TOWARDSA SUSTAINABLE
TRANSITIONEXTRA-FINANCIALREPORT

2022
SUSTAINABILITYREPORT
2021 SUSTAINABILITYREPORT
The sustainable
The sustainable
investor for a changing world
investor
for achanging world
For Professional Investors – Marketing Communication

SUSTAINABLE INVESTORSFOR A CHANGING WORLDCONTENTS

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04 OVERVIEW•
11 COLLECTIVE• INSIGHTS

Climate change, growing social inequality and environmental
damage caused by human activity can have a severe impact
on the performance of companies in which asset managementcompanies invest. To successfully meet today’s challenges and ensure
a prosperous and sustainable economy for tomorrow, long-term
investors have a role to play by using the leverage that theirinvestments and their voices bring to influence companies’ practices.
At BNP Paribas Asset Management, we believe that if the financial
sector takes better account of social and environmental externalities,
it will deliver value while making the world a better place
and the global economy more sustainable. BNPP AM takes
its share of responsibility and intends to be a driving force behind
this transformation. To achieve this, we work with our clients
to meet tomorrow’s challenges today and contribute to a moresecure economic future.

18 OUR• APPROACH

30 OUR• PROGRESS

99 ABOUT THIS
• REPORTBNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 2 •OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSEDITORIAL

Sandro Pierri
CEO, BNP Paribas Asset Management

I am proud to lead an asset
management firm that anchors its
business philosophy to the convictionthat contributing to the transition
to a more environmentally sensitive
and just economy is key to generating
long-term, sustainable returns forclients. Despite the crises the world
has faced in recent years, we havebeen able to grow and create value
sustainably for our clients, ouremployees and society as a whole andour goal is to maintain this momentum.
One of the most significant megatrends
we are seeing is sustainability. While
this may seem like business as usual,
we need to remember that this is stilla relatively new theme for many
investors, and the industry is still
grappling with its full impact.
Regulation is complex, ever changing
and not always consistent, but our earlycommitment to this topic has given
us the strength and expertise needed
to navigate this important area for ourclients. This is why we continue to invest
heavily in the integration of state-ofthe-art ESG data into our investment
decisions, and in the control frameworkneeded to ensure our sustainability-led
process delivers on its objectives.
The scale of change ahead of us isunprecedented. We do not simply haveto cut emissions or reduce our impact

IT IS BY WORKING COLLECTIVELYWITH CLIENTS, ISSUERS, REGULATORSAND PEERS THAT WE CAN CREATEA MORE SUSTAINABLE FUTURE.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 3 •on the natural environment, but actively Company (IWC). Actions such as thisare not just about creating new
move to a net zero impact world.
This will require the largest reallocation investment opportunities for clients,
but also about how we bring ourof capital ever seen and presents
commitment to sustainability to life.
us all with the opportunity to not only
IWC enhances our offering throughreposition portfolios for sustainable
the new Private Assets unit wegrowth, but to become a sourceof funding for a better world. A challenge have created, bringing together andleveraging the strengths of many partsof this magnitude requires a radicallyof the BNP Paribas Group.
different level of thinking across theentire financial system that we have
Finally, I would like to thank our
not had to do before.
employees for their commitment
to delivering on our vision to be
The transition towards a sustainable
the sustainable investor for a changing
future is too complex to face alone.
I believe that it is by working collectively world. We are above all a human
company and the recipe for success iswith clients, issuers, regulators andto have in our ranks tremendous talents
peers that we can create a sensible
and successful way forward. Roadmaps, with a high level of shared vision onsustainability. This report is a testament
including those we have publishedto the many achievements that we areon net zero and biodiversity, will help
guide our actions, but need to be applied proud to have made collectively
in this respect.
diligently and across the board
if they are to be of consequence.
In 2023, we will continue our efforts andbe alongside our clients to support them
Sustainability also guides how
in this world in transition. Whatever
we both manage our business today
and position it for the future. At the end we face, we are ready to face it together
and remain firmly committed toof 2022, we announced the acquisitionof the majority of a sustainable forestry delivering long-term sustainable returns
for the assets our clients entrust us with.
company, International Woodland

OVERVIEW€501bnTotal
Assets underManagement

3,022
34

PeopleCountries

ABOUT USCOLLECTIVE INSIGHTSOUR APPROACH

BNP Paribas Asset Management (BNPP AM) is BNP Paribas
Group’s dedicated asset management business that employs
3,022 people in 34 countries, including a large commercial
presence in Europe and the Asia-Pacific region. Throughthe BNP Paribas Group integrated model, BNPP AM has accessto a broad international client base and has close relationships
with BNP Paribas’ distribution networks. Ranked the10th largest asset manager in Europe*, BNPP AM manages€501 billion of assets and benefits from the expertiseof around 500 investment professionals and 400 clientservicing specialists, serving individual, corporate andinstitutional clients in 67 countries.
We offer investment solutions for individual investors (throughinternal distributors within BNP Paribas Group and external
distributors), and corporate and institutional investors
including insurance companies, pension funds and official
institutions. We offer portfolio investment expertise in linewith clients’ long-term sustainable performance expectations,
including active, conviction-based strategies, emerging
markets, multi-asset investments, private assets
and liquidity solutions.

