BNP Paribas – THEAM Quant Europe Climate Carbon Offset Plan enhances investment process
London, 7 April 2021 – THEAM Quant Europe Climate Carbon Offset Plan has enhanced its investment process with an additional focus on the outlook for companies’ profitability, prospects and valuation. The fund, created in partnership with BNP Paribas Global Markets and managed by BNP Paribas Asset Management (‘BNPP AM’), aims to generate returns from exposure to listed companies with robust Environmental, Social and Governance (‘ESG’) standards focusing on those with the strongest energy transition scores[1] The enhanced methodology, which coincides with the fund’s two-year anniversary, is based on a more selective approach to three aspects of companies’ financial outlook:
- Profitability – assessing a company’s resources required to run its operations and assessing return on invested capital to determine if it is sufficiently meeting profit expectations.
- Prospects – analysis of a company’s momentum, return, volatility and balance of upward and downward earnings revisions.
- Valuation – earnings yield and growth creating ‘value for money’
Each company receives a score of 1-10 (10 being the highest) based on its decile ranking according to these financial metrics. The top two thirds of companies in each sector then become eligible. This financial selectivity complements the existing strong extra-financial objectives of the systematic investment strategy, designed to capture the performance of European liquid equities with high ESG standards and robust energy transition strategies. The stock portfolio is also structured such that its carbon footprint is reduced by at least 50% compared to the broad European equity universe, while keeping a similar risk/return profile. The fund then aims to offset the remaining carbon footprint (Scope 1 and Scope 2 emissions) generated by this portfolio through the use of Verified Emission Reductions certificates (‘VERs’), also known as carbon credits, linked to the Kasigau REDD+ Project of Wildlife Works. This offsetting of carbon footprint can be considered as partial. (See Notes to Editors).
Vincent Berard, Head of THEAM Quant solutions for the BNP Paribas Global Markets Quantitative Investment Strategy team, said:
“We are very pleased to have seen a strong interest in the Europe Climate Carbon Offset Plan over the last two years, having recently strengthened its investment approach, with an added focus on companies’ financial outlook. It is delivering on its financial and extra-financial objectives, and at the same time is contributing towards a positive societal environmental, social and educational impact in Kenya.”
Francois Carré, Carbon Portfolio Manager for BNP Paribas, and a member of the Taskforce on Scaling Voluntary Carbon Markets, commented:
“It is clear that the voluntary carbon market is critical to achieving net-zero carbon emissions by 2050, and the Taskforce on Scaling the Voluntary Carbon Markets is helping the market reach its full potential. Our investment approach is very much in the spirit of the Taskforce’s latest recommendations i.e. Reduce, Report then Offset. Our investors are offered the opportunity to support projects which protect vital natural ecosystems, support local communities, and help prevent catastrophic climate change.”
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Press Contacts:
BNP Paribas
Murray Parker +44 (0) 7818 510 056 murray.parker@uk.bnpparibas.com
Notes to Editors:
THEAM Quant Europe Climate Carbon Offset Plan is a Fonds Commun de Placement (‘FCP’), UCITS V compliant, registered under the French law. There is also a global version of the fund called the THEAM Quant World Climate Carbon Offset Plan.
The investments in the fund are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay, the fund described being in risk of capital loss. For a complete description and definition of risks, please consult the last available prospectus and KIID of the fund that can be downloaded free of charge from our website: www.bnpparibas-am.com.
About BNP Paribas Asset Management
BNP Paribas Asset Management is the asset management arm of BNP Paribas, one of the world’s foremost financial institutions, and offers high value-added solutions to individual savers, companies, and institutional investors. It has a broad range of skills in four investment divisions: Equities, Fixed Income, Private Debt & Real Assets, and Multi-Asset, Quantitative and Solutions (MAQS). Sustainability is at the heart of BNP Paribas Asset Management’s strategy and investment decision-making process, making an active contribution to energy transition, environmental protection and the promotion of equality and inclusive growth. Its aim is to achieve long-term sustainable investment returns for its clients. BNP Paribas Asset Management has assets under management of EUR 483 billion* (as at 31 December 2020), with more than 500 investment professionals and almost 500 client servicing specialists, serving individual, corporate and institutional clients in 72 countries.
