COMMITTED TO CLIMATE:
OUR NET ZERO ROADMAP
Marketing Communication for professional Investors - November 2022

The sustainable
investor for achanging world

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 2 -CONTENTSFOREWORDINTRODUCTION

BNP Paribas’ commitment to net zero

PILLAR 1 – ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) INTEGRATION:		PORTFOLIO TARGETS AND OBJECTIVESStrategic asset allocation and scope of commitment
Listed equity and corporate bonds
Sovereign bonds
Private markets
		 Climate integration within our ESG scoring framework
		 Reducing our financed greenhouse gas (GHG) emissions
		 Aligning our holdings with net zero
Future developments

PILLAR 2 – STEWARDSHIPProxy voting
Corporate engagement
		Europe
		 Asia
		Americas
Public policy advocacy

PILLAR 3 – RESPONSIBLE BUSINESS CONDUCT
Coal
Unconventional oil & gas
Deforestation

PILLAR 4 – FOCUS ON THE FUTURE: THE 3ES

Energy transition to a low-carbon economy
Environmental sustainability
Equality and inclusive growth

PILLAR 5 – SUSTAINABLE INVESTMENT SOLUTIONSOur existing solutions
Partnering with our clients to align their portfolios to net zero

PILLAR 6 – WALKING THE TALK

Mission Zero
Employee engagement
Remuneration
Reporting

CONCLUSION

Putting our commitment into action

APPENDIX

Data Sources for net zero alignment assessment
Glossary
Relevant Policies and Reports
BNPP AM Climate Performance - A snapshot

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C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 3 -FOREWORD

Sandro Pierri

CEO, BNP Paribas Asset Management

Jane Ambachtsheer

Global Head of Sustainability

At BNP Paribas Asset Management (BNPP AM), we have put sustainability at the heart of ourbusiness strategy and made it one of our core investment beliefs. We also believe a shift to a lowcarbon, more sustainable economy is essential for the long-term sustainability of capital markets.
Accordingly, in 2015, we committed to contributing to achieving the Paris Agreement goals. Since
then, the scientific evidence for the human-driven causes and potentially dire effects of just 1.5°Cof global warming above pre-industrial levels has strengthened substantially. It is now universally
accepted that reaching global net zero emissions by 2050 is essential to prevent irreversible andmassive damage from climate change. This is imminent if no action is taken.
At BNPP AM, we have focused on contributing to the fight against climate change through significant
actions and initiatives for several years. We believe it is time to raise our climate ambition bycommitting to the goal of achieving net zero portfolio emissions by 2050 (or sooner). Because thisis a challenge that we must face together, we decided to join the Net Zero Asset Managers (NZAM)
initiative to lend coherence and accountability to BNPP AM’s commitments.
In this document, BNPP AM outlines its Net Zero Roadmap, which formally introduces its NZAM
commitment and covers three areas: Investments (portfolio alignment), stewardship and ouroperations.
Under the umbrella of the wider Glasgow Financial Alliance for Net Zero (GFANZ), BNP Paribas isalso a member of the Net Zero Banking Alliance and Net Zero Asset Owner Alliance – we touch onthese commitments in this document as well.
In line with our 2015 commitment to progressively align with the Paris Agreement, we have alreadytaken steps that bring us closer to net zero. This document highlights those achievements andsets out how we will reach global net zero emissions by 2050. However, meeting this commitment
will not be easy. Today, the global economy is not yet on a net zero pathway and our investible
universe stands to diminish over time if our current and prospective investees do not accompany us
in this transition. We therefore believe it is critical to work in partnership with clients, colleagues,
companies, governments and civil society to move towards a net zero future, and we look forward
to taking this journey together.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 4 -INTRODUCTION
BNPP AM’s Global Sustainability Strategy (GSS), launched in 2019, outlines our approach tosustainable investing. The strategy rests on six pillars (see Exhibit 1), within each of which we havearticulated clear objectives. Our six-pillar sustainable investment framework provides the structure
for this document.
Exhibit 1: The Six Pillars of our Global Sustainability Strategy (GSS)The 6 pillars of our sustainable investor approach
4.

1.

ESG INTEGRATION
Improve risk-adjusted
returns

2.

ESG

The First Four Pillars
Apply Across Our
Investment Approach

STEWARDSHIP(VOTING, ENGAGEMENT)
Protect company value, influence soundregulatory framework, promote bettersocial and environmental outcomes

FORWARD-LOOKING PERSPECTIVE:
THE "3ES"

Enhance investment decision-making,preserve long-term market performance

3.

RESPONSIBLE BUSINESS CONDUCTAND SECTOR-BASED EXCLUSIONS
Articulate expectations forresponsible business conduct andsensitive sectors; avoid regulatory
and stranded asset risk

5.

SUSTAINABLE

ENHANCED ESG
THEMATIC
IMPACT

Allocate to sustainable
investment opportunities

6.

CSR

WALKING THE TALK

Corporate practice anddisclosures should match orexceed the standards we
expect from the entities inwhich we invest

Source: BNP Paribas Asset Management, 2022. CSR is the acronym for Corporate Social Responsibility. The“3Es” are: The Energy transition to a low-carbon economy, Environmental sustainability, Equality & inclusive
growthIn the GSS, we stated our objective “to make a substantive contribution to the low-carbon energy
transition”, and that one of the ways to do so was by encouraging our investee companies “to aligntheir strategies with the goals of the Paris Agreement.” These statements have been supported by
portfolio and operational actions, many of which are discussed in this document (see Exhibit 2 for atimeline summary). We are proud to have strengthened our commitment to the Paris Agreement bysigning on to the Net Zero Asset Managers (NZAM) initiative.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 5 -Exhibit 2: Climate actions by BNP Paribas Asset Management

2023+
Founding members of:
PRI, Montréal Carbon
Pledge, Portfolio
Decarbonisation Coalition

2020
Implemented our
new Coal Policy

Joined Climate Action 100+

2002-2018
Brought to market a rangeof climate-focusedstrategies, including:
THEAM Carbon Offset andClimate Care
Easy Low Carbon
Climate Impact
Green Bond

2019

Revise net zerotargets on a 5 year
basis

Introduced beat thebenchmark on carbon
footprint objective
Expanded ourUnconventional Oil &Gas policy
Signed the Net Zero
Asset Managers
Initiative
Set 2030 portfolioalignment target

Launched the dedicatedEnvironmental Strategies
Group (and Energy
Transition strategy)

Launch net zeroproducts

Launched our
Global Sustainability Strategy

2021-2022
Launched Net Zero
Roadmap Paper
Further tightened ourCoal Policy

Source: BNP Paribas Asset Management, 2022

In this document, we formally introduce our net zero commitments, grouped into three categories:
Investments, stewardship, and our operations. The individual components of each area aresummarised in the table in the next page and discussed in more detail in the following chapters.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 6 -Exhibit 3: BNP Paribas Asset Management’s commitments to net zero

Net Zero Commitments

Investments

Stewardship1.

Reduce the carbon footprint of our in-scope corporate investments (Scopes 1
and 2)1a) -30% by 2025b) -50% by 2030

2.

Align with net zeroa) 60% of in-scope investments to be Achieving, Aligned or Aligning withNet Zero (NZ:AAA) by 2030b) 100% of in-scope investments to be NZ:AAA by 2040.

3.

Exit coal
We will exclude mining companies that do not have a strategy to exit thermal coal
activities, and power generators that still have coal capacity in their generation
mix, in 2030 for European Union and OECD countries and in 2040 for the rest of
the world.

4.

Invest in climate solutions
Substantially increase our climate and environmentally themed investments.

5.

Engage with our clients
Engage with our clients to transition towards net zero investing with us.

6.

Vote for climate actiona) Signal our expectation for companies to report on their carbon footprint,
and for the world’s largest greenhouse gas (GHG) emitters to set an
ambition to achieve net zero by 2050 or soonerb) Vote in favour of thoughtful shareholder proposals and submit proposals
of our own to accelerate corporate action on climate change.

7.

Engage with companies on net zero
Implement an engagement strategy that is consistent with our ambition for all
assets under management to achieve net zero emissions by 2050 or sooner.

8.

Advocate for NZ 2050 aligned climate policy
Play an active role in advocating for net zero aligned policy, and seek to ensurethat any relevant direct and indirect policy advocacy that we undertake issupportive of achieving global net zero emissions by 2050 or sooner.

9.

Reduce our operational emissions footprintContinue to offset our operational emissions while we improve energy efficiency
and use more green energy.

10.

Report on progress
Produce TCFD2-aligned reporting.

Operations

Source: BNP Paribas Asset Management, 2022

1. “Scope 1” refers to the direct emissions from sources that are owned or controlled by the company. “Scope2” refers to the indirect emissions linked to the company’s purchased or acquired electricity, heat, steam
and cooling. “Scope 3” refers to all other indirect emissions, including those related to the use of its
products. Scope 3 emissions are not included in the calculation since the measurement of these emissions
is not standardised or considered sufficiently reliable yet to be used in reporting. Given the importance of
scope 3 emissions in most sectors, we are evolving our approach to calculating scope 3 emissions with theaim of including it in our approach in the future.
2. Task Force on Climate-Related Financial Disclosures | TCFD) (fsb-tcfd.org))

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 7 -In considering the scope of assets included in our initial commitment, we will begin by following a
conservative approach with EUR 2503 billion, or 50%, of BNPP AM’s global assets under management(AUM). These represent holdings for which we believe we have, as of today, the tools, the data andthe ability to achieve net zero portfolio emissions by 2050. We intend to expand this scope over time.
At the outset, it is important to note that this document is written against a dynamic backdrop ofclimate policy, climate research and corporate/investor/civil society actions. Top of list, the conflictin the Ukraine has had – and will continue to have – enormous implications for inflation, energy
security and supply, food security and supply, and global geopolitics. While many of these pressures
may prove to be short-term headwinds for our transition to net zero as coal fired power plants arebrought back online in parts of Europe to meet Russian natural gas shortages, they also provide
windows of opportunity to enact the sort of legislative changes needed to support the transition in
the long term.
Enter the Inflation Reduction Act in the United States. This landmark law – the largest to address
climate change in US history – has important strategic implications for investors. The incentives
embedded in the law will support greater investment in a variety of clean technologies, creating
opportunities for investors knowledgeable in the dynamics of the low-carbon transition. It will also
help to manage inflation, increase domestic energy security and could even result in the US meeting
its Nationally Determined Contribution (NDC) with some further pushes from the private sector.
In past months, momentous reports and commitments have been released, which could havesignificant implications for climate change outcomes in the next few years. Some of these include:•

The Intergovernmental Panel on Climate Change (IPCC) release of the first, second and third
instalments of its sixth assessment report focused on updating our understanding of the physicalscience basis of climate change and on its mitigation. Overall, the reports highlighted theseverity of our current situation, with all future scenarios modelled by the IPCC showing theworld reaching 1.5°C of warming before mid-century. Even this level of warming will have direeffects on weather systems and on the social/economic systems that depend on them, which
reinforces the critical importance of reaching net zero emissions by 2050 at the latest to sustaina reasonable chance of capping warming at 1.5°C.

•

Countries from around the world convened at the 26th UN Climate Change Conference of theParties (COP26) in Glasgow in November 2021, five years after the Paris Agreement was struck,to hammer out further details of their commitments to reduce emissions. While some progress
was made to strengthen Nationally Determined Contributions (NDCs), these negotiations also
included a focus on the level of financial support developed countries would provide developing
countries for their climate mitigation and, increasingly urgent, adaptation efforts to compensate
them for damages already caused. Unfortunately, these negotiations were conducted ona shaky platform – the USD 100 billion annual ‘north to south’ financing commitment by
2020 agreed to by developed countries in 2009 in Copenhagen had not been reached by thetime leaders convened in Glasgow. While commitments to ramp up financing were made –including a doubling of adaptation financing by 2025 over 2019 levels – it is clear that thelevel of ‘largesse’ among developed world policymakers substantially lags the developingworld’s needs. This is a clear call to action for private investors, working in collaboration
with multilateral institutions and other innovative partners, to ensure greater private capital
flows to climate solutions and emerging markets in the absence of adequate public support.
In November 2022, world leaders will gather at COP27 to work on the concrete implementationof the commitments made in Glasgow, and to further increase climate ambition from the Parties.
The key focus of the discussions will include:− Further increasing countries’ NDCs
− Concrete implementation plans for GHG reductions− Climate change adaptation− Delivering on the USD 100 billion in annual flows committed by developed countries
to support climate action in developing countries.

3. Asset under managements figure based on the assets managed by the company as at 30/06/2022.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 8 -•The International Energy Agency (IEA) released its much-anticipated Net Zero Emission (NZE)
scenario in May 2021. Notably, this report includes a call to end investment in new fossil fuelextraction projects – a significant step for an organisation founded by a consortium of largely oilimporting nations to secure their national oil supplies. The NZE contains some big assumptions
around the future carbon intensity of the global economy and the rate of adoption of new – andin some cases, unproven – technologies. Nevertheless, the NZE will be an important benchmark
for investors and other energy market watchers as countries, companies and investors work overthe coming years to fulfil their various NZE pledges.

•

The Inevitable Policy Response (IPR) initiative released its latest scenarios in 2021. The IPR’s
Forecast Policy Scenario (FPS) foresees a response acceleration by 2025, driven in part by the2023 Paris Stocktake and the pending 2025 Paris Ratchet. IPR predicts that policy responses will
be increasingly forceful, abrupt and disorderly, while the FPS forecasts a dramatic accelerationof climate policy by the 2025 Paris Ratchet, which could result in warming being held to below
2°C. This year, IPR published a 1.5°C Required Policy Scenario (RPS) outlining the more ambitious
policies that would be required to reach a 1.5°C outcome. The RPS identifies additional key
actions that will be necessary, including: An end to deforestation, globally, ideally by 2025;
crucially, unabated coal fully decommissioned in China by 2035; phase-out of new ICE (internal
combustion engine) cars in almost all markets by 2040; and transition to 100% clean power
globally by 20454.

