporting oil and gas, or the development of new liquefied natural gas export terminals. Reclaim Finance also called on the BNP Paribas Group to apply the same approach to its other subsidiaries.
