BNP Paribas Asset Management (BNPP AM) is committed to using its investments and influence with companies and policy-makers to advocate for low-carbon, environmentally sustainable and inclusive economies.
It believes engagement is generally more effective than exclusion, but divestment can be effective as a last resort. BNPP AM sees collaboration with other long-term investors and stakeholders as an effective way to achieve common environmental and social aims, particularly when engaging with companies and regulatory bodies.
BNPP AM’s Stewardship Policy tackles environmental, social and governance (ESG) factors through different actions. One of the ways it contributes to climate change mitigation in Asia within the environmental pillar is through its stewardship initiative involving corporate engagements with companies in relation to its coal sector policy.
A fundamental aspect of BNPP AM’s efforts to gradually align its portfolios with the goals of the Paris Agreement is its coal policy, defined in the Responsible Business Conduct (RBC) policy. In 2021, BNPP AM opposed 605 resolutions due to the RBC, including its sector policy on coal.
At the heart of the policy is the alignment between the carbon intensity for power generation in its portfolios and the International Energy Agency Sustainable Development Scenario (SDS) by 2025. The need for a transition from high-carbon to low-carbon power is particularly acute in Asia, where coal is a dominant source of electricity generation, and utilities account for 23 per cent of global greenhouse gas emissions. BNPP AM engages with portfolio companies involved in coal-fired power generation to verify their emissions intensity and to encourage them to raise the ambition of their decarbonisation strategies.
Engaging companies for decarbonisation
In 2021, BNPP AM took a co-lead role in engagements via the newly launched Asian Utilities Engagement Program, an initiative by the Asia Investor Group on Climate Change (AIGCC). Through its engagement, BNPP AM achieved resounding success with Hong Kong-listed CLP Holdings.
BNPP AM’s training video featuring CLP Holdings as a case study.
The company has several coal-fired power generation assets but is also committed to sustainability, with robust climate governance in place. BNPP AM drove the discussion with the company alongside another asset manager. Through multiple constructive meetings with the company’s sustainability and investor relations teams and the board member in charge of climate issues, BNPP AM stressed the need for the company to enhance its climate approach by integrating a commitment to phase out coal and a net-zero emissions target.
In September 2021, the company announced it would exit coal-fired power generation by 2040 and target net zero emissions by 2050, a critical market signal in Asia’s transition towards net-zero power.
BNPP AM has embraced its role as a “future maker,” using its influence and investments to tackle three key issues: energy transition, environmental sustainability, and equality and inclusive growth.
Engagement related to cutting the use of coal and strengthening its coal policy are key aspects of BNPP AM’s strategy and commitment toward supporting energy transition. In 2021, it committed to the Net Zero Asset Managers initiative and published its Net Zero Roadmap in 2022, which describes in further detail the asset manager’s associated targets and strategy toward net zero.
BNPP AM is continuously strengthening its stewardship efforts to support this commitment.
Posted 08 March 2023
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