BNP Paribas Wealth Management’s responsible investment has crossed 3 billion mark, a 50% per year increase in clients’ wealth management since 2010.
Two years ago, it set itself the goal of passing the 2 billion euro mark for responsible investing on behalf of its clients. By June this year, these investments had reached over 3 billion euro, showing consistent annual growth for four years in a row.
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In 2007, at a time when client demand was still dormant, the Private Banking arm of BNP Paribas took the pioneering step of launching a Sustainable and Responsible Investment (SRI) range of products. Nowadays, the international business and finance climate, the well-established pedigree of SRI products, and the fact that investment specialists are generally more in tune with social trends, have led to the emergence of new requirements from investors and encouraged the business line to place greater priority on a socially responsible approach to the investments it recommends.
Over the years, BNP Paribas Wealth Management (WM) has built up a broad, diversified SRI and Impact Investing* range, coupled with a business development strategy and a specific methodology for putting forward investment products and services designed to meet the new needs and expectations of clients today.
Last year, BNP Paribas Wealth Management’s efforts in this field were recognised at the 2013 Global Private Banking Awards organised by The Banker magazine in conjunction with Professional Wealth Management magazine, where WM was named Best Private Bank for Socially Responsible Investing.
*Impact Investing is an investment strategy which seeks to bring solutions to key development issues while generating a financial return.
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By GlobalDataSteady increase in SRI at BNP Paribas Wealth Management
Only a short while ago, promoting Sustainable and Responsible Investment still called for considerable efforts on the part of private banking staff to identify potential SRI clients and provide them with all the necessary support to understand this new approach, but today there is a spontaneous demand for SRI products.
Besides, in contrast with institutional investors, private individuals do not generally have the time to closely examine the highly specific criteria underpinning SRI. Extra-financial rating agencies assessing SRI funds draw on as many as a hundred criteria when analysing a single company. What individual investors are more interested in however is to obtain a real indication of the impact their investment makes, ideally relating directly to their own interests as a consumer, entrepreneur, and so on, including clear proof that their investment is being used for instance to promote fair trade or foster employee well-being.
This is how the team in charge of selecting SRI funds at BNP Paribas Wealth Management chooses funds whose strategy demonstrates commitment to precise Environmental, Social and Governance (ESG) criteria. Our investors are offered investments in areas as diverse as microfinance, social entrepreneurship, water treatment and energy efficiency.
A winning combination of financial performance and social usefulness
It is difficult to draw systematic conclusions about the performance of SRI, especially given the diversity of possible strategies – multi-sector or by theme, multi-asset-class or equity-oriented investment, etc – but it is now generally recognised that using ESG criteria for asset management does not imply any financial under-performance.*
Investing in an SRI fund can imply good financial performance. This type of fund may in the long term out-perform indexes of choice as holdings are selected according to a very rigorous process.
For example, the SRI Mandate which is one option under BNP Paribas Wealth Management’s discretionary management service comprises a rigorous selection of funds chosen both for their financial and extra-financial soundness**, showing returns that are in line with traditional investment strategies, even slightly out-performing traditional investment vehicles over the last three years (figures to mid-July 2014).
Investments respecting Environmental, Social and Governance criteria, also paying special attention to the sustainability of these companies’ business models, will enable SRI funds to perform well over the long term. This also depends of course on highly-skilled fund management that is able to improve the risk/reward ratio.
