BNP Paribas sees increased demand for ESG and SRI ETFs
Isabelle Bourcier is Global Head of ETF and Index Solutions, BNP Paribas Asset Management (BNPP AM). She has been in indexing for many years, but with BNP Paribas since June 2016.
“The trends I have seen during the past few years have been an emerging demand from the institutional world, specifically the large institutions from the Nordic countries, the Netherlands and France, who are asking us to meet specific ESG criteria. And then, there has been an increasing demand from the private banks and their retail end users for ESG and SRI products.”
The demand for SRI and ESG or Impact investing has even spread to BNP Paribas bank itself. May this year saw the bank commit to becoming carbon neutral by the end of the year in terms of the CO2 emissions arising from its own operations.
Assets in European ETFs with SRI values now stand at EUR2.8 billion, according to ETFGI database. “In 2014 I started to have meetings with clients such as wealth managers who were asking for SRI and ESG products,” Bourcier says.
BNPP AM has a long history in launching ESG or SRI ETFs, with the 2008 launch of a low carbon ETF with EUR140 million in assets and products that reflect the Ottawa Treaty of 1999’s ban of investments into controversial weapons. 2004 saw BNPP AM launch a series of ETFs based on the MSCI indices which exclude the manufacturer of controversial weapons.
“More recently, last year saw the first SRI ETFs for the US and emerging markets. We are planning to launch new funds, again with a SRI approach. More and more European investors select the SRI approach, wanting to exclude notably Alcohol, Gambling, Tobacco, Military Weapons, Civilian Firearms, Nuclear Power, Adult Entertainment, Genetically Modified Organisms.”
Bourcier feels that increased communication on the topics have led to more information being disseminated and more companies developing their governance along SRI and ESG themes. Investors such as the church and charities are also driving demand. “They are asking for more products that respect ESG principals,” she says.
BNPP AM has a large business in customised funds for institutions. “From the RFPs we see going out into the markets, there are a lot of demands with exclusion lists from the clients with their own ESG criteria,” Bourcier says. “They are easily deliverable from us as we have a strong investment pool and strong research capabilities within BNPP AM.”
Other trends that remain strong within BNPP AM include smart beta or factor ETFs which they first launched a year ago and now have seen reach EUR300 million under management.
“Last year we launched a series of ETFs tracking four factors: low volatility, value, momentum and quality. These are the most documented and used within our quant teams for multi factor allocations,” Bourcier says.