•

In 2021, two key scientific bodies, the IPCC and IPBES (Intergovernmental Platform on Biodiversity
and Ecosystem Services), focused on climate change and biodiversity, respectively, issuing aunique joint report5 and explaining that the climate and biodiversity crises are interrelated andmust be addressed together, a message we had promoted a month earlier with the publicationof our roadmap for addressing biodiversity loss, Sustainable by Nature.

The collective body of research, commitments and actions summarised above demonstrates theincreasing scientific and policy consensus focused on the criticality of achieving a net zero future.
At BNPP AM, we are eager to work with clients and other stakeholders to ensure our net zerotransition encourages positive real-world outcomes while also producing industry-leading
financial returns. We believe these are mutually reinforcing aims and that a just, low-carbon
transition towards a more sustainable economy is essential for the long-term sustainabilityof capital markets. Along the way, significant investment risks and opportunities will arise.
By dedicating sufficient resources to understanding them, and taking on the commitments
outlined in this report, we feel we are best placed to appropriately manage them.

4. In July 2021, we joined the Inevitable Policy Response as a strategic partner. The IPR is a multi-year projectthat seeks to answer key questions for institutional investors: When will governments act on climate,
how will they act, and where will the impact be felt? Analysis of these issues can be used by institutional
investors to prepare for future policy outcomes, inform their TCFD reporting, and identify areas for enhanced
advocacy. The 2021 analysis drew on insights from 200 global policy experts. We were pleased to contributeto this important work. PRI | Inevitable Policy Response (unpri.org)
5. IPBES-IPCC co-sponsored Biodiversity and Climate Change Workshop Report available here

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 9 -BNP Paribas’s commitment to net zero
In 2021, BNP Paribas became a founding signatory to the Net-Zero Banking Alliance (NZBA),
which, similar to the NZAM initiative, aims to mobilise the banking sector around a clear
goal: A carbon-neutral economy by 2050. As part of this, it has committed to using credible
transition scenarios to focus on the highest greenhouse gas-emitting sectors and set interim
reduction targets for the credit portfolio in these sectors. To that end, in 2022, the Group
released its first Climate Analytics and Alignment Report, which includes a series of financed
carbon emissions intensity reduction for aligning its credit portfolio with its commitment to
a net-zero economy by 2050.
Similar to BNPP AM, the continual strengthening and acceleration of the implementation of
the Group’s coal policy leading to a total phase-out from the coal value chain has led to asignificant decarbonisation of its power generation loan portfolio. The Group’s 2020 baselineis already favourably positioned compared to the NZE 2050 global benchmark for 2025, but it
recognises that the large-scale deployment of renewables is necessary for society to meet its
climate objectives and has committed to reaching EUR 30 billion of financing for renewableenergy projects by 2025, further decarbonising the loan portfolio.
At the same time, BNP Paribas Cardif, the insurance subsidiary of BNP Paribas, joined the
Net-Zero Asset Owner Alliance in September 2021. This brings together the world’s largest
insurers and pension funds that have committed to transitioning their portfolios to net zeroby 2050. As part of this, BNP Paribas Cardif commits itself to:••••

Reducing the carbon footprint of its investment portfolios
Reducing the exposure of its portfolios to fossil fuels
Investing to support the energy transition
Engaging with companies and asset managers on their net zero journey

Together, these Group-wide commitments represent BNP Paribas’ firm ambition to become theleader in sustainable finance. They help us make the most of each other’s specific expertiseand gain synergies in our efforts, propelling internal and industry-wide momentum towards
decarbonising the economy.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 1 0 -PILLAR 1 – ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) INTEGRATION:
PORTFOLIO TARGETS AND OBJECTIVESWith the adoption of our Global Sustainability Strategy in 2019, we put ESG integration at the heartof our investment processes. This has had a significant impact on our net zero journey by compellingthe consideration of ESG characteristics and carbon values across our investment strategies. We
begin this section by sharing insights into our firm-wide asset allocation and the initial scope for our
net zero commitment. We then share information about our climate approach by asset class, andprovide a historical snapshot of our climate performance. We close with an overview of research
projects underway that will help us further build our approach in the years ahead.

Strategic asset allocation and scope of commitment
As an asset manager, BNPP AM does not directly manage its strategic asset allocation (SAA) per
se. Rather, it is determined, to a large extent, by client demand for specific asset class strategies;
our regional growth profile; and mergers, divestments and acquisitions, among other factors. Ourcurrent asset mix for in-scope and total global assets is as shown in Exhibit 4.
Exhibit 4: BNPP AM’s asset allocation (% of total AUM)ASSET CLASSES

8%

CLIENT*

27%

17%

6%

8%

DISTRIBUTION

12%

11%

21%

27%

11%

20%

58%

15%

12%

19%
13%

15%

Fixed Income

Insurances

Institutional

Multi-asset & Solutions

Corporates

Group networks

Equities

Pension Funds

JVs

Money Market

Retail Clients

Wholesale

Alternatives

Private Clients
Official Institutions
Asset Managers
Other

Total AuM: EUR 500 billion
Source: BNPP AM, as of 30/06/2022*Excluding investment in our own funds

Based on our current asset allocation, we have decided to focus on listed equities and corporate
bonds, in the first phase in our commitment towards net zero financed emissions6. About half(50%) of BNPP AM’s AUM are in the scope of our initial commitment – a calculation made byfocusing on funds in our range that are currently Article 8 or Article 9 under the Sustainable Finance
Disclosure Regulation (SFDR). These funds have formally adopted our better-than-benchmark
ESG target described below and also apply our Responsible Business Conduct (RBC) policy. Both

6. Financed emissions are emissions generated as a result of financial services, investments and lending byinvestors and companies that provide financial services.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 1 1 -these constraints will be important levers for achieving our net zero commitment over time. Ourcommitment also includes Article 6 funds and mandates which have adopted our RBC policy. Assets
which have not been included in our initial NZ commitment scope include mandates where clients
have not yet adopted our RBC policy, our advisory business, [some] affiliate businesses and [some]sub-advised funds. Additionally, we have removed from the AUM of in-scope assets any investments
in sovereign bonds, agency debt, derivatives and private assets to focus only on our holdings ofpublicly-traded corporate debt at this stage.
Our ambition is to steadily grow the proportion of our holdings that fall within the scope of
our commitment to reach net zero financed emissions by 2050. Outside this perimeter, we willcontinue to work on improving the climate profile of our holdings as we have done for our passive
investments7. While we do not have full control over our asset allocation, we expect our asset mix
to shift towards emerging markets (EM). This will present a challenge from a net zero perspective,
since EM entities tend to have higher Scope 1 and 2 emissions8, which introduces the opportunity for
us to have more impact through company engagement and policy advocacy, as well as reinforcing
the need to incorporate Scope 39 accounting into our overall tracking framework.
For those investments where measuring alignment is not yet possible due to the absence of a viable
methodology or a lack of data (e.g., derivatives), BNPP AM will continue to work and engage withother stakeholders to find a way to expand the holdings covered by our commitment.
For new mandates (i.e., segregated or separately managed accounts), net zero alignment will be thedefault option. For existing mandates, we will engage with clients and encourage them to join us in
our efforts to reach net zero financed emissions by 2050.
In undertaking our commitment, we build on previous work undertaken to assess the climate
performance of our assets – further information and analysis is provided in the Appendix to thisdocument.

Listed equity and corporate bonds
Climate change risk is already a key consideration across our investments10, enabled partly by the
adoption of our ESG Integration Guidelines, which stipulate the following:••

ESG Scoring: We avoid investing in a publicly listed entity without an ESG score, performing
qualitative ESG analysis in the absence of a quantitative ESG rating.
Better than Benchmark (BTB): We aim to hold portfolios with more positive ESG characteristics
than their respective (invested) benchmarks. This includes targeting a lower carbon footprint
than their respective (invested) benchmarks for our portfolios.

Introduced in 2019, the implementation of these guidelines has played an important role in shifting
our investments towards a net zero pathway and means that we are not making this formal NZAM
commitment from a standing start.
To underpin the implementation of our ESG integration approach, we developed a proprietary ESG
scoring framework which now covers more than 13 000 corporate issuers globally. This rating
framework places strong emphasis on climate change risks within the ‘Environmental’ pillar11,
including the GHG emissions of all companies.

7. Please refer to the section “Pillar 5: Sustainable investment solutions” for further details.
8. “Scope 1” refers to the direct emissions from sources that are owned or controlled by the company. “Scope2” refers to the indirect emissions linked to the company’s purchased or acquired electricity, heat, steam
and cooling.
9. “Scope 3” refers to all other indirect emissions, including those related to the use of its products.
10. Index-tracking funds are exempted from our ESG integration requirements since they are meant to track
benchmarks, although a growing number of these funds have an explicit sustainable, low-carbon or climate
action focus.
11. Our proprietary ESG scoring methodology determines an issuer’s ESG score by evaluating performance on
a set of key ESG issues related to 3 pillars: The environment, social issues and governance.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 1 2 -Sovereign bonds
Regulators and policymakers are key to achieving a sustainable, net zero economy, as they shape
the markets in which we invest and the rules that guide and govern companies’ behaviour. We have
not yet made sovereign bonds subject to our net zero commitment. This is partly because we feelmeasures of carbon and temperature alignment specific to sovereign bond issuers are not widelyused in practice, although this is an area of current focus for us.
Nevertheless, we currently assess the climate performance of sovereign bonds in which we invest
and aim to enhance these methodologies so we have full confidence in including sovereign debt in
the scope of our net zero commitment in future. To date, we have developed an ESG scoring system
for sovereign bonds to assess country performance across environmental, social and governancepillars, which informs our BTB rule for government bond or multi-sector fixed income portfolios. Our
ESG score for sovereign debt includes a 22% weighting for climate change factors, of which 11% isdevoted to assessing physical climate risk within the country and 11% to the consideration of eachcountry’s approach to climate mitigation. Within the mitigation category, we assess two indicators:
1. Quantitative – temperature alignment: The alignment of a given country’s NDC with the Paris
Agreement is calculated using the Climate Liabilities Assessment Integrated Methodology(CLAIM)12 which assesses that country’s NDC ambition against its allocated emissions under theParis Agreement using a dynamic approach to budgeting.
2. Qualitative – legislative ambition: Data from the London School of Economics provides detailed
information on the policies adopted by countries to tackle climate change, and the strength ofthese policies is assessed.
To improve on these measures, which we already believe to be positive differentiators over otherapproaches to sovereign ESG scoring, we are currently developing our own approach to estimating
sovereign GHG emissions to build upon or enhance the quantitative climate measure in our ESG
scoring model.

Private markets
BNPP AM’s Private Markets team manages several portfolios with exposure to corporate, real estateand infrastructure debt. As [most] funds are closed-end and beyond the initial investment period,
we have limited ability to change the emissions trajectory of these funds via portfolio management.
So, we have not included them in the scope of our net zero commitment.
However, we have already implemented several climate change-related risk assessment methods
in private markets portfolios (see section on Pillar 5, covering sustainable investment solutions,for more information). For instance, for our real asset debt strategies, we are assessing theenvironmental and climate impact of all our investments as part of our investment process. This
assessment is based on a proprietary climate impact methodology leveraging on Iceberg Data Lab
that provides us with the following data:••••

Indirect emissions linked to construction, operation, maintenance, refurbishment and asset use
Avoided emissions through asset optimisation and when compared to a reference scenario
Alignment with a 2°C trajectory based on the Sectoral Decarbonisation Approach method
Net Environmental Contribution (NEC), which assesses the environmental impact of each of theassets we finance based on a -100% to +100% scale (with 0% representing the sectorial mean
and 100% the best available solution). The NEC is an open-source methodology13.

We intend to include future fund launches in the scope of our net zero commitment.

12. How to measure the temperature of sovereign assets | FTSE Russell
13. NEC Initiative – Net Environmental Contribution Initiative (nec-initiative.org)

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 1 3 -Climate integration within our ESG scoring framework
Climate change is a core component of our proprietary ESG scoring framework, which aims to assess
issuers’ ESG performance, and its scope and intent are described in Exhibit 5. Climate change is oneof the 11 themes in this framework, representing 11.8% of the ESG score on average across sectors,
and up to 25% for the most climate-impacted sectors.
Exhibit 5: BNPP AM’s proprietary ESG scoring framework – core principles

Comprehensive:
Covering morethan 13 000 issuers

Focused on materiality:
Using a limited numberof material, insightful metrics
for each sector

Investment insight driven:
Built with and for investment
professionals

Robust:Using a statistically rigorous
model developed with ourQuantitative Research Group

Dynamic and forward-looking:Integrating unique insights
through qualitative inputs

Managed by the Sustainability
Centre: To ensure the integrity
and consistency of theframework

Source: BNPP AM, 2022

In light of the above, we believe our ESG scoring methodology is a powerful tool to help investment
teams generate long-term sustainable investment returns for clients.
Importantly, in line with our goal to align our portfolios with the Paris Agreement and recognisingthat the world faces an absolute carbon emissions problem, we have introduced an absolute carbon
emissions ‘tilt’ in our primarily sector-relative ESG scoring system. As a result, sectors, regions andissuers emitting more carbon and other GHGs will structurally have a lower ESG score than thosethat emit less.

