A bank that supports more sustainable finance

The financial sector lies at the heart of the economy. It is therefore an important driver of transformation towards an economy that is more respectful of the environment and society. BGL BNP Paribas is committed to supporting this transition and to assisting its clients in their efforts. Anne-Françoise Woolf, Head of Offering at BGL BNP Paribas Banque Privée, walks us through BGL BNP Paribas’ positioning on this key theme.

What is BGL BNP Paribas’ positioning on sustainable finance?

BGL BNP Paribas gives priority to the transition towards a more sustainable and inclusive economy. This direction of travel can be seen in its sector policies, partnerships and product innovation. When it comes to responsible investment, we make sure to integrate environmental, social and governance (ESG) criteria.

What responsible investment solutions does BGL BNP Paribas Banque Privée offer its clients in an environment with higher interest rates?

We are seeing renewed interest in bonds among our investor clients. Our range of solutions for accessing this market – whether through direct bond purchases or via investment funds – includes the BNP Paribas Green Bond fund managed by BNP Paribas Asset Management, a pioneer and leader in green bond portfolio management.

How do green bonds differ from other bonds?

Green bonds finance projects that help preserve the environment. For example, governments and businesses regularly issue bonds to finance the energy transition or a range of projects that use technology with a lower carbon footprint.

How big is this market today?

The capitalisation of the global green bond market now exceeds USD 2 trillion, i.e. 7% of the total global bond market*. The “greenium”, or scarcity premium, has virtually disappeared on the primary market, signalling a more abundant supply of securities. Thus, for the same issuer and the same maturity, yields on traditional bonds and green bonds are now essentially the same.

*Source CACIB, 2023

Can green bond portfolios be managed in the same way as conventional bond portfolios?

The expansion of the green bond offer means portfolio construction can be more elaborate and increasingly aligned with traditional bond management. Solid diversification is now possible, both geographically and in terms of issuers, maturities and the nature of projects.

On the other hand, we consider it essential to analyse projects carefully so as to select only those that promote a carbon-neutral economy and contribute to environmental protection. It is also crucial to verify that issuers have used the funds specifically to finance environmentally friendly projects.

Before a bond is launched, and again 12 to 24 months later, BNP Paribas Asset Management’s Sustainability Center examines all these aspects for each investment in each asset class. The issuer may also be questioned at any time about the progress of its project. This analysis may lead to a decision not to maintain exposure in the portfolios.

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