Joint ventures includedin the figures.
*

 ource: IPE Top 500
S
Asset Managers 2022.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 4 •OUR PROGRESS

500

investment
professionals

400

client-servicing
specialists

67

Servingclients incountries

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSA WELL-BALANCED, GLOBALLY DIVERSIFIED AND EUROPEAN-ROOTED ASSET MANAGER
AUM BY ASSET CLASSAUM BY GEOGRAPHY*

8%
Alternatives
18%
Money Market

22%
Equity26%
Fixed Income

8%
Other
10%
Official Institutions
11%
Private Clients
13%
Retail Clients2%
3% Asia
Latin America
7%
North America

1%
Emerging

11%
Wholesale12%
Joint Ventures
53%
Global35%
Europe26%
Multi-Asset& Solutions

CLIENT TYPES**

DISTRIBUTION

CLIENTS
6%
Asset Managers
19%
Insurances

EMPLOYEES
6%
Americas
18%
Asia

18%
Corporates
15%
Pension Funds

9%
Americas48%
EMEA*** (ex-France)

• 5 •

5%
UK
31%
Asia

25%
Europe(ex-Franceand UK)

28%
FranceJoint ventures included in the figures. Figures may not add to 100% due to rounding.
*
Asset Class Region. / ** Excluding investment in our own funds – €462bn. / *** EMEA: Europe (including UK), Middle East, Africa.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

59%
Institutional

18%Group Networks

30%
FranceOVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PURPOSE

THIS VISION IS ENDORSED BYOUR EXECUTIVE COMMITTEE, COMPOSED OF:
Sandro Pierri
Chief Executive Officer

Our purpose is to achieve long-term sustainable
returns for our clients, by placing sustainability
at the heart of our strategy and investment
philosophy.
Because understanding and supporting thetransition to a sustainable economy is key for us,
we have adopted a single-minded sustainability
approach. It shapes our firm and guides what
we do: our strategy, our culture, our structure,
our products, our processes, the way we engage
with our clients and with the companies and themarkets we invest in.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTOUR PROGRESS

Steven Billiet
Head of Global Client Group

Marion Azuelos
Global Head of
Human Resources

Pierre Moulin
Global Head of Products
and Strategic Marketing

Philippe Boulenguiez
Global Chief
Operating Officer

Robert Gambi
Global Head of Investments

David Vaillant
Global Head of Finance,
Strategy and Participations• 6 •View biographies

OVERVIEWOUR STRATEGYCOLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSSUSTAINABILITY IS A CORE INVESTMENT BELIEF
Conviction driven

Risk
management 
Conviction driven
In a changing world,
our conviction
based investment
philosophy provides
scope to capture
both short-and longterm opportunities
for value creation.
Our approachcombines a thoroughunderstanding ofmarket dynamics
and fundamentals(at security, sector,
thematic levels),
enabling highconviction positions
and a dynamic
allocation of capitalacross varied time
horizons.

Sustainable

Research
drivenPoweredby people

Global perspective

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 7 • Sustainable
We are convinced
we make better
decisions by
integrating
sustainability into
our investment
processes. We
believe this will
result in better
outcomes forour clients andthe planet.
 
Research driven
Research isthe foundation
on which we build
our market
views to support
our convictions.
We apply botha quantitativeand fundamental
approach to our
research with aculture of curiosity,
collaboration, andchallenge.

nurturing, andretaining ourdiversity of talent.
We align incentives
to our clients’ longterm sustainableobjectives.

 
Global perspective
A global perspective
is needed to makebetter investment
decisions, in
an increasinglyinterconnectedworld.

 
Risk management
The value createdthrough our
research and idea
generation needs
to be carefully
preserved throughappropriate risk
utilisation.

 Powered by people
People drive
investment
decisions. We
are committed
to attracting,OUR CULTUREOVERVIEWCOLLECTIVE INSIGHTSOUR APPROACH

2022: a new
articulation of ouremployer promise
In 2022, to reflect
our new reality
born out of thetransformationof our company overthe past five years,
we have worked withmany employees
to evolve our employer
promise.

