Currently valued at EUR 100 million1, Parvest Green Bond invests in bonds used to finance projects designed to mitigate or address climate change issues. It is managed by BNPP AM’s Fixed Income team leveraging proprietary analysis provided by its Sustainability Research Team. BNPP AM has been a market leader in sustainable & responsible investing since 2002 and manages nearly EUR 30 billion in SRI strategies, including more than EUR 500 million in green bonds (as at 30 June 2017).
Bonds are analysed using BNPP AM’s internal assessment methodology, incorporating financial and extrafinancial analysis to identify the most appropriate portfolio holdings from the universe of almost 150 issues representing around USD 115 billion of outstanding bonds. An innovative engagement process ensures that investments have a positive impact on climate change. This includes an initial meeting with the issuer to verify each bond’s sustainability credentials ahead of purchase, combined with ongoing monitoring of the environmental impact throughout the life of the bond.
The green bond market is expanding rapidly, and the inclusion of sovereign bonds such as the French government’s EUR8.6 billion issue, as of June 2017 provides greater liquidity and depth to the market. Green bonds can be issued by sovereigns, agencies or corporates, and enable capital-raising and investment for new and existing projects that have environmental benefits, including limiting climate change. Analysis conducted by BNPP AM suggests that between now and 2030, USD4 trillion will be required annually to support the energy transition towards a low-carbon economy. Meanwhile the global fixed-income market totals USD 100 trillion of outstanding securities. Green bonds are the missing link between the need for energy transition financing and supply from debt capital markets, and are therefore ideally suited to support low-carbon and climate-resilient development.
Felipe Gordillo, Senior ESG analyst & Arnaud-Guilhem Lamy, manager of Parvest Green Bond, comment: “Climate change is one of the greatest challenges of our time and green bonds are one of the best ways to finance activities with low greenhouse gas emissions and to support low-carbon and climate-resilient development. Meanwhile the rapid expansion of the green bond market means that it is now diversified enough to offer a genuine investment solution. Our SRI research expertise dating back 15 years, very wellresourced fixed income portfolio management capability and almost EUR 500 million of existing investments in green bonds makes us ideally placed to manage Parvest Green Bond. Greenhouse gas avoidance is the key climate benefit of the fund, enabling investors to offset carbon emissions in their fixed income portfolios, as well as to meet sustainable regulatory requirements.”
Parvest Green Bond is benchmarked against the Bloomberg Barclays MSCI Global Green Bond Index (Euro Hedged). It invests in issues with a minimum credit rating of B-, and may also use futures, options and swaps. The fund aims to have a minimum of 83.5% of green bonds. Denominated in euros, it uses FX derivatives to hedge bonds issued in other currencies. The base currency is Euros. Parvest Green Bond is currently registered for sale in Austria, France, Germany, Luxembourg and the United Kingdom.
This new launch contributes to the energy transition policy followed by BNP Paribas. The Group has a long standing commitment to sustainability and aims to rank among the top three global players for eurodenominated issues by 2018.