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BNP Paribas WM to double ESG AUM globally by 2020

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BNP Paribas Wealth Management has set an ambitious target to double its global ESG assets under management by 2020, according to the bank’s Kanol Pal, Asia senior advisor for responsible investments.

“Asia is still at a very low investor base for ESG, so we can easily double or triple ESG penetration here,” Pal told Asian Private Banker. “There is a lot of potential because Asian investors are playing catch up.”

While Pal had said in an interview last quarter that Asian clients still tended to adopt a “wait-and-see” attitude, he has observed a rising trend in client interest of late, as private banks develop ESG expertise, and more fund houses offer ESG products and integrate ESG into their investment processes.

“We are now offering a more diversified portfolio that includes ESG products,” Pal revealed. “Our ESG integration among all our offerings, not just within thematic funds, are on track. This differentiated approach also makes it easier for our RMs to discuss the subject with our clients.”

According to BNP Paribas’ ESG Global Survey 2019, 76% of Asia Pacific asset managers and owners are also using the UN Sustainable Development Goals (SDGs) as a compass, indicating that many are aligning their investment frameworks by setting SDG-related revenue targets for investee companies.

Further, 55% of Asia Pacific survey respondents expected to allocate between 50-75% of their investments to funds that incorporate ESG in two years’ time, compared to 49% globally. This is in spite of the region lagging behind global counterparts in current asset allocation into ESG (15% vs 18% globally).

Nonetheless, much work remains to be done in client and RM education to narrow the gap between current reality and future aspiration. According to Pal, many who are unfamiliar with the methodologies of ESG investing still tend to stick to traditional investment approaches, though there has been a gradual shift in mindset.

“Clients used to believe that there would be a trade-off between financial performance and ESG — people often conflated ESG with philanthropy,” Pal said. “Now, we are moving from the what and why of ESG to the how — how do I implement ESG? So we are working with family offices and they are at the stage of understanding and assessing our ESG rating methodology.”

In terms of client segment, Pal has identified millennials and women as the driving force for sustainable investment and impact investing in the future.

BNP Paribas’ survey additionally revealed that the growing prevalence of ESG investing has led to a number of new roles requiring relevant expertise, with Asia Pacific asset owners and managers being more likely to train incumbent teams in ESG principles and best practice (46% vs 40% globally).

“Having an ambitious target has propelled us to really do more with sustainable investment and train our staff,” Pal concluded.

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