At BNP Paribas Asset Management, we know about potential. The potential
for sustainability to change the world while achieving long-term sustainable
returns for our clients.
But for us, the greatest potential is in people. Today, we all seek to make an impact
through our work. At BNPP AM, this is at the heart of what we do; our people areproud of the impact they make, notably through our contribution to a better future.
We believe that our people make the most meaningful impact on the world
when they are living up to their full potential. That is why we have built a cultureof empowerment that helps discover the potential within each of our employees,
nurtures it, and lets it flourish and make an impact on the world.

WE ARE BUILDING A CULTURE OF EMPOWERMENTTHAT HELPS DISCOVER THE POTENTIAL
WITHIN EACH OF OUR EMPLOYEES,NURTURES IT, AND LETS IT FLOURISH AND
MAKE AN IMPACT ON THE WORLD.
BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTOUR PROGRESS• 8 •The mandate we set
for ourselves wasfor it to be authentic
and memorable sothat it could be a tool
to attract, retain
and transform.
A promise that conveys
the kind of company
we are: dedicatedto people andsustainability andwhere each employee
can unlock theirpotential.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESS

CASE
ST
UDY

*

91%

BUILDING SUSTAINABILITY
INTO OUR CULTURE

CONTEXTACTIVITYOUTCOMES

To deliver on our purpose
and strategy, we need a workforce
that understands our goals andembraces them. We also believethat creating a work environmentthat is consistent with
our investment philosophy
will help keep sustainability
top of mind for our employees,
and enable them to moreauthentically incorporate
sustainability principles into
their day-to-day activities.

We have a pillar within
our approach to sustainability
on ‘walking the talk’, which
includes dedicated internal
resources responsible for helping
to build a culture of sustainability
within our organisation. In 2022,
we went one step further andbuilt sustainability and impact
directly into our employer
promise.

We include questions about
our culture and strategy in our
employee engagement surveys andwe ask these questions annuallyto track our progress. In 2022,
the responses continued to be
overwhelmingly positive, with
91% of respondents saying it isimportant to them that we becomea fully sustainable asset manager
and 73% of respondents could
see how their role supported ourcommitment to sustainability,
which is a 1% increase overlast year. We believe that theseresults speak to the effectivenessof our approach but we know
we must remain vigilant in thisarea, as it is a vital component tomaintaining our leading position
on sustainability*.

2nd in Europe for active sustainable thematic strategies, according to an analysis made by BNP Paribas Asset Management based on Morningstar data as at 31/12/2022.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 9 •of respondents
say it is importantto them that
we become a fully
sustainable asset
manager73%

of respondents could
see how their role
supported ourcommitment
to sustainability

AWARDSOVERVIEWCOLLECTIVE INSIGHTSOUR APPROACH

RECOGNISED FOR OUR EXPERTISE: 77 AWARDS WON IN 2022,
INCLUDING 48 RESPONSIBLE INVESTOR AWARDS• European Pensions
Pan-Europe

Awards: ESG/SRI
Provider of the Year

• Environmental

Finance, Sustainable
Investment Awards:
ESG Investment
Initiative of the Year

• ESG Clarity Awards:
Best Diversity /Corporate Culture
Initiative

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• The Asset Triple A

APAC

Sustainable InvestingAwards: ESG AssetManagement
Company of the Year
(Asia, Malaysia)• Asian Investor

Asset Management
Award 2022: ESG
Excellence Awards Best Environmental
Investment Strategy
Adviser (APAC)• Asia Asset Management

Best of the Best Awards:
Best Application of ESG(Hong Kong), Best ESG
Engagement Initiative(Hong Kong), Best ESG
Manager (Malaysia)• I nsuranceAsia News

Institutional AssetManagement Awards
2022: Best ESG
Thematic Strategy Biodiversity

People• Financial News,
Fifty Most Influential
in Sustainable Finance,
Michael Herskovich• Financial News,
25 Rising Stars ofFund Management,
Thibaud Clisson• Financial News,
100 Most Influential
Women in Finance, Jane
Ambachtsheer• Impact Awards 2022,
Young professionalof the year/rising star,
Bérénice Lasfargues• 10 •OUR PROGRESSOVERVIEW

COLLECTIVE
INSIGHTSOUR APPROACH

COLLECTIVE INSIGHTSOUR PROGRESS

Expert views on three
key topics: climate, biodiversity
and geopolitics.

