BNP Paribas Asset Management (BNPP AM) has launched BNP Paribas Ecosystem Restoration, a thematic fund offering exposure to companies engaged in the restoration and preservation of global ecosystems and natural capital.
The addition of this fund to BNPP AM’s range of environmental strategies reinforces its European leadership within sustainable thematic investing.
The launch of the United Nations Decade on Ecosystem Restoration on World Environment Day (5 June) highlights the urgent need to protect natural capital, and the restoration of ecosystems represents an investment opportunity that has a positive impact on natural resources and global economies. Over the next decade, efforts to restore oceans, soil and urban areas will require investment of USD22 trillion and create business worth USD6 trillion a year.
BNP Paribas Ecosystem Restoration invests in listed global equities across the capitalisation scale that offer environmental solutions contributing to the restoration of ecosystems through their products, services or processes. Investments focus on three main themes:
• Aquatic ecosystems: water pollution control, water treatment and sustainable packaging, aquaculture, efficient irrigation systems and flood control solutions;
• Terrestrial ecosystems: technologies relating to alternative protein, sustainable agriculture, forestry and plantations;
• Urban ecosystems: environmental services, green buildings, recycling, waste management and alternative modes of transport.
BNP Paribas Ecosystem Restoration consists of a high conviction portfolio of 40-60 holdings selected from 1,000 global companies focused on aquatic, terrestrial and urban ecosystem restoration. The investment universe is diversified by geography, size and sector, with technology, industrials and materials well represented, and contains many highly innovative companies using complex technologies to address environmental issues. The fund is managed using an active approach that combines macro and fundamental research with proprietary quantitative screening, together with integrated ESG criteria, to identify best-in-class companies. The fund also contributes to achieving six of the United Nations Sustainable Development Goals (SDGs).
Launched in response to growing client demand, BNP Paribas Ecosystem Restoration is a further landmark on BNPP AM’s biodiversity roadmap, announced in May, which includes research aimed at accelerating the development of biodiversity measurement indicators and establishing a common reporting framework. BNPP AM has recently entered into partnerships with CDP and Iceberg Data Lab and I Care & Consult to promote transparent, high quality and standardised corporate biodiversity data reporting.
The fund is jointly managed by Edward Lees and Ulrik Fugmann, who co-head BNPP AM’s Environmental Strategies Group and manage the long-only BNP Paribas Energy Transition fund and the long-short BNP Paribas Environmental Absolute Return Thematic (EARTH) fund, launched in September 2019 and July 2020 respectively. The launch of BNP Paribas Ecosystem Restoration complements BNPP AM’s existing range of funds investing in sustainable development and energy transition, offering a wide range of environmental investment solutions. BNPP AM manages assets of EUR26 billion in sustainable thematic funds, making it one of the leaders in Europe.
Thematic investing has tended to be more focused on environmental areas such as renewable energy, rather than natural capital, yet natural capital is globally recognised as one of the most important elements of addressing climate change. The green economy offers an investment opportunity encompassing around 4,000 companies globally with a market capitalisation of USD5 trillion, equating to around 5 per cent of the total listed global equity market. Nonetheless, even with annualised growth of 8 per cent since 2009, the size of the green economy is falling short of the levels consistent with a 2C global warming scenario in line with the Paris Agreement.
Edward Lees, co-manager of BNP Paribas Ecosystem Restoration, says: “Half the world’s GDP is dependent on natural capital and our consumption of it is taking place 1.75 times as fast as the earth can regenerate it, while global population growth and rising incomes are leading to increased demand, which adds up to an urgent need to restore damaged ecosystems. The financial sector has a critical role to play in creating a positive environmental impact and we are proud to have launched BNP Paribas Ecosystem Restoration to support the work of the UN and others in doing this.”
Ulrik Fugmann, co-manager of BNP Paribas Ecosystem Restoration, says: “BNP Paribas Asset Management has been at the forefront of sustainable investment for two decades and the launch of BNP Paribas Ecosystem Restoration complements our existing funds that invest in environmental change and the energy transition. The restoration of aquatic, terrestrial and urban ecosystems offers significant investment opportunities, and by supporting and engaging with those companies providing solutions to protect our natural capital, we aim to meet investor requirements for financial returns combined with a positive environmental impact.”