Commitment # 1: Reduce the carbon footprint of our in-scope corporate
investments (Scopes 1 and 2)
Reducing our financed GHG emissions

BNPP AM will reduce the carbon footprint of its investment portfolios for in-scopeholdings from a 31 December 2019 baseline by 30% in 2025 and by 50% in 2030.
Building on our commitment as one of the first signatories to the Montreal Carbon Pledge in 2015,
our ESG Integration Guidelines include the objective for actively managed portfolios to have a lower
carbon footprint than that of their benchmarks. Our approach to measuring the carbon footprint of
portfolios is explained in more detail in Exhibit 6.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 1 4 -Exhibit 6: Measuring our carbon footprint: A long-term BNPP AM commitment

We started measuring the carbon footprint of our SRI-labelled equity funds and mandates in2011. In May 2015, we committed to progressively measuring and reporting the carbon footprint of our open-ended funds. Today, we systematically measure the carbon footprint of both
equity and fixed income portfolios. In 2022, we have updated our formula to align it with theEuropean Union’s Principal Adverse Impact (EU PAI) definition for carbon footprint, using theformula:Wptf,i: Portfolio weight in company iCO2e i: Sum of Scope 1 & 2 CO2 equivalent emissions expressed in tonnes for company iEnterprise value: Sum, at fiscal year-end, of the market capitalisation of ordinary shares, themarket capitalisation of preferred shares, and the book value of total debt and non-controllinginterests, without the deduction of cash or cash equivalents
Scope 3 emissions are not yet included in the calculation since the measurement of theseemissions is not standardised or considered sufficiently reliable to be used in reporting. Given
the importance of Scope 3 emissions in most sectors (such as car manufacturing, where theseemissions account for 98% of the total during the life of the vehicle), we are evolving our approach to calculating Scope 3 emissions with the aim of including it in future.

At the end of 2019, the aggregated carbon footprint of BNPP AM’s funds under the scope of ourcommitment was 91.72 tCO2/m€ invested: This is the baseline for our commitment14. Our 2022
carbon footprint calculation is impacted by time-lag in carbon data availability and will be disclosed
in our annual climate report in 2023.
We believe the emission reduction pathways encompassed in our commitment are consistent
with the required reduction in global GHG emissions to achieve net zero emissions by 2050. They
are aligned with the 7% yearly decarbonisation rate in accordance with the IPCC’s 1.5°C scenario
with no or limited overshoot15. While we acknowledge that the baseline year used to calculate thedecarbonisation of our portfolios16 is later than the 2010 starting point of the IPCC scenario, we
believe that a 50% reduction by 2030 will put us on track for net zero financed emissions by 2050.
We will review our commitment further and enhance it as needed. This target may be refined once
we evolve our approach to measuring scope 3 emissions.

14. Note, this reflects our exposures as of year-end 2019 with no re-baselining performed. If our firm-wide
asset, region or sector allocation shifts dramatically over time (e.g., as a result of a merger or acquisition)
we may apply a re-baselining methodology. If we do so, we will be transparent about the methods used.
15. Institutional Investors Group on Climate Change (IIGCC) special report (SR15_SPM_version_report_LR.pdf(ipcc.ch).
16. Our initial formal efforts to reduce the carbon content of our holdings began in 2015 when BNPP AM joined
the Montreal Carbon Pledge and the PRI Portfolio Decarbonisation Coalition (PDC).

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 1 5 -Why commit to carbon footprint [aka intensity]
reductions rather than absolute emission reductions?
There are a variety of measurement frameworks in place to support an assessment of the
carbon profile, and associated climate risk, of companies. In the end, the only thing that reallymatters is a reduction of absolute emissions to zero by 2050 in order to have any meaningfulchance of staying below 1.5°C. Considering this, why haven’t we made an absolute emissions
reduction commitment?
•

Zero is zero. A company with 0 absolute emissions will also have a carbon intensity of
0. So ultimately a net zero goal based on intensity or absolute figures should reach thesame point by 2050. Nevertheless, differences can arise in the interim, particularly withintensity measures where companies (e.g., through a merger or acquisition, or regional
expansion or valuation increases) could reduce their emissions intensity but still increase
their absolute emissions. We recognise these challenges and thus look at both measures,
particularly in exceptional circumstances (e.g., mergers or acquisitions).

•

Relativity matters. Absolute emissions do not reveal much about a given company’s
behaviour versus its peers or relative to its size. Given our fiduciary duty to our clients,
we endeavour to invest in companies outperforming their peers and/or benchmarks on avariety of metrics including carbon. Intensity measures facilitate related evaluations.

•

Avoiding undue sector biases. While we already include absolute emissions as a factor in
our ESG scoring model, adopting an absolute emissions commitment based on currently
available Scope 1 and 2 emissions data would introduce more significant sector biases into
our portfolios e.g., away from utilities and towards technology companies. Many currently
high emissions companies will be key drivers of the transition to a low carbon economy
and we want to be able to continue to support these companies with our investments.

•

Alignment with policymakers and existing processes. We decided several years ago to use
carbon footprint as defined by the European Commission17 as our primary mode of carbon
measurement. This measurement already underpins our carbon ‘BTB’ commitment andexists for ease of access by our portfolio managers in our portfolio management system.

There are many other factors to consider in setting carbon reduction targets such as which
denominator to use. For our purposes, we have selected adjusted enterprise value. We
recognise that, in aggregate, market fluctuations could have an impact (positive or negative)on our reduction pathway at any given point in time. In future, we may determine to control
for this in our Net Zero Achieving, Aligned or Aligning (NZ: AAA) measurement framework,
particularly in our approach to rebasing. We will also monitor absolute emissions trajectories
over time to ensure that intensity reductions are attributable mainly to reductions in the
numerator rather than increases in the denominator.

17. https://www.eba.europa.eu/sites/default/documents/files/document_library/
Publications/Draft Technical Standards/2021/962778/JC 2021 03 - Joint ESAs
Final Report on RTS under SFDR.pdf

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 1 6 -Commitment # 2: Align with net zero

Reducing our financed GHG emissions

Our goal is for 60% of our corporate investments (equity and fixed income) to fall
into NZ:AAA (Achieving, Aligned or Aligning) categories by 2030 and 100% by 2040.
This will enable us to achieve 100% net zero alignment of our corporate portfolio
by 205018.
Measuring company or portfolio alignment to a specific climate pathway is subject to uncertainty.
Among all the alignment methodologies, degree-warming metrics are attractive as they use thesame wording as climate science and seem quite easy to understand. These degree-warming
methodologies assign a temperature score to a company or portfolio based on their future carbon
emission pathway and compare it to a pathway compatible with a specific climate scenario.
Unfortunately, numerous degree-warming methodologies are available that generate highly diverse
outputs. These methodologies vary in terms of scenario(s) used, measurement approaches, timeframes and scales of measurement used, resulting in highly inconsistent temperature estimates atthe company level19. As noted by the Portfolio Alignment Team20, “a degree-warming metric has thepotential to be a powerful tool – but it is less understood, difficult to construct and requires further
work on both methods and data inputs to ensure transparency, robustness and consistency acrossthe degree-warming methodologies”.
To overcome these uncertainties, BNPP AM has decided to use a framework to measure the alignmentof its investments in corporates largely inspired by the Paris Aligned Investment Initiative (PAII) Net
Zero Investment Framework21. This triple-A (NZ: AAA) framework is set out in Exhibit 7, and is basedon various sources: Transition Pathway Initiative (TPI)22, Science Based Targets initiative (SBTi)23,
Climate Action 100+24 and Carbon Disclosure Project (CDP).25 Most are publicly available, and havegoals linked to classifying companies in categories depending on their level of alignment with net
zero. More information on the different sources used can be found in the appendix. We intend tofurther enhance our alignment assessment methodology in the future.

18. BNPP AM will continue to improve its NZ:AAA assessment methodology, and thus we may adapt ourcommitment and disclosures accordingly as the measurement approach evolves.
19. cookbook.pdf (ademe.fr)
20. PAT-Report-20201109-Final.pdf (tcfdhub.org)
21. https://www.iigcc.org/download/net-zero-investment-framework-implementation-guide/?wpdmdl=4425&r
efresh=61c444d8e6d101640252632
22. Overview of the TPI – Transition Pathway Initiative
23. About Us – Science Based Targets
24. About Climate Action 100+ | Climate Action 100+
25. About us – CDP

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 1 7 -Exhibit 7: BNPP AM’s NZ: AAA framework for assessing companies’ net zero alignment•
Achieving
net zero•••
Aligned to a
net zero pathway••

Companies with at least 50% of their turnover aligned with EU
Taxonomy Climate Change Mitigation OR
Companies with at least 50% of their turnover aligned withclimate-mitigation-linked SDGs26 and with no more than 20% of
their turnover misaligned with any SDGs OR
Companies committed to net zero and whose current carbon
performance is at (or close) to the one needed for its sector by
2050 to reach net zero global emissions.
Companies committed to net zero emissions by 2050 AND thathave a carbon reduction target assessed as </=1.5°C27 OR
Companies with at least 20% of their turnover aligned with EU
Taxonomy Climate Change Mitigation OR
Companies with at least 20% of their turnover aligned withclimate-mitigation-linked SDGs28 and with no more than 20% of
their turnover misaligned with any SDGs.

Aligning towards a
net zero pathway•

Companies that have a carbon reduction target assessed as
below 2°C and not otherwise considered Achieving or Aligned.29

Not aligned•

All other companies.

Source: BNP Paribas Asset Management, 2022

Exhibit 8: Current NZ: AAA breakdown of BNPP AM’s AUM in-scope corporate holdings (fixedincome and equity)

4%

Achieving Net Zero21%

Aligned to a Net Zero
Pathway60%

Not Aligned

15%

Aligning Towards a Net
Zero Pathway

Source: BNPP AM based on TPI, SBTi, CA 100+ and CDP data, as at June 2022

26. UN Sustainable Development Goals (SDG) target numbers: 7.2, 7.3, 7.a, 7.b, 9.4
27. 1.5°C temperature alignment is determined based on a variety of different inputs:• SBTi or SBTi tool using carbon disclosure project (CDP) data produces a </=1.5°C output for any assessed time frame• Companies assessed by Transition Pathway Initiative (TPI) as having Management Quality Level 4 with a short &medium or long-term carbon performance at or below 1.5°C• Companies passing indicator 1 to 6 in the CA100+ benchmark (Structure and Methodologies | Climate Action 100+)
28. SDG target numbers: 7.2, 7.3, 7.a, 7.b, 9.4
29. 1.5°C to 2.0°C temperature alignment is determined based on a variety of different inputs:• SBTi or SBTi tool using CDP data produces a </=1.5°C output• Companies assessed by TPI as having at least a Management Quality Level of 3 with a short, medium or long termcarbon performance between 1.5°C and 2°C.
• Companies passing indicator 1 to 3 in the CA100+ benchmark (Structure and Methodologies | Climate Action 100+)• Companies committed to net zero emissions by 2050 and that are below 2°C as per BNPP AM’s enhanced ITR (which
is currently under development)

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 1 8 -Our commitment focuses on where a company is coming from,and also where it is going

Carbon footprint measures are backwardlooking, and track a company’s progress overa fixed period of time

Net zero alignment measures are typicallyforward-looking, incorporating a company’s
targets and future plans

Future developments
Investment teams at BNP Paribas Asset Management are continually striving to improve theirknowledge of climate-related risks and opportunities. We are undertaking several related research
exercises to develop better tools and metrics to assess exposure to climate related risks andopportunities, as well as tracking and reporting against our net zero commitments. Our key research
work streams are outlined below (Exhibit 9).
Exhibit 9: Carbon emissions-related research
Net zero topic

Description of research

Carbon estimation

It is well known that current carbon data is imprecise due toinconsistent and typically unaudited disclosure across industries,
regions and markets. BNPP AM’s Quantitative Research Group (QRG) is
working to enhance existing carbon data using quantitative methods
based on machine learning and we plan to extend our current GHG
data use from Scope 1 and 2 to include Scope 3.

Carbon forecasting

Implied temperature rise (ITR) measures require estimates of futurecompany emissions to produce results. Some companies provide
trajectories which could benefit from quantitative validation. Manyother companies do not disclose emissions trajectories and therefore
these emissions require estimation to produce universe-wide ITR
measures.

Carbon footprint ofgovernment bonds

We have been working on developing a methodology to allow us toincrease the coverage of our holdings for which we measure andpublish the carbon footprint by including holdings of government
debt. This has been done in collaboration in collaboration with BNPParibas, including a dialogue with PCAF (Partnership for Carbon
Accounting Financials) on the matter. We plan to share further
information about the methodology chosen, as well as the resultsfor our portfolios.

Implied temperaturerise (ITR) modelling

We endeavour to enhance measures of ITR industry-wide through ourcollaboration with and use of tools provided by SBTi, CDP, CA100+, TPI,
OS-Climate, the Inevitable Policy Response and GFANZ. We intend touse our knowledge and these tools to develop a more comprehensive
ITR measurement methodology for our own portfolios, which will
help us assess our alignment with our net zero commitments at theissuer, fund and total portfolio levels.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 1 9 -PILLAR 2 – STEWARDSHIP
Investing in assets is only one aspect of our response to the climate crisis. Effective stewardship,including proxy voting, direct or collaborative corporate engagement and public policy advocacy, isalso necessary to ensure we are doing all we can to move society as quickly as possible to net zero
emissions30

Proxy voting

Commitment # 6: Vote for climate action

We will use our votes to signal our expectation that companies report on their GHG
emissions. We expect the world’s largest GHG emitters to set a goal to achieve net
zero by 2050 or sooner. We will back thoughtful shareholder proposals as wellas submit shareholder proposals of our own to accelerate corporate action on
climate change.
We have incorporated climate change considerations into our proxy voting guidelines for many
years. In addition to providing strong support to shareholder proposals addressing climate change,
our Governance and Voting Policy promotes a more proactive approach. In 2022, we updated our
Policy to further align with our net zero commitment.
We will sanction companies that do not meet our climate expectations by opposing the following
categories of management resolutions: Discharge of board and management / board re-elections/ financial statements. In determining whether to apply these sanctions, we consider if companies:•••

Properly report on all greenhouse gas emissions related to their activities (Scopes 1 and 2 for allcompanies, Scope 3 where appropriate)
Communicate or constructively engage with regard to their business strategy on climate
adaptation or their climate lobbying strategy; andHave set an ambition to achieve net zero GHG emissions by 2050 or sooner, underpinned bycredible decarbonisation strategies and intermediary targets, in line with global efforts to limit
warming to 1.5°C (See the box below for details on how this criterion is applied).

