measuring esg performance of your portfolios
DESCRIPTION
Eric Borremans, Head of SRI Research and Development - BNP Paribas Investment Partners - FranceTRANSCRIPT
[Special Mention]
ESG Integration in Reporting
TBLI Tokyo
May 28-29, 2010
TBLI – ESG Integration
Back to basicsThematic Investments
How does it work?
• products and services with clear environmental and/or social benefits
What is the value added?
• superior returns and/or diversification• strong value added from a sustainability point of view
Main investors
• Private banking and retail networks• Institutional clients making strategic allocation to a specific theme
Key success factors
1. technical expertise and understanding of growth drivers (eg legislation)
2. Clearly defined and diversified investment universe3. Investment discipline and strict risk control4. Proven track record
Environmental / Social Products & Services
Financi
als IT
Health
Care
Indust
rials
Materia
ls
Utilities
Energy
Consum
er …
Environment•Renewable energy•Energy efficiency•Water•Pollution control•Waste management•Environmental services
Social•Education•Healthcare•Ageing society•Sustainable food•Low income solutions•Sustainable mobility
Min. 20% business exposure
TBLI – ESG Integration
Back to basicsESG Practices
How does it work?
• ESG practices are systematically assessed• Applied to mainstream asset classes
What is the value added?
• mitigating financial risks of investments• preventing reputational risks of the investor• superior ESG performance of investments
Target clients
• Institutional clients
Key success factors
1. Portfolio management capabilities in mainstream asset class2. ESG research contents and value creation3. Financial performance against conventional benchmarks4. Extra-financial reporting (eg. investment decisions, key holdings,
portfolio KPIs)
Best ESG practices
Worst ESG practices
Financi
als IT
Health
Care
Indust
rials
Materia
ls
Utilities
Energy
Consum
er …
ESG Practices
TBLI – ESG Integration
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
ma
i-07
juin
-07
juil-
07
aoû
t-0
7
se
pt-
07
oct-
07
nov-0
7
déc-0
7
jan
v-0
8
févr-
08
ma
rs-0
8
avr-
08
ma
i-08
juin
-08
juil-
08
aoû
t-0
8
se
pt-
08
oct-
08
nov-0
8
déc-0
8
jan
v-0
9
févr-
09
ma
rs-0
9
avr-
09
ma
i-09
juin
-09
juil-
09
aoû
t-0
9
Surperformance Portefeuille ERAFP Surperformance "Univers Investissable"
Sur-performance portefeuille actions Euro IRD Sur-performance « univers investissable » issu destravaux des analystes extra-financiers
Financial value added?
Net outperformance of a Euro SRI Equity institutional mandate
Significant value generated by ESG research AND portfolio manager
Sources : BNP Paribas Asset Management.Past performance is not a guide to future performance
TBLI – ESG Integration
What about Extra-Financial Performance?
Extra-Financial Performance
FinancialPerformance
+
-
+-
Crusador
Short-termride
Long-termwin
Liability
OR ?
TBLI – ESG Integration
Environmental indicatorsCO2 Emissions
Sources : BNP Paribas Asset Management, Factsset
-6%
TBLI – ESG Integration
Environmental IndicatorsCO2 Emissions
Sources : BNP Paribas Asset Management, Factsset
-9%
TBLI – ESG Integration
Social IndicatorsEvolution of Headcount
Sources : BNP Paribas Asset Management, Factsset
TBLI – ESG Integration
Governance IndicatorsBoard Independence
Sources : BNP Paribas Asset Management, Factsset
60 v 50%
TBLI – ESG Integration
Financial and Extra-Financial Performance
Extra-Financial Performance
FinancialPerformance
+
-
+-
Crusador
Short-termride
Long-termwin
Liability
TBLI – ESG Integration
Eric BorremansHead of Development - Sustainable Investment SolutionsBNP Paribas Investment Partners
[email protected]+33 1 58 97 77 35