The first investment product to include a carbon offsetting mechanism

In early March, Febelfin awarded its “Towards Sustainability” label to seven new investment products developed by our bank. This takes the number of BNP Paribas Fortis products featuring this label to 93, the highest in Belgium!

Very strict stock selection

Among these sustainable investment solutions, one is particularly innovative. It is an investment fund comprising shares in around 100 companies from all over the world, and was put together in a very specific way, based on several factors and with the support of extra-financial rating agency Vigeo Eiris, which specialises in assessing corporate responsibility.

“To select the companies in the portfolio, we applied several filters,” explained Florence Devleeschauwer (BNP Paribas Fortis Global Markets). “One filter is based on compliance with environmental, social and governance (ESG) standards, another on the companies’ real carbon footprints, and a third on the robust nature of their energy transition strategy. And obviously, we also assessed their financial strength, to ensure good returns.”

Using this advanced filtering method, the fund selects companies with a carbon footprint at least 50% smaller than that of the benchmark universe of eligible companies. So their carbon footprints are very small, but they still exist.

Carbon credits

“We racked our brains to find a way of offsetting the remaining emissions of companies included in the portfolio,” Florence continued. “And eventually we thought “why doesn’t the fund buy carbon credits?””

As you may know, after the Kyoto Protocol was ratified in 1997, carbon markets were introduced to help governments reduce greenhouse gas emissions and achieve their climate goals. To take part in the collective effort, companies that are not subject to Kyoto Protocol emission quotas can also reduce and offset their CO2 emissions by buying voluntary carbon credits arising from highly sustainable projects. A carbon credit represents a 1-tonne reduction in CO2. A company wanting to offset 18 tonnes of carbon dioxide emissions must therefore buy 18 credits to become carbon-neutral. The BNP Paribas Group has been using this method since 2017.

“But the method had never previously been applied to an investment fund. We worked with regulators for 18 months to create this innovative new solution,” explained Florence.

The REDD+ project

To offset the residual emissions of companies in the fund’s portfolio, the bank chose the Kassigau Corridor REDD+ project, which protects more than 200,000 hectares of highly endangered Kenyan forest. It also protects the local fauna, because the corridor is home to more than 300 animal species, including some threatened with extinction.

“The REDD+ project has a positive impact on the climate: by combating deforestation, it avoids 1 million tonnes of carbon dioxide emissions per year. It also helps to maintain biodiversity and creates around 100 local jobs. All of these reasons played a part in our decision to select this project, as well as the fact that it’s enabling the BNP Paribas Group to achieve carbon neutrality,” said Florence.

Available to all our customers

The fund was initially launched for the French institutional investors in April 2019, before being made available to Belgian customers in November through its inclusion in BNP Paribas Fortis Private Banking’s SRI fund of funds.

Finally, in February 2020, it became part of Retail & Private Banking’s socially responsible investment offering, which means that all of our customers, institutional investors and individuals, can now invest in the fund.

More information about BNP Paribas Fortis’ sustainable investment products and strategy is available here in French and Dutch. You can also call us on +32 (0)2 433 41 33: our people will be delighted to answer your questions and work with you to find out which investment best fits your profile and how to make it part of your investment portfolio.

Disclaimer: Investments in funds are subject to market fluctuations and risks inherent in investments in securities. The value of investments and the income they generate may go up or down, and investors may not get back all of their initial investment. There is a risk that an investment in the funds described might decrease in value. For a definition and a fuller description of the risks, please read the relevant fund’s prospectus and KIID. Before subscribing, you must read the most recent version of the prospectus and KIID, available free of charge on our website: https://www.bnpparibas-am.be/