BNP Paribas Asset Management has also incorporated new requirements related to biodiversity
preservation, in line with its biodiversity roadmap published in 2021. BNPP AM expects companies
to assess and report on their main environmental impacts and nature dependencies, starting withthose in high-impact sectors, and focusing primarily on deforestation and water-related issues.

Voting on CA100+ net zero expectations
In 2022, in light of the climate crisis and our commitment to the Net Zero Asset Managers(NZAM) initiative, we amended our voting policy to reflect heightened expectations forcompanies identified as the world’s largest GHG emitters.
Our analysis is based on the results of the Climate Action 100+ Net Zero Company Benchmark.31
On a case-by-case basis, we oppose the key management proposals described above for:••

CA100+ companies that have not adopted a “net zero by 2050” ambition (not aligned withthe benchmark), or
CA100+ companies that are partially aligned on indicator 1 of the CA100+ Net Zero
Benchmark (“net zero by 2050” ambition) and have not shown meaningful progress overthe past year, or set long-term, medium-term and short-term GHG reduction targets.

In making these voting determinations, we will exercise our own judgement, seeking toconsider new company commitments published after the finalisation of the CA100+ Net Zero
Benchmark results, as well as other relevant company-specific considerations. We do notdelegate our voting decisions to any third parties, including CA100+.

30. More detailed on our Stewardship strategies and principles are outlined in our Stewardship Policy.
31. Net Zero Company Benchmark | Climate Action 100+

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 2 0 -In instances where companies failed to meet these expectations, BNPP AM opposed the re-electionof directors, discharge, or approval of accounts: 1 231 of such resolutions were opposed at 216
companies for environmental or social considerations, the vast majority of which (1 144) were forclimate or biodiversity reasons (as of end of June 2022).32

Say on climate

When voting on “Say-on-climate” proposals, we take into consideration whether the company has:••••

Disclosed all relevant GHG emissions linked to its activities (Scopes 1, 2 and 3, as appropriate)
Set an ambition to achieve net zero GHG emissions by 2050 or sooner, in line with global efforts
to limit warming to 1.5°C
Set short and medium-term targets to achieve net zero GHG emissions by 2050 or sooner, whichprioritise the most relevant emission scopes for the company
Reported on its climate governance, strategy, risk management & metrics and targets in line with
TCFD standards.

If these factors are not decisive, additional factors may be considered, including how the company
performs compared to its peers in terms of climate strategy, considering all recently publishedinformation. In the 2022 proxy season, BNPP AM voted on 34 say-on-climate resolutions and opposed
76% in 2022 (vs. 29% last year). This significant opposition rise resulted from the implementation ofan analysis grid, clarifying and strengthening our requirements on this type of proposal.
A shareholder proposal can be an effective tool for raising issues that would not otherwise appear
on the board’s agenda. BNPP AM has a strong record of supporting proposals addressing a wide
range of ESG issues, in addition to submitting proposals of our own to accelerate corporate action
on climate change. We seek to apply these policies consistently, in all markets.
More detailed strategies and principles are outlined in our Governance and Voting Policy.
Exhibit 10: BNPP AM proxy voting and climate change record summary

Support for climate-relatedshareholder proposals:
94%

89%

Opposition to board elections, discharge ofthe board or financial statements due toenvironmental or social issues:

92%

451

550
50

70%
2020

2021

2022
(mid-year)

1231

969

1050

66

216

168

2020
Number of companies

2021

2022 (mid-year)

Number of resolutions

32. BNP Paribas Asset Management targets climate and compensation during 2022 AGM season (bnpparibasam.com)

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 2 1 -Supporting change at Exxon Mobil
Exxon Mobil’s 2021 annual meeting was one of the most highly anticipated and closely watchedmeetings of the year. Engine No. 1, a small hedge fund, proposed four new directors to the Exxon
Mobil board, challenging the company’s preparation for the transition to a low-carbon economy,
as well as its financial results. It was the first time an activist hedge fund had run a dissident slate
based on climate change. In a vote that sent shock waves across the industry, three of Engine No.
1’s nominees were elected to the Board.
We voted for all four Engine No. 1 nominees, after meetings with the hedge fund and the prospective
directors, and voted against all incumbent directors, as we had for the past several years. We
believe these new directors are highly qualified and prepared to help lead Exxon Mobil through aperiod of fundamental change, not just for the company itself, but for the entire oil & gas industry.
Since the election of these directors, Exxon has announced a “net zero by 2050” commitment for its
Scope 1 and 2 emissions, a clear step in the right direction, and published a climate lobbying reportin response to a majority vote on our shareholder proposal.
In addition to these proxy voting activities, we are also actively engaged with Exxon Mobil (see below).

Corporate engagement

Commitment # 7: Engage companies on net zero

Implement an engagement strategy that is consistent with our ambition for all
assets under management to achieve net zero emissions by 2050 or sooner.
Our active membership in CA100+ is a core element of our plan to align corporate strategies witha net zero future. CA100+ is a collective effort to engage the world’s 167 largest corporate GHG
emitters, supported by investors that collectively manage more than USD 68 trillion.
BNPP AM serves as lead or co-lead investor with ten companies in CA100+, and actively supports
10 other dialogues33 in Europe, North America and Asia. Our CA100+ engagements include electricutilities, oil & gas and aviation, three industries that are critical for bringing about energy transition.
We are helping to lead a broader effort focused on corporate climate lobbying.
In 2021, CA100+ launched its Net Zero Company Benchmark. The benchmark, to which we contributed,
defines key indicators to assess business alignment with a net zero future and the goals of the Paris
Agreement to limit global temperature rise to 1.5°C above pre-industrial levels. The benchmark
is now used to structure each dialogue, and to set clear targets for companies to meet in theareas of ambition, target setting (short, medium and long-term), decarbonisation strategy, capital
allocation alignment, climate policy alignment (lobbying), climate governance, Just transition and
TCFD disclosure. Each of the benchmark’s 10 indicators is supported by detailed sub-indicators. The
benchmark is used to produce an annual evaluation of each of the largest corporate GHG emitters,
to provide us with a systematic way to measure meaningful progress. (Company assessments canbe viewed here: Companies | Climate Action 100+.)
We have placed particular emphasis on corporate climate lobbying in our global engagements.
Lobbying activities that are inconsistent with the goals of the Paris Agreement present significant
risks to investors and systemic risks to our economies as delays in the implementation of the Paris
Agreement increase the physical risks of climate change, threaten economic stability and introduce
uncertainty and volatility into our portfolios.
We began our work on “Paris-aligned corporate climate lobbying” in 2018 and are now witnessing
rapid uptake of this issue by institutional investors – a good sign that investors are coming to grips
with the climate crisis and beginning to focus on the importance of strong public policy and the rolethat companies are playing in influencing those policies.
In 2020, we drafted a shareholder proposal to address this key topic, receiving a historic majority
vote at Chevron’s annual meeting. To date, this proposal has received six majority votes since wefirst submitted it in 2020 (three were achieved by other investors, using versions of our proposal). Our
proposal’s basic template is now being used by investors affiliated with CA100+ and the InterfaithCenter on Corporate Responsibility to engage a wide range of companies.
33. Data as of December 2021

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 2 2 -We submitted four climate lobbying proposals at US companies for the 2022 proxy season andsuccessfully withdrew three ahead of the respective company’s AGM, in exchange for written
commitments. We served in a lead capacity for two of these proposals and played an active
supporting role for the other two. ExxonMobil and General Electric published reports evaluating
their climate lobbying in response to our proposals, and Delta Airlines published a climate lobbying
report in response to a majority vote our proposal received at the company’s AGM last year.
In early 2022, we helped launch the Global Standard on Responsible Climate Lobbying34 to provide
the market with clear guidance on our expectations and allow all stakeholders to share a common
set of indicators to evaluate the increasing number of corporate climate lobbying reports companies
are now publishing.
As noted above, the climate crisis and the biodiversity crisis are driving each other and must be
addressed together. Environmental sustainability, with a focus on deforestation and water, is a key
theme for our corporate engagements. In 2021, we collaborated with other institutional investors tolaunch Nature Action 100, an initiative focused on reversing nature loss by 2030. The effort, which
we expect to launch publicly later in 2022, will engage corporates and policymakers, and has the
support of a technical advisory group to ensure the work is grounded in science.
Highlights of some of our corporate climate engagements are provided below, as reported in our
2021 Sustainability Report and our standalone Stewardship Report35.

EuropeIberdrola (Spain)
Activity: We are the lead investor on behalf of Climate Action 100+. We continued our dialogue
with Iberdrola throughout the year, focusing on the details of its transition plan and its governancearrangements relating to climate change.
Outcomes: In 2021, we secured a success with the company as it committed to submit its climate
action plan to shareholders for an advisory vote. Shareholders approved the revision of the Articles
of Association to place responsibility for the company’s climate strategy on the Board of Directors
as well as responsibility for approving and producing annual climate management reports, startingin 2022 within the Non-Financial Information Report. It also provided for a shareholder vote on
the climate change plan from 2022. This new role assigned to the Board was approved by theshareholders at the general meeting and we supported the proposal as it is aligned with our
expectations and a good step in order for the company to achieve its net zero goal by 2050.

Asia

CLP Holdings (Hong Kong)
Activity: We initiated our engagement with CLP Holdings in our co-lead role within the Asia Investor
Group on Climate Change (AIGCC) Asian utilities engagement programme because we believed thecompany may be in breach of our coal policy.
Outcomes: Our engagement with CLP Holdings was particularly fruitful. It is a power utility withbusinesses across the Asia-Pacific region, operating several coal-fired power generation assets. We
have been actively engaging with the company since 2019. During Q3 2019, as CLP was working on
new climate targets for Board approval, we held no fewer than four meetings with the company’ssustainability, investor relations and board representatives responsible for climate issues. Among
our asks of the company was a clear initial focus on committing to net zero by 2050 and coal exit
by 2040 for non-OECD operations. In September 2021, CLP Holdings announced its commitment to
net zero emissions by 2050 and coal exit by 2040, setting new science-based targets to align withthe goal of limiting global warming to well below 2°C. The company also announced its ambition tofurther strengthen its approach to align with 1.5°C, demonstrating leadership in the transition awayfrom coal and towards net zero power generation. Following those announcements, we decided
that the company would remain eligible for investment and to continue our engagement via AIGCC.

34. Home – Responsible climate lobbying: The global standard (climate-lobbying.com)
35. https://docfinder.bnpparibas-am.com/api/files/F1DBA719-AC36-4B3D-973D-E0C764359E43

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 2 3 -Americas
Exxon Mobil (Oil & Gas; US); Delta Airlines (Aviation; US) – Majority votes on climate lobbying
BNPP AM’s Role:• Climate Lobbying: Lead Investor• CA100+: Exxon Mobil (Co-lead); Delta Airlines (Supporting Investor)
In 2020, our Paris-aligned climate lobbying proposal received a historic majority vote at Chevron’sannual meeting. In 2021, we filed the proposal with Exxon Mobil and Delta Airlines, attracting
record support – 64% and 63% approval, respectively.
Our proposal asked each company’s board to evaluate whether their company’s direct and indirect –e.g., through trade associations – lobbying aligns with the temperature goal36 of the Paris Agreement
and to report to shareholders, with their report indicating how the company should address
misalignments. Chevron, Exxon Mobil and Delta Airlines have all produced climate lobbying reports
in response to majority votes on our proposal, and dialogue with each company continues.

Public policy advocacy

Commitment # 8: Advocate for climate policy

We will actively advocate for net zero-aligned policy and seek to ensure any
relevant direct and indirect policy advocacy that we undertake is supportive ofachieving global net zero emissions by 2050 or sooner.
Climate change is a systemic risk and, as such, cannot be resolved by the private sector alone. We
need strong government policy that sets clear targets – and limits – and aligns incentives to ensurethat capital markets are allocating capital towards a sustainable future. In 2019, we published our
Public Policy Stewardship Strategy on Sustainability, with a core focus on climate change37.
The United Nations’ Emissions Gap Report has warned that national climate pledges and othermitigation measures put the world on track for a temperature rise of 2.7°C by the end of the century,
well above the 1.5°C limit that scientists say must be achieved to avoid disaster.
In 2021, we signed the Global Investor Statement to Governments on the Climate Crisis, coordinatedby the Investor Agenda to encourage all countries to significantly strengthen their Nationally
Determined Contributions (NDCs) under the Paris Agreement for 2030 and to ensure an orderlytransition to net zero emissions by 2050 or sooner.
Until recently, our discussions with government representatives as bondholders were limited togreen bond issuance. While a new practice for us, we have started to ramp up our dialogue withgovernments on ESG issues in relation to the issuance of government debt. These discussions focus
on national transition pathways to meet commitments to the Paris Agreement.

US Securities and Exchange Commission

For capital markets to effectively manage the risks of climate change, investors need reliable,comparable data from the companies they invest in. We are pleased to see that, for the first time,
the US Securities and Exchange Commission (SEC) has proposed rules in this area.
In 2021, we participated in three calls with SEC officials to discuss corporate climate change
disclosures, including a one-on-one call with the interim Director of Corporation Finance and twogroup calls with the new SEC Chair, during which we presented our views on climate disclosureand financial materiality. We are encouraging the SEC to embrace a holistic approach to materialitythat addresses the risks companies face from climate change, as well as information to allow us
to measure each company’s contribution to the climate crisis through mandatory disclosure ofcorporate GHG emissions.
In close coordination with BNPP AM, BNP Paribas sent a letter to the SEC supporting mandatory
Scope 1, 2 and 3 disclosures for all reporting companies, in addition to other recommendations,38
36. The first iteration of the proposal referred to “well below two degrees goal” and the second to “1.5 degrees”.
37. 8BFBC6C4-8E02-408E-A187-E7D437C467AC (bnpparibas-am.com)

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 2 4 -while in 2022, we worked with BNP Paribas colleagues on a letter expressing broad support for the
SEC’s rule proposal, including support for mandatory Scope 3 emissions disclosure from all large
companies39. BNPP AM also sent a letter to the Canadian Securities Administrators with our views
on its climate disclosure proposal40 and we joined a PRI-coordinated call with the Ontario Securities
Commission to underscore our recommendations.