12 •	TACKLING THE CLIMATE EMERGENCY REQUIRES A SOCIALLY JUST TRANSITION
14 • CLOSING THE BIODIVERSITY FUNDING GAP: A CALL TO INVESTORS

16 •	RECONCILING RESPONSES TO SHORT-TERM CHALLENGESWITH THE LONG-TERM GOALS OF SUSTAINABLE INVESTING

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 11 •

OVERVIEW

CLIMATETACKLING
THE CLIMATEEMERGENCYREQUIRES A
SOCIALLY JUSTTRANSITIONOUR APPROACH

COLLECTIVE INSIGHTS•

The world is not equal under climatechange, as both its impacts andthe resources needed for mitigation
and adaptation are unequallydistributed. But for active investors,
capital markets could be a force forclimate justice.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTOUR PROGRESSRich nations have traditionally pushed backagainst loss and damage to avoid debatesaround climate change blame and liability, but
the tide appears to be turning. There is growingpressure for the Global North to acknowledge
the role it has played in changing the climate
and provide recompense to the Global South.”

JETP deals not only
aim to reduce power
sector emissions andaccelerate the energy
transition in coaldependent countries.
They also help support
economic growth,
create new skilled jobs,
reduce air pollution,and contribute to a
resilient, prosperous
future.”Alexander Bernhardt

Alexander Bernhardt
Global Head of Sustainability
Research

Thibaud Clisson
Climate Change Lead

Thibaud Clisson

The 27th Conference of theParties, or COP27, held in
Sharm el-Sheikh last December,saw a small breakthroughon the central climate justiceissue with an agreement toestablish a ‘loss and damage’fund, paving the way for the
Global North to support the
Global South in fighting climatechange and mitigating its
impacts.
The Intergovernmental Panelon Climate Change (IPCC)
estimates 3.3 billion people
already live in climaticallyvulnerable areas. The private
sector can play a large rolein financing a just transitionand climate adaptation incommunities that need it.
For investors, this means,among other actions, ensuringsocial factors are integrated
into capital allocation andstewardship activities orinvesting in social bonds.

RENEWABLES IN
DEVELOPING COUNTRIES
While COP27 underwhelmedon emissions commitments,
the conference placed capital
markets in the spotlight,
underlining their potential
contributions to financing ajust transition that supports
adaptation in developing
countries. Among possible
approaches, blended• 12 •

finance – a mix of public andphilanthropy-backed financealongside private capital – could
be one way.
Indonesia signed a USD
20 billion agreement with
developed countries and majorinternational lenders to help
it transition away from fossil
fuels and towards renewableenergy sources. The Just Energy
Transition Partnership (JETP)
deal is an important step forthe country as it is the world’s
third-largest coal producer.
South Africa, another developing
country with high coalproduction, was the first nation
to sign a JETP deal, swiftly
followed by Vietnam. India, thePhilippines and Senegal will
be watching how these deals
progress as they are consideringsigning similar agreements.

INVESTOR ENGAGEMENTFOR THE PLANET AND FOR
OUR HEALTH
The Agriculture & Food sector
was another major focus
addressed during COP27.
It poses several challenges
relating to justice: the current
food system generates 37%
of global emissions*, yet one
third of food is wasted while
hunger persists in the Global
South and food insecurity
is prevalent even among
poorer populations in middle

and high-income countries.
To deliver the essential
global transition to net zero
emissions, food systems must
undergo their own transition.
This means substantial shifts
in diets towards plant-based
and alternative proteins,more efficient supply chains
generating less methane
and waste, and reducing
deforestation, also called‘the new coal‘. Today’s
unsustainable food practices
also carry increasing financial,
regulatory, or reputational risks.

*

Source: NewScientist.

OVERVIEWOUR APPROACH

COLLECTIVE INSIGHTSOUR PROGRESS

CLIMATE•

The successful transition of food and land use
systems depends on a host of actors working
together, including investors. We must
not only shift to live within the planetary
boundaries but also redress the inequity
created by the current system in relationto access to adequate healthy diets.”
Rachel Crossley

climate-related shareholder
SAY-ON-CLIMATEMANAGEMENT PROPOSALS dialogue, those ballot
measures are more and
GROWING WORLDWIDE

more voluntarily added byTools are emerging tocompanies to their Annual
take action on climate
General Meeting (AGM)
priorities, including in theagendas. The practicefield of traditional corporate
however remains at an early
governance. Initially promoted stage, with only 2% of global
by Non Governmental
AGMs presenting Say-onOrganisations (NGOs) andClimate votes within ourinvestors, the practice of Say- 2022 voting perimeter. It is
on-Climate proposals has been still uncertain whether thegrowing in popularity among
practice is going to generalise,companies in the lastand some investors suspect
two years.
these management proposals
Aiming to offer a shareholder could create a distraction
consultative vote on thefrom effective climate
corporate climate strategy
action. Despite differing
and/or report, and to enhance viewpoints, and considering

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTFor now, Say-onClimate is voluntary.
This leaves companies
free to decide on
the best strategy.
Eventually, it may
become regulated,much like climaterelated disclosures.”

