#1 Green Future – Interview Claus Hecher | BNP Paribas
Claus Hecher – Head of Business Development ETFs and Index Solutions – von BNP Paribas im GGX – Green Future Interview über Nachhaltigkeit, ETFs und andere Projekte von BNP Paribas.
Claus, it is a great pleasure to have you with us today. First of all, what does sustainability mean to you personally?
We drive a hybrid vehicle as an entry into electromobility. With more choice of models, longer ranges and a more closely meshed network of charging stations, I would like to switch completely the next time I change vehicles. After all, we haven’t been flying when going on vacation for 2 years. There are also attractive destinations closer by that are accessible by car. Coffee to go in disposable cups is not my thing either.
BNP Paribas has established itself as one of the leading asset managers integrating ESG solutions for many years. Where is this movement coming from… From management itself or more from investor demand/public pressure?
Both… We have pioneered many thematic ESG ETFs, e.g. the first low carbon ETF back in 2008, the first ETFs for ESG infrastructure, green real estate, circular economy and blue economy over the last two years.
We have our ear to the market, pick up on clients’ wishes and discuss them with our product development team. Conversely, there are smart people in our research department who develop ideas. However, we don’t just launch a product, but rather build on lead orders and analyse feedback from customers when we talk to them about our ideas.
Finally, we also adapt our product development to regulatory needs such as the EU Disclosure Regulation, but also take into account requirements of ESG labels such as the French ISR, the Belgian “Towards Sustainability” or the German FNG seal.
The origins of our ESG strategy were certainly management-driven, but today it is rather our clients who set the tone.
Some critics argue that ETFs can only play a limited role in actively influencing listed companies on their ESG behaviour. What do you think about this?
We certainly see it differently. ESG-compliant indices and ETFs based on them are experiencing a boom. It makes perfect sense for companies to adopt a positive attitude towards ESG requirements in order to be included in sustainable indices and to receive passively managed investor money.
BNP Paribas Asset Management plays an active role in shareholder voting rights, whether they come from an actively managed or passive fund. We publish on our website not only our Stewardship Policy but also an annual report on actual voting behaviour.
The Global Sustainabilty Center also seeks dialogue with selected companies as part of the engagement process, including, for example, Japanese fishing companies in which we are invested through our Blue Economy ETF.
What feedback do you receive from clients when you talk about sustainable investments?
Since March this year, our top priority is to be clean with regard to the EU Disclosure Regulation. This means that our sustainable ETFs have to be classified in either category 8 or 9. Article 8 stands for sustainable investments which, in the case of an index product, have exclusion criteria and/or a best-in-class approach laid down in the index rules. It happens time and again that clients philosophize about individual security, whether it is sustainable or not. With sustainable indices, however, the only thing that matters is the requirements set. The selection of securities results from the strict application of the rules.
Which ESG index concept do you like best?
Index concepts that stand for impact-related sustainable investments according to Article 9. This is most likely to apply to climate indices, which correspond to the goals of the Paris Agreement and the EU goal of CO2 neutrality and should help to counter the risk of greenwashing. The aim is to reduce the carbon footprint by around 50% compared to the investment universe. The Paris-aligned benchmark provides a mechanism to further reduce the portfolio’s carbon footprint by at least 7% per year.
Which of your ETFs are currently most in demand?
For strictly sustainable equity SRI ETFs, the US and World regions. In thematic equity ETFs, the circular economy ETF stands out in terms of sales. In 2021, we also saw very high demand for euro-denominated corporate bonds, of course with a strict SRI approach in the rulebook.
What other initiatives towards sustainability does BNP Paribas Asset Management plan to take in the near future?
We will regularly launch more sustainable themed ETFs, e.g. we are currently discussing medical technology equities and green and social bonds.
For regional ESG equity products, the aim is to add regions that are in demand to the range.
For bonds, it is about different risk profiles and specific maturities, among other things.
We constantly review the quality of our indices. Are there new regulatory requirements that require adjustments in the rules and regulations, such as minimum exclusions? How do we need to adjust the index if we apply for an ESG label in a new country? We also need to think about fee reductions, as competition has become intense for sustainable ETFs as well.
Claus Hecher has been Head of ETF Sales & Index Solutions (D/A/CH) at BNP Paribas Asset Management in German-speaking countries since July 2016. He began his professional career in 1987 at Deutsche Bank AG. He subsequently worked for the investment banks Bear Sterns and Natixis CIB, as well as BlackRock, from 2003.
About the author
CMO / Head of Communication & Partnerships der Global Green Xchange AG