The Taskforce on Nature-related Financial Disclosures (TNFD)

We have been closely involved with industry-wide voluntary efforts to help provide better and moreconsistent data to the markets on climate change and biodiversity loss. BNP Paribas co-chaired aworking group that led to the launch of the Taskforce on Nature-related Financial Disclosures, whichaims to produce a reporting framework to help financial institutions redirect capital flows towards
nature-positive outcomes. The framework will provide companies with guidance on how to measure
and report on their impacts and dependencies on nature. BNPP AM contributed actively to working
group sessions and is represented on the TNFD by Robert-Alexandre Poujade, our biodiversity lead.

Financial Institution Statement ahead of the Convention on Biological Diversity COP15

2021 saw the kick-off of the 15th meeting of the Conference of the Parties (COP 15) to the Convention
on Biological Diversity. This was a critical moment to establish a clear path to reverse nature loss.
We signed an investor statement supporting the creation of an ambitious and transformational
post-2020 Global Biodiversity Framework (GBF) to fulfil the vision of “living in harmony with natureby 2050” through the recovery of natural ecosystems, with net improvements by 2050. To achieve
this vision, nature loss must be halted and reversed by 2030, through improvements in the health,abundance, diversity and resilience of species, populations and ecosystems.
The statement was endorsed by 78 financial institutions managing more than USD 10 trillion. Ourrole was to help convince Ceres (The Coalition for Environmentally Responsible Economies) toissue the statement, along with its co-author, the Finance for Biodiversity Foundation, and provide
comments and edits to the final text.
What were the outcomes of the first part of the negotiations?
The main outcome is the adoption of the Kunming Declaration – a ‘statement of political will’ that
includes 17 points demonstrating a commitment from all countries to work together. Also, several
announcements were made to increase international funding to support biodiversity, such as theKunming Biodiversity Fund.
What are BNPP AM’s expectations?
The so-called 30×30 proposal is not clearly stated in the declaration, indicating that a consensus has
not yet been reached, though this proposal aims to protect and conserve 30% of land and sea areasand is supported by more than 70 countries, led by Costa Rica, France and the UK. We view it as apositive sign that the Kunming Declaration includes an explicit expectation to align financial flows
to support the conservation and sustainable use of biodiversity. Ultimately, we believe initiatives
such as TNFD will play an instrumental role in tackling this issue.
The most challenging factor facing net zero portfolio alignment is that the global economy is not
yet on a net zero pathway. Until we change this, the investable universe for net zero investors will
shrink. This underscores the importance of forward-looking perspectives and long-term engagement
in making investment decisions.
More detailed strategies and principles are outlined in our Public Policy Stewardship Strategy
document.

38. cll12-8911625-244371.pdf (sec.gov) We have been signatories to each annual version of this statement
since it was first issued.
39. s71022-20131610-301983.pdf (sec.gov)
40. https://www.osc.ca/sites/default/files/2022-01/com_20220117_51-107_kanzera.pdf

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 2 5 -PILLAR 3 – RESPONSIBLE BUSINESS CONDUCT
We believe that business conduct impacts the value and reputation of companies in which we invest.
Our Responsible Business Conduct Policy, discussed earlier, outlines our expectations of companies
and our approach to those that do not meet them. It sets out the conditions under which we will
invest in specific sectors and guides our screening requirements and related stewardship activities.
These criteria are based on international conventions and regulations, BNP Paribas CSR Policies andvoluntary industry standards. In each sector, we highlight mandatory responsible business conduct
requirements that must be met by issuers for us to include a company in an actively managed
portfolio. In addition to the compulsory standards, we have developed criteria that we encouragecompanies to comply with, which provide us with a good framework for further analysis and dialogue
with companies. Finally, we have a set of policies that commits us to excluding certain sectors or
activities when we deem them to be in violation of international norms or causing unacceptable
harm to society or the environment, without counterbalancing benefits. These are generally sectors
where engagement makes little sense.

Coal

Commitment # 3: Exit Coal

We will exclude mining companies that do not have a strategy to exit thermal coal
activities and power generators that still have coal capacity in their generation
mix in 2030 in European Union and OECD countries, and by 2040 for the rest of
the world.
In 2020, BNPP AM introduced significant updates to its RBC policy, which brought into effect a
restrictive approach to coal investing. The goals are to manage stranded asset risk while improving
the climate profile of our holdings and avoid financing the most climate-damaging activities. The
RBC policy addresses companies engaged in mining thermal coal and using thermal coal to generate
electricity, and we have progressively strengthened our coal policy since its inception.
BNPP AM excludes mining companies that meet any of the following criteria:••••

Developing or planning to develop thermal coal extraction capacities (new mines or expansionof existing ones)
Deriving more than 10% of their revenues from the mining of thermal coal
Producing more than 10 million tonnes of thermal coal per year
Lacking a strategy to exit thermal coal activities.

BNPP AM excludes power generators that meet any of the following criteria:••

Adding operational coal-fired power generation capacity to their power portfolio
Having a carbon intensity above 420 gCO2/kWh. This exclusion will be further tightened following
the trajectory for the sector as determined by the IEA’s Sustainable Development Scenario (SDS).
This means power generators’ carbon intensity will need to fall to 346 gCO2/kWh by 2025, orthey will be excluded from our investment portfolios.

In addition to the above, we will systematically exclude any power generators that still have coalcapacity in their generation mix in 2030 in European Union and OECD countries, and by 2040 for the
rest of the world.
By construction, our holdings41 in the power generation sector track the SDS scenario for power
generation, and our overall exposure to coal power production is limited. As we do not havescientific benchmarks based on activity metrics for mining companies, we have selected thresholds
we believe are strict enough to reduce our overall exposure to coal mining. We have been reducing
the threshold over time and will continue to do so. Our coal exposure should be zero by 2030 for
European Union and OECD companies and by 2040 for non-OECD companies.

41. Note, per our ESG Integration Guidelines, our RBC policy applies to all actively managed BNPP AM Funds,
and has become the default for mandates. We are engaging with existing clients to seek permission to
apply the policy to existing mandates (although mandate clients do have the ability to opt out of the RBC).
The RBC is progressively applied to index funds, JVs and former Affiliates although some exceptions apply.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 2 6 -In 2021, the IEA published a report on how to transition to a net zero energy system by 2050aligned with 1.5°C. Exhibit 11 shows that for electric power generation, this scenario implies a sharp
reduction of the carbon intensity of electricity generation as against the SDS scenario (-42% by 2030
and -29% by 2025).
Exhibit 11: IEA SDS vs. net zero energy scenarios – Global carbon intensity of electricity generation
500

gCO2/KWh

400
300
200
100
0

2020

2021

2022

2023

2024

2025

World NZE

2026

2027

2028

2029

2030

World SDS

Source: IEA 2021

As can be seen in Exhibit 12, current pledges by countries are not consistent with bringing power
generation to net zero emissions by 2050. It also highlights that there are significant, distinct
regional differences in current emissions trajectories or – put more simply – some regions havemore work to do than others to get to net zero.
Exhibit 12 - Carbon intensity of electricity generation in selected regions in the announced pledges
scenario 2000-2040
900
800
700
600
500
400
300
200
100
0
-100

2010

2012

2014

2016

2018

2020

2030

World APS

China

India

United States

European Union

World NZE

2035

2040
Southeast Asia

Notes
APS = Announced Pledges Scenario. NZE = Net Zero Scenario. Regions show APS.
Source: IEA 2021

For the time being, we do not plan to change our policy to use the net zero energy benchmark
for power producers. Our near-term priority is to align our investments in other sectors not yet
addressed and to align our portfolios in general, beyond power production. We will revisit thisoption once this wider alignment work has been undertaken in other high carbon-intensive sectors.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 2 7 -Unconventional oil & gas
The rapid increase in the number of unconventional oil & gas projects has a significant impact not
only on climate change, but also on ecological integrity, as these projects operate in increasingly
difficult or sensitive areas. Some of this risk can be mitigated by implementing best practices, anarea we will focus on when investing in these types of companies. However, some areas are so
sensitive that operations should cease. To that end, we have exclusions and mandatory criteria
in place for companies with significant involvement in the exploration, production, trading and/or pipeline distribution of shale oil or gas, oil sands, and other oil & gas resources, especially insensitive areas. We have recently strengthened our policy on unconventional oil & gas and on
particularly sensitive areas in terms of climate and biodiversity, namely the Arctic and Amazon
regions. More information is available in our Responsible Business Conduct Policy.

Deforestation
Deforestation is a primary driver of the release of GHG emissions, with the greatest deforestation
occurring in the humid tropics. Our RBC Policy contains sector-specific investment criteria to help
reduce the impact of deforestation, specifying standards for activities associated with palm oil andpulp and paper production. In addition, we have set targets for relevant companies in our portfolios
to comply with No Deforestation, No Peat and No Exploitation (NDPE) commitments for palm oil,soy, paper, timber and beef producers, as well as NDPE commitments from companies operating in
mining, metals and infrastructure. These evaluation criteria drive our engagement activities withcompanies that we believe can be leaders in championing those standards within their sectors.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 2 8 -PILLAR 4 – FOCUS ON THE FUTURE: THE 3ES – ENERGY TRANSITION TO A LOW-CARBONECONOMY, ENVIRONMENTAL SUSTAINABILITY, EQUALITY & INCLUSIVE GROWTH
We believe a better world is one that has an economic model underpinned by a successful energy
transition, that is more environmentally sustainable, and that has more equitable and inclusive
practices. Together, these ‘3Es’ represent the pathway to the economic sustainability that enables
us, as investors, to safeguard long-term returns.
With respect to net zero, these three themes are closely interlinked. While it is obvious that theenergy transition is key to addressing environmental challenges, we also need to consider social
factors to ensure that equality and inclusive growth are addressed. Enabling such a ‘just transition’will require a multi-pronged and multi-stakeholder approach. We have seen the concept of the justtransition used to support a more gradual transition than the science tells us is necessary. But webelieve the greatest threat to low-income and under-represented communities globally is climatechange, and we must find a way to transition rapidly to a low-carbon economy in a just manner.

Energy transition to a low-carbon economy
As highlighted earlier, the science is unequivocal, and the evidence is growing ever stronger: Climaterelated risks are greater and impacting the global economy more rapidly than previously thought.
‘Energy transition’ – the term now widely used to describe the structural shifts that are occurringin the global energy system – is a critical part of the response to climate change. Energy-related
emissions and those associated with industry, transport and buildings account for around 75% of all
GHG emissions and have continued to grow from year to year. That is why these sectors are central
to achieving the transition to a net zero economy.
As the International Energy Agency recently highlighted, energy-related CO2 emissions rose to arecord 36.3 gigatonnes in 2021 due to the rapid economic recovery from the pandemic, reversing
the slowdown the year before. The war in Ukraine has further increased usage of coal in somejurisdictions to offset the loss of Russian natural gas supplies, at least in the short term. While theseare setbacks for climate mitigation, we now more than ever need to harness the four main driversof the energy transition:-1Public policy

-2-

-3-

-4-

Technology

Changing investor
and consumer
preferences

Geopoliticalconcerns

These four factors operate in a feedback loop, so the energy transition will likely intensify andaccelerate over the next decade. The transition is an opportunity in the short, medium and longterm to boost growth, both from increased investment in the low-carbon economy and by fostering
innovation and technological progress. In the long run, we believe this is the only plausible growth
we can aspire to and those who do not adapt will be left behind. We aim to make a substantive
contribution to this transition.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 2 9 -Our approach to the energy transition incorporates the notion of a ‘just transition’ to ensure that theshift will be inclusive and responsive to the needs of displaced workers, poorer communities, andthose communities and regions in the world most affected by the impact of a changing climate (thisaligns with our thematic pillar, ‘Equality and inclusive growth’.

Environmental sustainability
Human society and the global economy are inextricably linked to water, land, biodiversity, forestsand minerals. Once considered inexhaustible, these critical resources and ecosystems are now under
severe pressure from current rates of consumption as a result of both population and unsustainableeconomic growth and operational models.
The rate of environmental degradation is outpacing the planet’s ability to absorb the damage.
Scientists estimate that humans use as many ecological resources as if we lived on almost two
Earths42. Misuse, on top of overuse, coupled with pollution and contamination are only worsening
the condition of the air, water and soil. It is estimated that 60% of global ecosystem services aredegraded or are being managed unsustainably43.
We now know that we should target 1.5°C as an absolute cap on global average temperature
increases. Limiting temperature rises to 1.5°C rather than 2°C could reduce the number of species
being lost due to climate factors44. There are, however, different ways to get to the 1.5°C target,
and the path we choose will have different implications for society and biodiversity45. If we wereto achieve 1.5°C at the expense of biodiversity, we would have redefined the term ‘Pyrrhic victory’.
In 2009, the Stockholm Resilience Centre introduced the planetary boundaries concept, which focuseson the nine systems that regulate the stability of the Earth46. They have found that six out of nine
planetary boundaries have now been crossed: Climate change, biosphere integrity, land-system change,
biogeochemical flows (phosphorus and nitrogen), pollution from ‘novel entities’47 and freshwater48.
Renewable and non-renewable natural resources are also under severe threat. When we cross aplanetary boundary, we enter an area of high uncertainty and increasing risk as the interactions ofland, ocean, atmosphere and life provide the conditions upon which human societies depend.
Unless we act immediately and radically to reverse the situation, not only will we destroy our natural
capital, but we will be unable to sustain current economic growth rates and the prosperity levels
that the populations in developed countries enjoy, let alone extend them to developing nations. Andagain, as with climate change, those populations that are the most dependent on environmental
resources – which tend to be the poorest – will be the first to suffer.