Regulation is still
evolving, yet theguiding principle
remains one of greatertransparency, whichis key to building
investors’ confidence.”
Laurence Caron-Habib

Paula Meissirel
Rachel Crossley
Head of Stewardship – Europe

Paula Meissirel
Stewardship Analyst

the current multitude ofcorporate approaches, acommon framework isneeded to facilitate a global
understanding and alignmentof Say-on-Climate proposals.

of regulations can bechallenging, they are moving
in the right direction. The
adjustment period will bechallenging in the shortterm for capital markets asvarious Sustainable Finance
MARKETS NEED
Disclosure Regulation (SFDR),
TRANSPARENCY, CLIENTS
European Union Taxonomy and
MIF2 (Markets in Financial
NEED CLARITY
Instruments 2) dispositions
COP27 also heralded
come into effect before
increasingly high disclosure
they are fully aligned. In
and reporting standards,
notably the 2023 launch of the Q4 2022, Article 8 & Article
9 funds gathered €15.8bn
Net-Zero Data Public Utility
6 funds dropped(NZDPU) data repository, and while Article*
the CDP’s planned integration by €3.3bn , showing themarket’s strong appetiteof IFRS 2 standards in 2024.
remains. Asset managers have
While navigating the flurrya key role to play in providing• 13 •

Laurence Caron-Habib
Head of Public Affairs

clarity to clients and investors,
so their preferences translate
into concrete results that
contribute to a more just andsustainable global economy.
Morningstar Direct.

*

37%

THE CURRENT FOOD
SYSTEM GENERATESOF GLOBAL EMISSIONS(SOURCE: NEWSCIENTIST)

3.3•

BILLION PEOPLE ALREADYLIVE IN CLIMATICALLYVULNERABLE AREAS(IPCC ESTIMATION)OVERVIEW

BIODIVERSITY
CLOSING THE
BIODIVERSITYFUNDING GAP:A CALL TO
INVESTORSOUR APPROACH

COLLECTIVE INSIGHTSOUR PROGRESS•Over 50% of global Gross Domestic
Product (GDP) is ‘moderately
or highly dependent’ on natureand ecosystem services, according
to the WEF New Nature Economy
Report 2020. Capital markets
are called upon to act.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

Funding biodiversity will not only
help species and ecosystems
to recover, this is also important
to maintaining the world economy
and reducing social injustice.”
Robert-Alexandre Poujade
Biodiversity Lead

Investors showed up in
numbers at the COP15, theConference of the Parties
on Biodiversity, a new but
fitting development asnegotiators stressed theurgency of investing to halt
and reverse nature loss
by 2030. While the annual
biodiversity financing gap
is pegged at USD 700 billion,
according to the Paulson
Institute ‘Financing Nature‘
report, the cost of inaction
is higher still: a collapseof ecosystem services would

cause annual losses estimatedat USD 2.7 trillion by 2030,
with some of the poorer
countries hit the hardest,
according to the World Bank.
Much like climate mitigation,
the scale of the challenge
makes a case for blended
finance. Investors can also act
via biodiversity funds (a small
but growing segment), carbon
markets and biodiversity
credits. Investor stewardship –engaging both corporates
and governments – will
also be critically important.

• 14 •APPLYING CLIMATELESSONS TO BIODIVERSITY
How then should investors
approach biodiversity
conservation? At COP15,
parties took a non-binding
but important step towards
more transparency, agreeing
to call on governments totake measures to encouragebusinesses to disclose
their biodiversity risks,
dependencies and impacts.
Turning disclosure into
decision-useful data,

however, will require reliablebiodiversity indicators.
Going forward, investors
can glean valuable insightsfrom their experience
with climate indicators:•B iodiversity risks should
be quantified with clearly
expressed metrics (e.g.
Mean Species Abundance.
km²), designed to allow
investors to understand eachcompany’s impacts on nature
as well as their dependencies.
Impacts and dependencies
must be separated.

