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ESG leader launches long-short strategy


BNP Paribas Asset Management has an enviable record of being a sustainable investment leader. Not only has it continued to build on previous commitments to align with the Paris Agreement and improve transparency, but BNP has launched a raft of new commitments aimed at strengthening its fight against climate change and the preservation of the Earth’s biodiversity.

  • The group has been carbon-neutral on “its operational scope (direct greenhouse gas emissions and indirect emissions linked to the purchase of energy and to business travels) since 2017,” according to its spokesperson.

    Careful planning and hard work have helped reduce the group’s carbon footprint, but it doesn’t stop there. The asset manager recently announced the launch of three new trusts: Global Green Bonds, Global Environmental Equity Market Neutral and China Equity.

    Recognising the importance of climate change, Mark Carney, former Governor of the Bank of England was quoted as saying: “Every company, every bank, every insurer and investor must adjust their business models to climate change, but this existential risk could be the greatest commercial opportunity of our time.”

    One thing that is clear, is that the pandemic and its lockdowns have changed the way we do business, the way we live, and the way we see the world. It’s also reinforced the world we want to live in, one that is environmentally sustainable for us and the generations ahead. And the pandemic has helped us see what we need to do to achieve it.

    BNP says companies positioned to provide sustainable environmental solutions will outperform those operating in similar markets with assets at risk from the transition, or inferior technologies. Companies seen to be harming the planet will continue to grow unpopular with both investors and customers, underperforming companies with strong environmental principles.

    Edward Lees is portfolio manager for the EARTH strategy at BNP Paribas, as well as the co-head of the environmental strategies group. The Environmental Absolute Return Thematics Fund (EARTH) looks to give investors exposure to global companies that address environmental challenges in energy, materials, agriculture, and industrial markets. With a target return of 9-12 per cent a year over the medium term, it is a highly concentrated portfolio of 30-50 stocks able to take both long and short positions.

    “We believe that companies positioned to help address the significant environmental challenges we face will outperform those that either take no action or indeed contribute to these issues,” Lees says.

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