42. WWF (2022), Living Planet Report, https://www.wwf.org.uk/our-reports/living-planet-report-2022
43. Millennium Ecosystem Assessment (2005), Ecosystems and Human Well-being: Synthesis, Island Press,
Washington, DC, www.millenniumassessment.org/documents/document.356.aspx.pdf.
44. “Several factors determine species range. Climate is one important factor. For example, polar bears (Ursus
maritimus) travel on sea ice, so the limit of their range is determined by the amount of sea ice that forms
in the winter. Many species of cacti and other succulent plants are adapted to live in very hot, dry climates.
They cannot survive in areas with lots of rainfall or long periods of cold.” For more information, please see
www.nationalgeographic.org/encyclopedia/species-range/ and Smith P. et al. (2018), Impacts on terrestrial
biodiversity of moving from a 2°C to a 1.5°C target, www.ncbi.nlm.nih.gov/pmc/articles/PMC5897827/.
45. The IPCC has outlined four pathways to 1.5°C, three of which would allow higher emissions today in exchange
for some form of carbon capture and storage later. While these approaches may be tempting to policymakers
looking to lessen the immediate economic consequences of a rapid transition – a worthy objective in keepingwith our commitment to a just transition – the ecological consequences are unacceptable. See IPCC (2018),
Global Warming of 1.5°C, https://www.ipcc.ch/sr15/.
46. Steffen, W. et al. (2015), “Planetary boundaries, guiding human development on a changing planet”. Moreinformation available on the Stockholm Resilience Centre’s webpage: https://www.stockholmresilience.org/
research/planetary-boundaries.html
47. Outside the Safe Operating Space of the Planetary Boundary for Novel Entities | Environmental Science &Technology (acs.org)
48. Stockholm University:https://www.stockholmresilience.org/research/research-news/2022-04-26-freshwaterboundary-exceeds-safe-limits.html

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 3 0 -Equality and inclusive growth
Climate change is a significant driver of inequality, hitting vulnerable populations the most andreversing hard-won development gains49. It is critical to scale up investment in adaptation andresilience to ensure that the shocks of climate change do not disproportionally affect certain
segments of society. This entails a stronger focus on the needs of populations most affected byclimate change, granting them access to the tools they need to adapt and cope with climaterelated disasters. Disaggregated data on the anticipated local impacts of climate change and on
the potential socio-ecological effects of responses to climate change (e.g., maladaptation risk) is aprerequisite for effective and just climate action.
Environmental sustainability and inclusivity go hand-in-hand. Limiting temperature rise is the best
preventive measure to address serious social challenges, not least to reducing poverty, conflict andmigration and to preserving the livelihoods of hundreds of millions of people. The loss of biodiversity
will affect people living in poverty more because they depend more directly on natural capital given
their limited ability to purchase, for example, food, medicines and insurance50.
The shift to a zero-carbon and environmentally sustainable economic model is necessary, considering
what is at stake, and there is little doubt about the important economic and social benefits that thetransition can deliver. A report of the New Climate Economy, for example, concludes that low-carbon
growth could deliver economic benefits of USD 26 trillion by 2030 and generate over 65 million new
low-carbon jobs51. We believe investors will have a key role to play in enabling a just transition to
low-emission, climate-resilient economies.
However, and given the urgency to act, it will not come without a cost. There will be companies
and sectors that will experience significant disruption, which if not well managed could bring
unemployment and economic depression.
We investors can play a critical role by ensuring that the social dimension is well integrated
into our investment analysis and decision-making, and in our engagements with companies andpolicymakers. We are committed to bringing the Environmental and Social dimensions together, andto taking action to support the just transition by integrating workforce and social dimensions into
our climate practices52.
In most countries, going solar is now cheaper than building new coal power plants. Clean energy
investments drive economic growth, with the potential to create 18 million jobs by 2030, evenallowing for the inevitable fossil fuel job losses. Clean energy is also less expensive once built,
lowering costs for consumers and industry in the medium to long term.
In considering our approach to these three challenging topics, we have a range of tools at hand, key
ones being investment, divestment, stewardship and integration.

AVOID HIGHEST CARBONINVESTMENTS

ENGAGE COMPANIESTO MAKE THE TRANSITIONOVERWEIGHT LOW CARBONINVESTMENTS AND CLIMATE
SOLUTIONSSUPPORT NET ZERO POLICY IMPLEMENTATION

49. OECD (2018), “What does it mean to leave no one behind?”, in Development Co-operation Report 2018 : Joining
Forces to Leave No One Behind, OECD Publishing, Paris, https://doi.org/10.1787/dcr-2018-8-en.
50. Dylies R. et al. (2011), “Biodiversity and Poverty: Ten Frequently Asked Questions – Ten Policy Implications”,
International Institute for Environment and Development (IIED), London, https://www.iied.org/14612iied.
51. New Climate Economy (2018), Unlocking the inclusive growth story of the 21st century, Washington DC, https://
newclimateeconomy.report/2018/.
52. New Climate Economy (2018), Unlocking the inclusive growth story of the 21st century, Washington DC, https://
newclimateeconomy.report/2018/.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 3 1 -

•

•
•
•

We can integrate our knowledge and perspectives on the ‘3Es’ into investment processes acrossasset classes (Pillar 1). This optimises our ability to make well-informed decisions – particularly
in a world with imperfect information and varied levels of knowledge – thus helping to protect
and enhance investment outcomes for clients.
We can exercise investor stewardship (Pillar 2) – through our proxy voting and engagement
activity with companies – and via our discussions with policymakers, regulators and governments.
We can divest from companies that we believe to be at risk from inevitable structural changes(Pillar 3), and whose behaviour is too much at variance with our own beliefs and investor
preferences.
We can invest in the companies and sectors that are part of the solution, encouraging their
growth and benefiting from their success through our allocation of capital (Pillar 5).

These steps will allow us to optimise our portfolio-level decisions, help shape the debate and alignour investments with net zero.

Articles on BNPP AM Viewpoint blog
explore the intersection between the “3 Es” and net zero

Energy security concerns highlight the needto move faster on decarbonisation
Rapid energy price rises and concerns about
energy security following Russia’s invasionof Ukraine mean that transitioning to net
zero has never been more important.
READ THE FULL ARTICLE

To reach net zero, overhaul the built environment
Buildings account for over a third of global
energy-related CO2 emissions. Focusing
on reducing these – both operationaland embodied emissions – represents asignificant opportunity for investors overthe next decade.
READ THE FULL ARTICLE

Investment in nature-based solutions will
be key to net zero
Forests are central to the global carbon cycle, acting as the Earth’s lungs by removing
and releasing CO2 in tune with the waxing
and waning of the seasons.
READ THE FULL ARTICLE‘Greenflation’ – Navigating the climate policy, oil price and inflation nexus
Given the relationship between climate
policies, oil prices and inflation and the
difficulties in managing inflation throughinterest rate policy, it is worth taking acloser look at the dynamics involved.
READ THE FULL ARTICLE

What links climate change, biodiversity loss
and gender?
An effective response to the twin problemsof climate change and biodiversity loss
must also be grounded in improving genderequality.
READ THE FULL ARTICLE

To address climate change, we need toaddress social inequality
Two of the largest challenges society faces
today – climate change and social inequality– can benefit from a joint approach,particularly as investors may have tonavigate enhanced regulation in both.
READ THE FULL ARTICLEC O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 3 2 -PILLAR 5 – SUSTAINABLE INVESTMENT SOLUTIONS

Commitment # 4: Invest in climate solutions

Substantially increase our climate and environmentally themed investments.
We believe that sustainable thematic investing can contribute to the net zerotransition by investing in companies that facilitate it. We aim to substantially
increase our climate and environmental-themed investments. Today, BNPP AM is
one of the leaders in sustainable thematic investment, with more than EUR 21.4
billion in sustainable thematic funds that focus on environmental, climate andsocial themes. Separately, we manage more than EUR 13.7 billion in Paris Aligned/
Climate Aligned Benchmark, Low-Carbon and Fossil-Free funds.
As of today, 90% of global GDP and 85% of the world’s population have committed to some sortof carbon neutrality53. However, one of the biggest challenges facing net zero is the fact that theeconomy is largely not net zero aligned. Accordingly, achieving this goal will be economicallydisruptive for some industries and, in these cases, radical changes to business models may benecessary. It will also be disruptive for the investment industry, which will increasingly need toaccommodate new methods of investing to account for the environmental and social impact of
portfolios. The urgency and extent of the climate crisis warrant this disruption and we believe that
achieving net zero is realistic – indeed economical compared to fossil fuel alternatives – even withexisting technologies.
While the transition to a low-carbon economy creates many risks, it also generates significant
opportunities, which forward-looking investors may capture by investing in existing technologies –e.g., wind and solar projects, developers or manufacturers – or by financing new technologies that
can accelerate the necessary disruptions – e.g., clean tech, venture capital or small-cap pure play
innovators.
The Energy Transitions Commission estimates that to develop these technologies and others not
explored here, including bioenergy to decarbonise aviation, heavy goods transport, buildings andagriculture, will require investment of between USD 1 trillion and USD 2 trillion a year. In addition,
the cost of climate adaptation is estimated to reach up to USD 300 billion a year in 2030, comparedto the USD 30 billion invested in 2017–2018. To date, just 1.6% of this is coming from private sources.
There is a clear call to action for private investors to move money flows toward climate solutions suchas greater energy and water efficiency, the large-scale use of clean hydrogen, precision irrigation andcarbon capture. Our product range already includes strategies seeking to invest in climate opportunities
and we will continue to innovate and provide investment solutions to our clients.

Our existing solutions
At BNPP AM, we aim to provide our clients with sustainable thematic solutions focused on addressing
climate change, and we will continue to develop our investment range in line with our net zerocommitment. We offer these investment solutions to tackle climate change.

Equity (Environmental Strategies)

The Environmental Strategies Group invests in companies globally whose products or services
directly contribute to solving climate change, aiming at both reducing CO2 and other GHG emissions
as well as protecting and restoring our natural capital and ecosystems. The group manages about
USD 4 billion across four funds, three of which focus on climate solutions:•

BNP Paribas Energy transition strategy: This long-only strategy invests in the energy transition
opportunity arising from increased energy demand, a changing energy mix and the need forenergy-efficient solutions to address climate change.

53. Source: Net Zero Tracker, as at January 2022. Progress Tracking – Net Zero Climate

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 3 3 -•BNP Paribas Environmental Absolute Return Thematic (EARTH) strategy: This long/shortstrategy takes long positions in the most promising and innovative companies globally within
the energy, materials, agriculture and industrials markets that are providing solutions toenvironmental challenges. These are paired with short positions in companies with unsustainable
or technologically inferior business models vulnerable to transition risk. Short positions are usedboth to hedge long positions and as a source of alpha, while increasing the cost of capital forcompanies failing to address environmental challenges.

•

BNP Paribas Emerging Climate Solutions: This long-only equity strategy invests in companies
providing environmental solutions for the sustainable management of land, water, energy,
manufacturing and transport in emerging economies.

We plan to further grow our range of environmentally-themed active equity strategies, in addition
to embedding climate and net zero considerations across other equity strategies.

Fixed income

Green bonds have grown and matured as a fixed income segment over the past decade. The needfor climate action has spurred a raft of green projects and activities that combat climate change andother environmental challenges and seek to contribute to a net zero world.
BNPP AM’s Sustainability Centre has developed a proprietary methodology for analysing green
bonds that integrates in-depth financial and extra-financial analysis to identify such bonds. This
process ensures that these investments have a concrete positive impact in combating climatechange by checking when they are issued and one year afterwards whether the issuer has met theircommitments.
Our BNP Paribas Green Bond strategy invests in global green bonds supporting environmental
projects, issued by corporates, supranational agencies, local entities and governments in hardcurrencies. The fund is included in our impact fund range and in our annual Operating Principles for
Impact Management report54.
More recently, we launched a Sustainable Asian Cities fixed income strategy designed to target
opportunities for enhancing urban mobility, incorporating low-carbon elements, improving basic
infrastructure to help cities operate and thrive, and improving their resilience to extreme weather
events.
We will continue to further develop our climate fixed income investment solutions.

Passive solutions

BNPP AM ranks among the biggest ESG ETF (exchange-traded fund) providers in Europe. Over theyears, our ESG expertise has been developed through a strong collaboration between our investment
managers, our Sustainability Centre and external index providers.
We build customised solutions either completely in-house (ESG/climate-optimised portfolios basedon a standard index using our proprietary ESG scores and carbon data) or with an independentindex administrator, whereby we match the index solutions with our ESG/climate requirements or
those of our clients. We have a range of innovative approaches – including having launched the firstlow-carbon ETF in 2008. More recently, in addition to the socially responsible investment criteria
already applied, ETFs and index funds tracking the MSCI SRI S-Series 5% Capped range have adopted
the characteristics of Paris Aligned Benchmarks. As a result, we were managing EUR 9.2 billion in
PAB and Climate Transition Benchmarks (CTB) passive funds, representing around 40% of our BNP
Paribas Easy funds range (as at the end of June 2022).
We will strengthen and develop our ESG range with new indexation and apply the new climate
framework defined by the Technical Expert Group of the European Commission to some of ourexisting index funds and ETFs. Overall, we are aiming to expand our BNP Paribas Easy range of ESG
indices across all asset classes.

54. Available here: E6CD2ACB-4368-4B76-8E46-A3CD84968ED7 (bnpparibas-am.com).

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 3 4 -Private assets markets
Through our investments in private markets, we invest in companies, infrastructure projects andreal estate assets which contribute to the transition to a low-carbon economy. Our team helps
companies engaged in the reduction of their emissions by providing them with financial support.
The infrastructure investment team finances projects that contribute to climate change mitigation,
which includes renewable energy, green mobility and energy-efficient utilities. A systematic climate
impact assessment of our real asset investments is undertaken in partnership with an independent
expert (Iceberg Data Lab). Its external analysis helps us measure the carbon footprint, avoided
emissions, temperature trajectory as well as the Net Environmental Contribution (NEC) of individual
investments.
We are in the process of developing a positive impact investment solution that will target climatechange mitigation by investing in real assets that are aligned with the requirements of the EU
Taxonomy, with a minimum NEC threshold and a positive avoided emissions profile.