WILDLIFE
POPULATIONS HAVEDECLINED BY

69%

ON AVERAGE
BETWEEN 1970
AND 2018 ACCORDING
TO THE WWF LIVING
PLANET REPORT 2022

109•

MILLION TONNESOF PLASTIC WASTEHAVE ACCUMULATEDIN RIVERS ACCORDING
TO THE OECD GLOBAL
PLASTICS OUTLOOKOVERVIEWOUR APPROACH

COLLECTIVE INSIGHTSBIODIVERSITYOUR PROGRESS•

Investors can and should supportconsistent regulation, especiallythrough an open innovation approach
focused on quality data. They will
be better equipped to engage with,and evaluate, the companies
in their portfolio.”
Valérie Charrière-Pousse•E ffective action requires

Valérie Charrière-Pousse
Deputy Head of European
Large Cap Equities

Adam Kanzer
Head of Stewardship – Americas

Portfolio management
techniques alone will notprotect from these risks.
Effective stewardship,including public policy
advocacy, will also
be necessary.

or policy advocacy.
Incentivising companies
to reduce their biodiversity
footprints and work
to reverse nature loss
by 2030 is fully in line withthe fiduciary role enshrinedin the Principles for
Responsible Investment(PRI). Preserving nature
is in everyone’s interest.

specific goals. Science has
set an ambition to reverse
nature loss by 2030. Investors
can adopt biodiversity
roadmaps e.g., prioritise
key biodiversity topics suchas reducing plastic pollution
OPPORTUNITIESor deforestation, but they
FOR ASSET MANAGERS
need a combination ofEnvironmental, Social
Momentum is building in theand Governance (ESG) data,
investment sphere, backed bystewardship and capitalcross-sectional initiatives suchallocation to meet their goals. as CDP or Nature Action 100.
This opens opportunities for• N ature loss represents
investors to actively engage
a systemic risk. As such,with companies across supply
engagement must be done
chains, especially the biggest
to reduce the drivers ofpolluters – whether
nature loss, guided by thevia corporate engagement
best available science.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTThe collapse of nature will touch
every aspect of our lives andour economies. We must act now
to end deforestation, but we mustgo further, engaging on all key driversof nature loss, which include climatechange, land use change, exploitationof species, invasive species
and pollution, including chemicaland pesticide use.”
Adam Kanzer• 15 •

OVERVIEWGEOPOLITICS
RECONCILING RESPONSESTO SHORT-TERM
CHALLENGES WITH
THE LONG-TERM GOALSOF SUSTAINABLE
INVESTING

OUR APPROACH

COLLECTIVE INSIGHTSOUR PROGRESS•

Climate, geopolitics and macroeconomic factors combine
to make instability a constant rather than a break fromthe norm – at least for a while. Sustainability remains
the best long-term prism to understand crisis
factors and anticipate a low-carbon, environmentally
sustainable and inclusive economy. Challenges may beinterconnected, but so are the solutions.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

What we can now say with some certainty,
based on PRI research, is that ESG integration
at corporate and fund levels more often thannot leads to better financial outcomes**.”Jane Ambachtsheer & Alexander Bernhardt

Jane Ambachtsheer
Global Head of Sustainability

Alexander Bernhardt
Global Head of Sustainability
Research

The integration ofEnvironmental, Social andGovernance (ESG) factors
is here to stay, as shownby the growth of sustainable
investment regulations frombelow 50 in 2015 to more than
500 today*. Investors that are
signatories to PRI (Principles
for Responsible Investment)
combined now manage over
USD 100 trillion in assets.
The efforts of the PRI andother industry groups havebeen instrumental in putting
to bed the fiduciary duty
debate. The relevance ofsustainable investing as asecular growth driver should
no longer be in question
and is integral to navigating

this environment,with opportunities for
active managers.
When disruption reigns,
we need effective mediating
institutions more than everto continue ESG integration
and bring about regulation
conducive to investing thetrillions needed to meet
Sustainable Development
Goals (SDGs) worldwide.
Investors must join theconversation in timesof crisis response and beyond,to advocate for regulationthat is constructive andconsistent on a global scale.

• 16 •SHORT-TERM REACTIONSSET THE LONG-TERM
AGENDAThe war in Ukraine and its
consequences are a case study
in interconnected challenges –from climate change to energy
security and inflation. In 2022,
energy supply shocks rocked
global commodity prices
and inflation, forcing Europe
to rethink its energy policies.
As a result, European countries
chose to diversify energy
supplies by including more gas
and coal as a stopgap, a movethat could extend reliance on
fossil fuels.
For the European Union (EU)to reach its climate targets,
this temporary measuremust be just that. Better still
would be to value low-carbon
projects short term to increase
future resilience. Not onlyis clean energy infrastructure
faster to develop than thermal
or nuclear, it reinforces
security of supply while
being deflationary. This logic
can be seen at work in the
US Inflation Reduction Act,
which includes nearly USD
400 billion in incentives forclean energy programmes.
Sustainable investing must
look long term but act ‘rightnow’. The past year has shown*

Source: Preqin.
RI Quarterly vol.10 Jan. 2017, PRI
Academic Research.

