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Articles Q4 2022 Q4 2022 Buy-side

Sustainability and ESG in Asset Management

With Johanna Lasker, CEO, BNP Paribas Asset Management North America

Briefly outline your career to date? 

I am currently the North America CEO for BNP Paribas Asset Management (BNPP AM) as well as the Head of Central Banks and Official Institutions based in New York. As CEO for North America, I am responsible for strategic leadership and development. I also manage the growth of the business, overseeing business development, and maintaining direct oversight of management and effective governance in the region. In my capacity as Head of Central Banks & Official Institutions, I am responsible for managing and growing the official sector business globally, while also ensuring we are meeting client needs. 

I originally joined BNPP AM through a predecessor firm in 1997. Since 2013, I have been the head of the Central Banks and Official Institutions team, successfully growing the client base and increasing AUM for this sector. 

In addition to working for BNPP AM, I worked in the Corporate Finance division at UBS where I was an Associate Director in the Consumer Products Group in New York and then later transferred to the Global Industrial Group in Japan.

Why is BNPP AM interested in sustainable investing and ESG?

Climate change, growing social inequalities, and environmental damage can have a significant impact on the performance of companies in which asset managers, including BNPP AM, invest. In order to tackle these challenges, we believe long-term investors have a role to play by utilizing their investments – and their voices – to positively influence companies’ practices. We intend to be the driving force behind this transformation, working with our clients to meet tomorrow’s challenges today.

However, ‘walking the talk’ is also critical to achieving a more sustainable world. BNPP AM’s CSR demonstrates the standards we expect from the entities in which we invest. We have incorporated a four-pronged approach to integrating sustainability into our operational and community activities. This includes decreasing our CO2 emissions and landfill waste, achieving a more inclusive workforce, and focusing on youth community initiatives.

What is your personal interest in ESG?

Throughout my career, I have had great role models who have taken me under their wing. As a business leader in a historically male-dominated industry, I strive to also be a role model for all employees. It is important to show that women and under represented groups can be successful in a company but also in the industry at large. I actively focus on this and recognize the importance of helping everyone move through and succeed in the different phases of the employee life cycle. I am lucky enough to be a part of an organization that values and includes representation from diverse backgrounds and perspectives.

What is the value proposition for an institutional investment manager to pursue sustainable investing and ESG initiatives?

To put it simply, it is key for the world we live in, but also for capital markets. Investing sustainably encompasses a range of issues from mitigating climate change to tackling social inequality. More and more, investors want to invest sustainably. They are interested in coupling investing for a financial return with a positive contribution to the environment and society. Integrating ESG also allows investors to unearth uncovered areas of risks and opportunities and make better investment decisions. They understand that investing sustainably can be financially rewarding as well.

Sustainability is at the heart of BNPP AM’s business and investment decisions. We have been working on sustainable investing for 20 years. We focus on achieving long-term sustainable returns for clients and offer a range of investment strategies to adopt a sustainable investment approach. For example integrating ESG factors, investor stewardship, and thematic investing. 

Today, sustainability is becoming a key ingredient in asset management and ESG is moving into specialist areas like credit or sovereign fixed income. We are looking at new ways of bringing our ESG strategies to the US marketplace. As sustainability becomes mainstream in the US, we hope our long track record and experience in ESG will position us at an advantage to the US client-base and attract new talent.

How is the demand for sustainable investing evolving? How is it different now compared to a year or two ago?

The evolution of sustainable investing has been exponential. Now, companies and investors alike are more knowledgeable about ESG factors such as net zero, reducing their impact on nature and improving diversity. Clients are requiring, for example, the implementation of complex in-house ESG policies or the creation of bespoke ESG solutions. 

The Covid-19 pandemic put an unprecedented spotlight on ESG and demand has soared over the past two years. More recently, geo-politics and the energy crisis have posed a challenge to some ESG initiatives, but overall demand in this area will continue to grow.

What ESG initiatives does BNPP AM have in place?

BNPP AM has had an early and strong emphasis in sustainability. Our commitment to sustainable investment began in 2002. 

In 2017, BNPP AM created our Sustainability Centre to bring together research and expertise with the aim of supporting investment processes.

In 2019, we developed a Global Sustainability Strategy with includes our four key pillars: ESG integration across all investments; stewardship; responsible business conduct; and the ‘three E’s’, environment, energy transition, and equity and inclusive growth.

In May 2021, we changed our tagline to the “sustainable investor for a changing world” which highlights the importance of ESG to us.

In 2021, we also launched a market leading Biodiversity Roadmap. In partnership with CDP, we developed biodiversity corporate reporting metrics, to help investors to better assess biodiversity impacts. 

We also worked in partnership with Matter, a Danish fintech specializing in sustainability insights, to launch ‘SDG Fundamentals’. This innovative data solution enables investors to analyze the extent to which company revenues are aligned – or misaligned – with the 17 U.N. SDG targets. This gives investors actionable information on what constitutes company alignment, and also increases data breadth, quality and standards through industry collaboration.

As a signatory to the Net Zero Asset Managers initiative, BNPP AM has committed to supporting the goals of net zero greenhouse gas emissions and to support investing aligned with net zero emissions by 2050. 

Broadly speaking, what is the future of sustainable investing and ESG in the institutional investment industry? 

ESG is here to stay. In the future, we hope to see greater volume and harmonization of corporate disclosures through the work of international standard setting bodies such as the ISSB and local regulators. This harmonization will power enhanced sustainable investment solutions for our clients. In addition, we see growing progress on how to measure impact investments, both at the company and investment portfolio level. Asset managers should seek to measure – and manage – the impact we have across trillions of assets. For example, BNPP AM published its first Biodiversity Footprint earlier this year, where, following a collaboration with Iceberg Data Lab and I Care & Consult, we determined the impact on biodiversity at the portfolio level.