Partnering with our clients to align their portfolios to net zeroCommitment # 5: Client engagement

Engage with our clients to transition towards net zero investing.
Each group of stakeholders has responsibilities in our collective race towards net zero, and in ourinterconnected financial system, the action of one group can be amplified or hindered by others.
Working collaboratively with different stakeholders is thus essential if we want to have a net zeroeconomy by 2050, and so, as part of our net zero commitments, we will partner with clients on their
net zero goals. We will engage with clients and encourage them to join us in our efforts to reach net
zero financed emissions by 2050. This engagement will take several forms. We will:
•
•

•

•

Communicate regularly with clients about our net zero strategy, firstly through this dedicatedroadmap, and we will send periodic updates on new developments and progress on our net zerojourney.
Provide our clients with a range of education and training tools, notably via our Investment
Academy. Created in 2009 with the purpose of sharing knowledge and expertise with clients,
Investment Academy classes have been delivered online and in-person, with over 15 000 people
attending since inception.
Publish thought leadership pieces on climate change and net zero topics throughout the year –articles, podcasts and videos on our Viewpoint blog. We will also produce brochures, videos andclient events designed to enable clients to understand the challenges and opportunities offeredby aiming for net zero.
Further develop climate & environmentally themed investment solutions for retail clients. We will
also work with institutional clients to provide them with tailor-made climate & environmentally
themed investment solutions so they can align their existing and new portfolios toward net zero.
We will work on developing metrics enabling clients to assess the net zero alignment of theirportfolios.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 3 5 -Partnering with a client to allow them to reach their net zero goal
In 2021, we worked with one of our clients to reorient one of their dedicated portfolios toinclude a strong focus on physical risks associated with climate change and to align theportfolio to net zero.
The portfolio was initially investing in European equities according to a “best in class”
approach, favouring companies with the best sustainability ratings within each sector.
To restructure the fund, criteria defined by the European Paris Aligned Benchmark (PAB)55
standard were integrated into the investment process of the dedicated fund. The eligibilityof the underlying companies was assessed by analysing their climate ambition and theirclimate performance using a proprietary approach. The portfolio was then constructed inaccordance with the PAB standard, which requires a reduction in the carbon footprint fromthe initial investment universe of 50%, an annual carbon footprint reduction of the portfolio
of 7%, a ratio of green shares/brown shares of the portfolio significantly higher than theinvestment universe, and exposure to sectors that contribute the most to climate change – atleast equivalent to the exposure from the original universe.

55. This standard imposes strict requirements, namely the exclusion of companies that derive at least 1% of
their turnover from the prospecting, extraction, distribution or refining of hard coal and lignite; companies
that derive at least 10% of their turnover from liquid fuels; companies that derive at least 50% of their
turnover from gaseous fuels; companies that derive at least 50% of their turnover from electricity production
activities with a GHG emission intensity greater than 100 g CO2 e/kWh.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 3 6 -PILLAR 6 – WALKING THE TALKWe believe that ‘walking the talk’ is critical to achieving excellence. As a sustainable asset manager,
our corporate practices and disclosures should match or exceed the standards we expect from theentities in which we invest. Not only will this reduce our negative impact on society, it helps build aculture that is consistent with our investment philosophy. We believe that immersing employees in amore sustainable work environment will help them to more authentically incorporate sustainability
principles into their day-to-day activities, whether that is in investments, sales or operational roles.

Commitment # 9: Reduce our operational footprintContinue to offset our operational emissions, while we improve energy efficiency
and increase the use of green energy.
As a services business, our operational impact on the environment is relatively limited comparedto other industries, but this does not minimise our obligation to take concrete measures to reduce
our footprint. Our Corporate Social Responsibility approach has four main thrusts, one of which is along-term goal of reducing our absolute emissions. We call this Mission Zero.
We have a three-pronged strategy to achieve this goal, in order of priority:
1.
2.
3.

Reducing our emissions through improvements in our operations
Buying green energy where possible
Offsetting any remaining residual emissions through offsets.

Don’t miss the forest for the trees:
The impact of operational emissions for financial services firms
All organisations must do what they can to minimise their emissions and bring them in linewith the goals of the Paris Agreement. For financial services companies, this means not
only focusing on operational or direct emissions, but also on indirect emissions related tothe companies they finance or invest in. A recent study by the CDP found that indirect, or
financed emissions, are on average over 700 times greater than direct emissions. This is why
we have committed to aligning our investment portfolios to a net zero pathway.

Mission Zero
Our long-term goal is to reach net zero within our operations. As a services company, our emissions
from our operations stem primarily from offices, IT operations, business travel and employee
commuting, and to a lesser extent, the production of waste.
We have implemented several energy efficiency initiatives within our offices, and this has resulted
in the consistent reduction in the emissions intensity of our footprint. Seven of our eight largest
offices, encompassing about 80% of our operations, are powered by green or low emissions energy.
We are currently reimagining our workspaces and moving to a flexible working environment where
employees may choose to work from home or the office a number of days. We will require less officespace to do this, reducing our footprint, and where we move offices, we will continue to prefer green
certified office space.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 3 7 -As with many other industries, digitalisation is transforming how we do business and has becomea key enabler of our business strategy. The digital sector accounts for 4% of GHG emissions, which
is more than the civil aviation sector, and its emissions are expected to double by 2025. Beyond
this role in contributing to climate change, the production and disposal of digital equipment isassociated with harmful impacts on our biosphere that we can no longer ignore. As a results, we aretaking a holistic approach to reducing the environmental footprint of BNP Paribas’ digital operations
by looking at equipment and infrastructure, data and applications. Examples of IT initiatives at BNPPAM and Group level include:••••

Engaging and working with our top 25 IT suppliers to communicate our environmental goals andupdating contracts accordingly
Closing old data centres and streamlining them into state-of-the-art facilities with improved
cooling technologies that reduce the use of primary resources by up to 50%
Developing partnerships such as BNP Paribas 3stepIT to ensure better reuse and recycling of ourold IT equipment (in France in 2019, 160 tonnes of equipment was repurposed, and another fivetonnes were recycled through certified facilities)
Running communications campaigns with employees on the role we can all play in reducing theimpact of digital activity.

Business travel and employee commuting are also significant drivers of our emissions. The pandemic
has taught us that we can adopt new ways of working that require less travel and commuting. While
this still presents many challenges – increasing the use of digital tools and accounting for emissions
as a result of employees working from home – our hope and plan is that this leads us to emissions
reductions compared to our pre-2020 modus operandi.
Finally, we expect waste reduction initiatives to lower our operational emissions. In 2019, we
undertook a waste audit at our headquarters in Paris, where about half of our workforce are located.
The results show that we currently have a recycling rate of 35%. This provided us with an action
plan and a baseline to achieve our long-term goal of diverting 100% of our waste. Recognisingthat we will need transformative change to realise our ambition, we established the Mission ZeroCouncil to bring together key stakeholders to help us achieve our goal. The council meets quarterly
and includes our facilities and procurement teams, our property manager, and the food services
company managing the cafeteria facilities at head office. Together, we are implementing the multiyear action plan that came from the audit. Initiatives include switching from single-use plastic,running paperless competitions and establishing recycling streams for specialised waste such as
coffee capsules, cigarette butts, lightbulbs and other electronic waste.

Employee engagement
Our employees are the key to our sustainable transformation and the implementation of our net
zero goals. To help employees embark on our mission, we provide them with training, awarenessraising initiatives and resources related to climate change and net zero.
We have brought in external scientists to speak directly with investment teams, offer general allemployee talks, and provided specialised training for interested members of the media. We havereleased internal and external educational videos on the topic, and we leverage content developedby BNP Paribas.

BNPP AM employee training

We are investing significantly in ensuring that our investment staff and other key employees havethe most current knowledge on sustainability issues and sustainable investment:••

88 employees have passed a sustainable finance certification programme from recognised
external entities: UN PRI, EFFAS, FSA or the CFA, such as the CFA Certificate in ESG Investing.
Sustainability was the central theme of our annual internal three-day Investment Symposium in
2021, which focused on how it can be further integrated and used within our portfolios. A hostof external experts held discussions with our investment and sales teams on the transition toa new economic model, identifying trends that contribute to a more sustainable and inclusive
world.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 3 8 -

•
•
•

•

We have embedded sustainability in our FAME (Financial & Asset Management Expertise) training
curriculum and our Demystification series designed for a wide range of employees.
We continue to roll out our online training videos on sustainable investment, available to all
staff. The videos, or micro-nuggets, range from six to 10 minutes in length so they can be readily
watched, and employees have so far completed more than 2 390 hours of this training.
17 employees have completed an internal certification programme developed by BNP Paribas
with the University of Cambridge’s Institute for Sustainable Leadership (CISL). The CISL Positive
Impact Business Certified Training is a 7.5-day course, delivered online in 2021, over threemonths and tailored to sustainability and finance. On completion, graduates became Positive
Impact Pioneers, a community of internal sustainability experts who develop projects that drive
positive impact within the organisation.
We held internal sessions for employees on sustainability topics including regulatory changes,
the circular economy, climate change and impact investing. Activities included workshops withexperts, conferences with scientists and the Group’s We Engage platform.

As at December 2021.

Remuneration
We have significantly tightened the alignment of our Remuneration Policy with our sustainability
goals over the past few years, integrating sustainability with performance assessments, financial
rewards and the professional development of our employees.
Analysts and portfolio managers set performance goals related to integrating ESG factors into theircompany, asset and sovereign evaluations and investment decision-making processes. Successfully
implementing our ESG Integration Guidelines – including beating the related universe or benchmark
on carbon footprint and ESG scores, which incorporates factors related to climate and net zero –is a key performance goal of our Chief Investment Officers and investment teams. As we continue
to implement our net zero approach, we will look at how these can be further incorporated in therelated targets and key performance indicators (KPIs), and in our remuneration philosophy.

ReportingCommitment # 10: Report on progress

We will produce TCFD-aligned reporting, both by contributing to the BNP Paribas
TCFD report, as well as by including a TCFD-aligned section in our annual
Sustainability Report.
As a leading financial institution, we are a firm believer in good governance, transparency andextensive reporting, which we expect from both the companies we invest in and ourselves.
Transparency is an essential element of good stewardship practice and a necessary step towards
a sustainable financial system. We expect companies to disclose their practices and performance,
so that we can engage in well-informed discussions with them. At the same time, clients and otherstakeholders need, and are entitled to, information on our sustainability policies and practices. That
is why we are committed to reporting on a regular and consistent basis.
••

On an annual basis: We publish a Sustainability Report, Stewardship Report, Voting Report andPrinciples for Responsible Investment (PRI) Transparency Report to provide an overview of oursustainability-related activities for the year. We contribute to the Group’s annual report and TCFD
report. We are producing additional reports to comply with local requirements – for example, we
produce a report in line with the French law on Energy and Climate56.
On a monthly basis: We generate portfolio reports and fund factsheets that include ESG metrics
such as the carbon footprint, the ESG score and the ESG contribution of portfolios versus
benchmarks.

We will continue to work on improving our climate and net zero reporting capabilities.

56. Effective from this year, Article 173 was replaced by the new decree under Article 29 of the French law on
Energy and Climate.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 3 9 -Conclusion
The scientific evidence that has accumulated over recent years highlights the urgent need tobend down the GHG emissions curve and get the economy on track for net zero by 2050. This
document presents BNPP AM’s inaugural NZAM commitments, outlining how we will get there.
These commitments build on the work that we have undertaken over prior years, from measuring
and reducing the carbon footprint of portfolios to integrating climate in our ESG scoring framework,
using our voting rights actively and engaging with the biggest contributors to climate change, andproviding clients with a comprehensive range of climate-oriented investment solutions.
Over time, we aim to increase both the amount of our AUM included in our net zero commitment andto strengthen our targets to ensure we achieve this aim. We look forward to keeping you informedof our progress and count on working with our clients, the companies in which we invest, GFANZ(including NZAM) peers and governments around the world in achieving mission critical: A net zeroeconomy by 2050.
Exhibit 13 – BNP Paribas Asset Management’s climate roadmap

2025

Sign the Net Zero AssetManagers Initiative
Set 2030 portfolioalignment target

Corporate
Funds carbon
footprint
reduction:-30% vs 20192021-2022

First NZ Milestone

2050

Launch Net Zero
Roadmap Tighten
our Coal Policy
Enhancement of our
Proxy voting policy
regarding climatechangeIntermediary
NZ Milestones
Revise NZ target
on a 5 year basis

2040
Net Zero Alignment
Target:100% of corporate
holdings achieving
NZ AAA

2023+

Investment:
Launch net zero products
Stewardship / Engagement :Vote, engage with companies and policy
makers towards the net zero ambition

Funds carbon
footprint reduction:-50% vs 2019

2030

Net Zero Alignment
Target:
60% of corporate
holdings NZ Achieving,
Aligned or Aligning(“NZ AAA”)

Source: BNP Paribas Asset Management, 2022

Putting our commitment into action
BNPP AM’s NZAM progress will be overseen through a formal governance framework, ensuring
appropriate supervision and oversight of our net zero commitment.
BNPP AM’s Sustainability Committee, chaired by the CEO, is responsible for the strategic
direction of sustainability-related topics, including our net zero commitments, which will be
reviewed annually. The Investment Committee, chaired by our Global Head of Investments,
oversees the implementation of these commitments and is responsible for the progress of thecompany towards net zero commitments at the asset class level.
The implementation horizon for the commitments in this roadmap is from 1 January 2022 to 1
January 2050. However, because the climate investment landscape is changing rapidly with new
scenarios, data and tools becoming available regularly, we expect to evolve the commitments
outlined in this report as we progress on our net zero journey. We commit to doing so transparently
and in the best interest of our clients. We will report annually on our progress.