**

OVERVIEWOUR APPROACH

COLLECTIVE INSIGHTSOUR PROGRESSGEOPOLITICS•

The wide scope of the EUR 2 trillion
NextGenerationEU recovery plan
speaks to an understanding at thehighest levels of decision-making
that we need not only a greener, butalso more digital and more resilient
Europe.”Maya Bhandari

this approach can be difficult
to translate into policy for
regulators.

While understandable undercurrent political constraints,
such choices reflect the idea
that, when crisis strikes,
REGULATION AS A
short-term relief warrants a
VIRTUOUS CIRCLE
trade-off against long-term
Carbon pricing schemes, which sustainability goals. This needs
not be the case.
are meant to disincentivise
greenhouse gases (GHG)
Another approach is toemissions, illustrate thisembrace, not avoid, theissue. As EU-ETS (European
rising carbon prices andUnion Emission Trading
their positive externalities.
System) prices surged in 2022, European regulation could go
the European Commission
further by taxing cross-border
responded by providing
emissions, which would level
financial aid to participants
the playing field for companies
in the scheme and including
subject to EU-ETS rules while
EUAs (European Union
pushing exporting markets to
Allowances) in the financing
develop their own carbon tax.
of the RePowerEU plan.
Meanwhile, EU companies

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

Examining the interconnections
between drivers of previous
industrial revolutions, and previous
technological advances, can help
assess the role and value of today’s:
are they independent quick fixes
or vital components in a newenvironmental infrastructure?”
Edward Lees & Ulrik Fugmann
Maya Bhandari
Global Head of Multi-Asset

Edward Lees
Co-Head of the Environmental
Strategies Group

that decarbonise first will
gain a competitive edge by
selling increasingly valuable
allowances. Citizens should
be encouraged to join these
efforts, for instance throughincentives to electrify, which
would nicely synergise with
the initiatives above.
Overall, climate change
mitigation requires structuralchanges and ambitious
policies reflecting the fact that
we live in an interconnectedworld. As such, it cannot be
separated from geopolitics,
food security, biodiversity loss
or even public health: 58% of
infectious diseases confronted
by humanity worldwide havebeen at some point aggravatedby climatic hazards according
to Nature magazine. Investors
can contribute to this dynamic
through stewardship, but mostimportantly by investing in
the key technological drivers
for a resilient future economy.

Ulrik Fugmann
Co-Head of the Environmental
Strategies Groupfactory, autonomous systems,
3D printing and machinelearning. Combining
these technologies could
allow capacity and resources
to be used ever more
efficiently, and usher ina sharing economy basedon ‘open source’ approaches
FINANCING THE
to information and innovation.
‘INTERCONNECTED
One must be careful not to
RESILIENCE’
dismiss this new paradigm.
INFRASTRUCTURE
Throughout history, theSustainability and efficiency
assumption that disruptive
are core to the promise of
products and services would‘Industry 4.0’. As with previous retain high marginal costs
industrial revolutions, it will
and linear growth has been
emerge on the back of andisproven. To wit, in 2012 theinfrastructure platform – based International Energy Agency
on such advances as the smart (IEA) expected global solar• 17 •

energy generation to reach
550 TWh in 2030 – it exceeded
1,000 in 2021.
Despite these promises,
investors who seek to join thisnew paradigm face several
imperatives, which are notwithout challenges. The firstis to understand the breadthand the inter-relatedness ofchallenges and opportunities
ahead. The second is to
identify companies that willsurvive and prosper, notjust rising trends. The third
relies on conviction: targeting
positive environmental
outcomes within an
unconstrained approach
to investment.

58%

OF INFECTIOUS
DISEASESCONFRONTEDBY HUMANITYWORLDWIDE HAVEBEEN AT SOMEPOINT AGGRAVATED
BY CLIMATIC
HAZARDS ACCORDING
TO NATURE
MAGAZINE

OVERVIEWOUR
APPROACH

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESS

As part of the development of our
Global Sustainability Strategy in 2019,
we enhanced our investment philosophy
with a more detailed set of investment
beliefs focused on sustainability.