* EUR 618 billion of assets under management and advisory as at 31 December 2020
For more information please visit bnpparibas-am.com
About BNP Paribas
BNP Paribas is a leading bank in Europe with an international reach. It operates in 68 countries and has more than 193,000 employees, including nearly 148,000 in Europe. The Group has key positions in its three main activities: Domestic Markets and International Financial Services (whose retail-banking networks and financial services are covered by Retail Banking & Services) and Corporate & Institutional Banking, which serves two client franchises: corporate clients and institutional investors. The Group helps all its clients (individuals, community associations, entrepreneurs, SMEs, corporates and institutional clients) to realise their projects through solutions spanning financing, investment, savings and protection insurance. In Europe, the Group has four domestic markets (Belgium, France, Italy and Luxembourg) and BNP Paribas Personal Finance is the European leader in consumer lending. BNP Paribas is rolling out its integrated retail-banking model in Mediterranean countries, in Turkey, in Eastern Europe and a large network in the western part of the United States. In its Corporate & Institutional Banking and International Financial Services activities, BNP Paribas also enjoys top positions in Europe, a strong presence in the Americas as well as a solid and fast-growing business in Asia-Pacific.
About the Wildlife Works Kasigau Corridor REDD+ project
The Wildlife Works Kasigau Corridor REDD+ project protects over 200,000 hectares of highly threatened dryland forest, which is owned by 4,500 community members and is home to 116,000 people. The project establishes a safe haven for over 50 species of large mammals, 300 species of birds, and populations of IUCN Red List species such as cheetahs, lions and over 2,000 African elephants that cross from Tsavo East to Tsavo West National Parks. In 2011, the Kasigau Corridor project became the world’s first REDD+ project to be verified under the Verified Carbon Standard (VCS) and the Climate, Community and Biodiversity Standard (CCB). The project was also awarded Gold Level status by the CCB for exceptional biodiversity and climate benefits. The project will generate 45 million tons of Verified Emission Reductions (VERs) over 30 years. More information is available here: https://www.wildlifeworks.com/kenya. Wildlife Works REDD+ Project in Kenya: Vital Climate, Community and Biodiversity – Theam Quant (bnpparibas-am.com)
About REDD+
REDD+ (Reducing Emissions from Deforestation and Forest Degradation) is a climate change mitigation strategy envisioned by the United Nations. REDD+ places a value on a standing forest as a key element in a plan to avoid continued deforestation. By making forests more valuable standing than cut down, REDD+ provides forest communities and countries with a model for economic development where both people and the planet can benefit. The value is represented by Verified Emission Reduction (VER) units. VERs are also known as offsets or carbon credits. Each VER equals one tonne of carbon dioxide that was prevented from being released into the atmosphere as a result of a REDD+ project’s conservation plan.
About the GHG Protocol
The Greenhouse Gas Protocol Corporate Accounting and Reporting Standard classifies a company’s GHG emissions into three ‘scopes’. Scope 1 emissions are direct emissions by the company. Scope 2 emissions are indirect emissions from the consumption of purchased energy. Scope 3 emissions (value chain emissions) are other indirect emissions not within the company’s control. More information is available here: https://ghgprotocol.org/.
Additional information
BNP Paribas Asset Management France is an investment management company authorised by the Autorité des Marchés Financiers, no. GP96002, incorporated as a simplified joint stock company, registered at 1, Boulevard Haussmann 75009 Paris, France, RCS Paris 319 378 832. Its website is www.bnpparibas-am.com.
This material is issued and has been prepared by BNP PARIBAS ASSET MANAGEMENT UK Limited, authorised and regulated by the Financial Conduct Authority. Registered in England No: 02474627, registered office: 5 Aldermanbury Square, London, England, EC2V 7BP, United Kingdom. It contains opinions and statistical data that are considered lawful and correct on the day of their publication according to the economic and financial environment at the time. This document is produced for information purposes only and does not constitute investment advice or form part of an offer or invitation to subscribe for or to purchase any financial instrument(s) nor shall it or any part of it form the basis of any contract or commitment whatsoever.
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As at April 2021.
[1] Energy transition scores are provided by Vigeo Eiris.