Reach Net
Zero portfolio
emissionsC O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 4 0 -APPENDIX
Data sources for net zero alignment assessment
More information on the data sources used to assess companies’ net zero alignment:
•

•
•

•

•
•

Climate Action 100+ (CA 100+) is an investor-led initiative that collectively works to ensurethat the world’s largest corporate GHG emitters take the necessary action on climate change.
It provides a publicly available Net Zero Benchmark in which 167 companies’ net zero plans areassessed. Those companies account for over 80% of corporate industrial GHGs.
CDP is a not-for-profit organisation that analyses environmental questionnaires sent tocompanies. It is considered as a ‘golden source’ for climate-related data.
EU Taxonomy Regulation : The Taxonomy Regulation (EU) 2020/852 establishes the generalframework for determining whether an economic activity qualifies as environmentally sustainable
for the purposes of establishing the degree to which an investment is environmentally sustainable.
We selected Bloomberg as a vendor since this is in our view the provider offering the highest levelof compliance with the requirements of the Taxonomy Regulation and supplemental guidance
provided by financial regulators including the AMF. For more information see https://docfinder.
bnpparibas-am.com/api/files/0EE37EC2-8612-48A5-8AA1-D5C09CCB58DD
Science Based Target Initiative (SBTi) is a partnership between CDP, the UN Global Compact,
World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). It seeks to define andpromote best practice in emissions reductions and net-zero targets in line with climate science,
provides technical assistance to companies who set science-based targets and independently
assesses and validates companies’ emissions reduction targets. It provides a tool that allows
for comparison between companies’ reduction targets and hundreds of different IPCC climate
scenarios.
Transition Pathway Initiative (TPI) is a global, open-sourced initiative that assesses companies’
carbon performance against IEA scenarios based on operational intensity metrics and companies’
climate management quality based on publicly disclosed data.
United Nations Sustainable Development Goals (SDGs): The 17 SDGs are the closest thinghumanity has to a roadmap for achieving a sustainable future for all. Adopted by 193 countries in
2015, they outline an ambitious set of objectives to tackle all forms of inequality, end poverty andhunger and address climate change, whilst simultaneously encouraging economic growth. They
are based upon universal underlying principles that are applicable across geography and context.
Together with Matter, a Danish fintech, BNP Paribas Asset Management built SDG Fundamentals.
SDG Fundamentals is a dataset that enables investors to understand how their portfolios alignor misalign with the 17 UN SDGs and their targets by analyzing the revenue issuers generate
through their products and services. We integrate turnover aligned with climate-mitigationlinked SDGs into our NZ:AAA framework.

Glossary•••

Carbon footprint – To calculate the carbon footprint of a fund, we apply the standards of the
GHG Protocol to measure greenhouse gas (GHG) emissions. To calculate the carbon footprint,
companies’ CO2 emissions are added up and weighted by enterprise value and the companies’
weight in the portfolio. The resulting indicator measures emissions generated for each euro
invested in the fund57
Carbon offsetting – A carbon offset refers to a reduction in GHG emissions – or an increase incarbon storage, e.g., through land restoration or tree planting – that is used to offset emissions
that occur elsewhere. A carbon (offset) credit is a transferrable, certified instrument to represent
an emission reduction of one metric tonne of CO2. The purchaser of an offset credit can ‘retire’ itto claim the underlying reduction towards their own GHG reduction goals58
ESG – Environmental, social and governance criteria and standards applied to responsible
investing, but also business standards

57. Source: Measuring carbon footprints, www.bnpparibas-am.com/en/measuring-carbon-footprints/. Alsowatch the video at Introducing new ESG and carbon footprint reporting (bnpparibas-am.com)
58. Source: http://www.offsetguide.org/understanding-carbon-offsets/what-is-a-carbon-offset/

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 4 1 -

•

•
•

•

•
•

EU taxonomy – The official EU classification of economic activities and the conditions underwhich economic activities can be considered sustainable. lt aims to help investors, companies,
issuers and project promoters navigate the transition to a low-carbon, resilient and resourceefficient economy59
Greenhouse gases – Seven GHGs are included in the Kyoto protocol: Carbon dioxide (CO2),methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PCFs), sulphur
hexafluoride (SF6) and nitrogen trifluoride (NF3)4
Net zero – According to the IPCC60, in order to maximize our chance to limit global warming to
1.5°C above pre industrial levels by the end of this century, global net human-caused emissionsof carbon dioxide (CO2) need to fall by 45% by 2030 from 2010 levels and reaching net zeroaround 2050. “This carbon neutrality is reached when human activities result in no net effect on
the climate system. Achieving such a state would require balancing of residual emissions withemission (carbon dioxide) removal61.
Scope 1, 2, and 3 emissions – Emissions are broken down into three categories. 1: Directemissions from sources that are owned or controlled by the company. 2: Indirect emissions
linked to the company’s purchased or acquired electricity, heat, steam and cooling. 3: All otherindirect emissions, including those related to the use of its products4
SFDR – The Sustainable Finance Disclosure Regulation is part of a set of EU regulations seeking
to clarify which activities meet sound ESG criteria and what the impact of investments is on
stakeholders including the environment, society and people62
Technical Expert Group – The European Commission has set up an expert group on sustainablefinance to assist it in developing the EU taxonomy, an EU green bond standard, methodologies
for EU climate benchmarks, and guidance to improve corporate disclosure of climate-related
information. Members come from civil society, academia, business and the finance sector63

Relevant policies and reports
Policies and Strategies
Global Sustainability Strategy
ESG Integration Guidelines 2020
Stewardship Policy 2022
Public Policy Stewardship Strategy 2022
Governance and Voting Policy 2022
Responsible Business Conduct Policy 2021
Biodiversity roadmap
Reporting
Sustainability Report 2021
Voting and engagement report 2021
Impact Principles Disclosure Statement 2022
Voting report 2021
TCFD Report 2021
PRI transparency Report 2021

59. Source: Using the EU taxonomy as a guide to sustainable recovery (bnpparibas-am.com).
Further information https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/documents/200309-sustainable-finance-teg-final-report-taxonomy_en.pdf

60. Summary for Policymakers of IPCC Special Report on Global Warming of 1.5°C approved by governments— IPCC HYPERLINK: “https://www.ipcc.ch/2018/10/08/summary-for-policymakers-of-ipcc-special-reporton-global-warming-of-1-5c-approved-by-governments/”
61. IPCC - Glossary — Global Warming of 1.5 ºC (ipcc.ch) HYPERLINK “https://www.ipcc.ch/sr15/chapter/
glossary/”
62. Source: SFDR – Understanding and implementing it (bnpparibas-am.com)
63. Source: https://ec.europa.eu/info/publications/sustainable-finance-technical-expert-group_en

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 4 2 -BNPP AM climate performance – A snapshot
In 2020 and 2021, we requested an external data provider to run a climate analysis of our holdings
to help us assess and benchmark the effectiveness of our climate strategy. The analysis covered
all of BNPP AM’s holdings except cash & derivatives, a number of local joint ventures not yet fully
integrated into our investment platform (EUR 4.7 billion of AUM at 31/12/2020) and residual
positions. It addressed climate-related components: financed emissions, energy mix financed,
exposure to fossil fuels & stranded assets, and alignment with below 2°C pathways. The results
helped us to refine our approach and demonstrate the effectiveness of our climate strategy.
Some key findings62:
The analysis shows that we have marginal exposure to coal extraction, coal power generation andunconventional oil & gas extraction. Our limited exposure to fossil fuel-related revenue amounted
to just over 1% of total AUM and is concentrated around conventional crude petroleum extraction,
conventional natural gas extraction and natural gas power generation (as shown in Exhibit 14).
Exhibit 14: BNPP AM’s fossil fuel-related revenue exposure as a percentage of total assessed
portfolio AUM.

% of total assessed
portfolio AUM

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

Crude Petroleum and Natural Gas extraction

Tar Sands Extraction

Natural Gas Liquid Extraction

Bituminous Coal and Lignite Surface Mining

Drilling oil and gas wells

Support activities for oil and gas operations

Coal Power Generation

Natural Gas Power Generation

Petroleum Power Generation

Source: S&P Global, Trucost, BNP Paribas AM, 2021 (based on holdings at 31/12/2020)

62. As these measurements were undertaken by an external provider, they may not fully align with the net zeromeasurement approaches used elsewhere in this report and are provided for illustrative purposes only.

C O M M I T T E D TO C L I M AT E : O U R N E T Z E R O R O A D M A P - 4 3 -The power generation mix reflected in BNPP AM’s holdings is almost 60% fossil-free. As per Exhibit
15, this share is less than the share suggested in the 2°C scenarios developed by the International
Energy Agency for 2025 and in line with the share suggested by the IEA for 2030. The share of coal in
BNPP AM’s generation mix is well below the share for coal required to be in line with the 2025 and2030 in the 2°C scenario. (NB: the IEA Net Zero scenario was not available at the time this analysis
was undertaken and is therefore not featured).
Exhibit 15: BNPP AM’s holdings ‘s power generation mix
100%
90%
80%
70%
60%

7%
1%

25%

33%

2%
23%

0%

50%
40%

0%

18%

10%

3%

0%

16%

21%
2%

18%

15%
8%

6%

43%

5%

11%

15%

BNPP AM Aggregated Ptf

IEA World 2025
2 Degree Scenario

Other renewables

1%

18%

30%
12%

9%

13%

32%

20%

6%

15%

Biomass

Hydroelectric Nuclear

22%

IEA World 2030
2 Degree Scenario
Fossil energy with CCS

IEA World 2050
2 Degree Scenario
Natural Gas

Petroleum

Coal

Source: S&P Global, Trucost, BNP Paribas AM, 2021 (based on holdings at 31/12/2020)

According to the methodology developed by the data provider to track the alignment of investment
portfolios with the goal of limiting global warming to 2°C above pre-industrial levels, BNPP AM’s
holdings were aligned with a pathway consistent with a rise in global temperatures of 1.75 to 2°C
by the end of the century.
Based on the data provider’s methodology and evaluation, the climate profile of BNPP AM’s holdings
is reasonably good. Our Responsible Business Conduct (RBC) policy (discussed earlier), and theassociated exclusion policies on coal and unconventional oil & gas (discussed earlier) have madea key contribution to improving the climate profile of our holdings. Furthermore, the objective weset in 2019 – that portfolios should have a better carbon footprint than that of their respective
benchmarks – has made a meaningful contribution to reducing our aggregate footprint.

BNP PARIBAS ASSET MANAGEMENT France, “the investment management company”, is a simplified joint stock company with its registeredoffice at 1 boulevard Haussmann 75009 Paris, France, RCS Paris 319 378 832, registered with the “Autorité des marchés financiers” under
number GP 96002.
This material is issued and has been prepared by the investment management company.
This material is produced for information purposes only and does not constitute:
1. an offer to buy nor a solicitation to sell, nor shall it form the basis of or be relied upon in connection with any contract or commitment
whatsoever or
2.investment advice.
This material makes reference to certain financial instruments authorised and regulated in their jurisdiction(s) of incorporation.
No action has been taken which would permit the public offering of the financial instrument(s) in any other jurisdiction, except as indicated in
the most recent prospectus of the relevant financial instrument(s), or on the website (under heading “our funds”), where such action would be
required, in particular, in the United States, to US persons (as such term is defined in Regulation S of the United States Securities Act of 1933).
Prior to any subscription in a country in which such financial instrument(s) is/are registered, investors should verify any legal constraints or
restrictions there may be in connection with the subscription, purchase, possession or sale of the financial instrument(s).
Investors considering subscribing to the financial instrument(s) should read carefully the most recent prospectus and Key Information
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These documents are available in the language of the country in which the financial instrument(s) is authorised for the distribution and/or
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development into its activities, without all funds of BNP PARIBAS ASSET MANAGEMENT France belonging to articles 8 or 9 of theRegulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector (“SFDR”). For more information, please see
www.bnpparibas-am.com/en/sustainability.
Environmental, Social and Governance (ESG) Investment Risk: The lack of common or harmonized definitions and labels integrating ESG andsustainability criteria at EU level may result in different approaches by managers when setting ESG objectives. This also means that it may
be difficult to compare strategies integrating ESG and sustainability criteria to the extent that the selection and weightings applied to selectinvestments may be based on metrics that may share the same name but have different underlying meanings. In evaluating a security basedon the ESG and sustainability criteria, the Investment Manager may also use data sources provided by external ESG research providers.
Given the evolving nature of ESG, these data sources may for the time being be incomplete, inaccurate or unavailable. Applying responsible
business conduct standards in the investment process may lead to the exclusion of securities of certain issuers. Consequently, the Sub-Fund’s
performance may at times be better or worse than the performance of relatable funds that do not apply such standards.

February 2023 - Design: AM Graphic Design - P2210050

Opinions included in this material constitute the judgement of the investment management company at the time specified and may be subject
to change without notice. The investment management company is not obliged to update or alter the information or opinions contained within
this material. Investors should consult their own legal and tax advisors in respect of legal, accounting, domicile and tax advice prior to investingin the financial instrument(s) in order to make an independent determination of the suitability and consequences of an investment therein, if
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Given the economic and market risks, there can be no assurance that the financial instrument(s) will achieve its/their investment objectives.
Returns may be affected by, amongst other things, investment strategies or objectives of the financial instrument(s) and material market
and economic conditions, including interest rates, market terms and general market conditions. The different strategies applied to financial
instruments may have a significant effect on the results presented in this material. Past performance is not a guide to future performance and thevalue of the investments in financial instrument(s) may go down as well as up. Investors may not get back the amount they originally invested.
The performance data, as applicable, reflected in this material, do not take into account the commissions, costs incurred on the issue andredemption and taxes.
You can obtain this by clicking here:
www.bnpparibas-am.fr/investisseur-professionnel/synthese-des-droits-des-investisseurs a summary of investor rights in French. BNP PARIBASASSET MANAGEMENT FRANCE may decide to discontinue the marketing of the financial instruments, in the cases covered by the applicableregulations.

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