The sustainable investor for a changing world

People in office

BNP Paribas Asset Management regards active stewardship as an essential part of its role as a ‘Future Maker’ and a sustainable asset manager for a changing world, engaging with companies on issues ranging from environmental degradation and social inequality to opaque governance.

Climate change has been a key theme in our voting and engagement activities, with a particular focus on tackling corporate climate lobbying.

In this area, we have been recognised for our efforts. BNPP AM was ranked first in the Corporate Lobbying Alignment Project (CLAP). According to Preventable Surprises, the NGO behind the ranking, our documenting of this commitment in a Public Policy Stewardship Strategy on Sustainability is unique and provides a simple model for other asset managers to build on.

The Corporate Lobbying Alignment Project seeks to make corporate political capture – where companies use their economic power to ensure decision makers prioritise their profit interests over public needs – a central component of investors’ approach to ESG stewardship and integration.

In our Public Policy Stewardship Strategy, we state that we will actively pursue more transparent and responsible corporate lobbying practices under our comprehensive approach to stewardship. This articulates our rationale and the process for engaging with policymakers and the topics we focus on.

One of the ways we brought this engagement to life was with our active role as a member of the EC Technical Expert Group (TEG) on Sustainable Finance.

Active stewardship

Gender diversity at the board level is another issue taking centre stage in our voting at shareholder meetings and in our engagement meetings:

  • We will vote against the entire board of directors in companies which do not have at least one woman on the board
  • We have raised the threshold to 30% of women on boards for companies based in North America, Europe, Australia and New Zealand starting this January.
  • This year, we strengthened its board diversity requirements by setting a threshold of 15% women for Asian and Latin American countries, while from 2025, we plan to apply a threshold of 40% globally.

Our track record shows that we challenge management proposals more often than the average large asset management company does.

Source: Voting & Engagement, 2020 results, BNP Paribas Asset Management

A clear focus

Given our strategic priorities around sustainability, we usually support climate-related proposals including those calling for climate-aligned or ‘Paris’-aligned climate change lobbying. We also give our backing to deforestation-related proposals. In 2021, BNPP AM supported 90% of climate-related shareholder resolutions (94% in 2020) and tabled two resolutions on climate lobbying.

“This year, the growth in climate-related resolutions filed by shareholders, very often gaining majority supported, as well as the emerging phenomenon of ‘Say on Climate’ strategies, marked a major turning point, and should impact the agendas of AGMs for years to come.  We have shown strong support – 75% – for the resolutions submitted by companies on their climate ambitions and we welcome the progress made by those companies that show long term commitment to the energy transition.” Michael Herskovich, Global Head of Stewardship[1]

We oppose board elections or the approval of financial statements when companies do not disclose their CO2 emissions and have executive remuneration packages that are unreasonable in the context of executive pay and that of the median worker.

Through voting and engagement, we aim to encourage companies to integrate ESG criteria into their executive remuneration policy and align it with the company’s long-term prospects. The transparency of the remuneration policy, its alignment with company performance and the challenging nature of remuneration criteria are key elements of our voting policy.

As a future maker, we intend to use our votes to send a strong signal to companies regarding our expectation for governance and their role in the energy transition, in securing environmental sustainability and safeguarding equality and inclusive growth.

Global stewardship

Our stewardship activities have a global reach, with a Head of Stewardship for Asia and a Head of Stewardship, Americas. This setup has resulted in a significant rise in our activities in those regions, strengthening our leadership as a global active asset owner.

Source: Voting & Engagement, 2020 results, BNP Paribas Asset Management

As long-term investors, we use stewardship – proxy voting, company engagement and policy advocacy – to encourage companies and policymakers to improve their performance on a range of sustainability topics.

This helps us to manage investment risk in the near and long term, enhances our knowledge and understanding as investors, and creates positive externalities – all of which benefit our clients.

[1] Also see BNP Paribas Asset Management focuses on climate and board diversity during 2021 AGM season

Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.