19 • JANE AMBACHTSHEER, GLOBAL HEAD OF SUSTAINABILITY

20 • THE 6 PILLARS OF OUR APPROACH
22 • SUSTAINABILITY GOVERNANCE
23 • PEOPLE

25 • INCENTIVES

26 • CONFLICTS AND ASSURANCE

28 • REFLECTING CLIENT NEEDS IN OUR INVESTMENT SOLUTIONSBNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 18 •

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSEDITORIAL

Jane Ambachtsheer
Global Head of Sustainability

inward, exploring how we can continue
Sustainability is core to our investment demonstrate. We also strengthened
to support our teams with training on
strategy and 2022 was a dynamic year our ties across the BNP Paribas
sustainability (a topic discussed in thisorganisation, itself a rich source offor sustainability-focused investors.
Markets were impacted by the conflict sustainability ambition and intellectual report), communicate clearly to clients
about our sustainability activities,
capital. One example is the newly
in Ukraine, concerns about energy
and evolve our state-of-the-art
security and rising prices. At the same unified Private Assets business unit
Environmental, Social and Governancewithin Asset Management, whichtime, investors needed to manage(ESG) data and research platform.
brings together teams focused on
the complexities of implementing thelatest phase of the Sustainable Finance corporate financing, real assets,
We are pleased to see growing industry
and private market funds, using
Disclosure Regulation (SFDR). Against
recognition for our work, from being
sustainability as a guiding principle.
this backdrop, we stayed focused on
ranked first in the study ‘Fulfilling
our mission: delivering sustainable
Looking ahead, we are excited to launch the Promise ’ conducted by Majority
returns to our clients.
the sequel to our Global Sustainability Action to ranking 2nd among theStrategy, published in 2019, later
Indeed, increasingly, we find thatworld’s 77 largest asset managers
this year. It will focus on our core
our clients share our passion for
across responsible investment themes
differentiators: putting sustainability
sustainability, engaging with us in
in ShareAction’s ‘Point of No Returns
discussions about our net zero roadmap, at the heart of our culture; exercising
report ’, to receiving numerous awards
a bold stewardship strategy; andasking for our insights on biodiversity,
such as the best ESG/SRI Provider
utilising a science-based, transparent
or exchanging approaches on how toof the Year by European Pensions.
catalyse greater diversity within investee approach to sustainability research andimplementation. Our implementationcompanies. This is not an accident: ourclients increasingly choose to work with of SFDR reflects this. Over the coming
three years, we are also prioritising
us in part based on our sustainability
credentials. This, in turn, reinforces our the evolution of our impact investing
methodology and offering, as wellcommitment to evolve our ambition,
as the way we approach investing inprocesses and results.
emerging markets – where significant
Over the past year, we madesignificant progress on several fronts, opportunity exists to drive sustainableoutcomes. Finally, our strategy looks
as I hope the pages of this report

We are also happy to solidify ourposition in the sustainable thematic
market (2nd Sustainable thematic active
asset manager in Europe as of 31
December 2022). We also continue tofocus on integrating ESG in our funds
offering, with 89% of our open European
range currently classified as Article 8 or
9 under the SFDR as of December 2022.
By embracing our role as a future
maker: we work hard, to understandhow the world is evolving, and to use
our influence to shape a future thatwill best serve our clients. We lookforward to continuing this partnershipand welcoming new clients to our firmin 2023.
Thank you for your trust.

WE FIND THAT OUR CLIENTSSHARE OUR PASSIONFOR SUSTAINABILITY.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 19 •

COLLECTIVE INSIGHTSOVERVIEWOUR APPROACH

THE 6 PILLARS
OF OUR APPROACH

OUR APPROACH IN PRACTICE

Our approach to sustainability is built on six pillars. Together, thisapproach strengthens the way we invest, including how we generate
investment ideas, construct optimal portfolios, control for risk and engage
with companies and markets. It is designed to respond to the diverse
needs of our broad client base while protecting their interests.

1

ESG INTEGRATION

Improve risk-adjusted
returns

2

STEWARDSHIP(VOTING,ENGAGEMENT)

Protect company value,
influence sound regulatory
framework, promotebetter social andenvironmental outcomes*

RESPONSIBLE
BUSINESS CONDUCT(RBC) AND SECTORBASED EXCLUSIONS

Articulate expectations
for responsible businessconduct and sensitive
sectors; avoid regulatory
and stranded asset risk

Our approach to sustainability
begins with an investment philosophy,
a set of underlying beliefs that inform investment
teams when they are managing their funds.
Relevant Environmental, Social and Governance(ESG) considerations are integrated into
investment philosophies.
At the idea generation stage, investment
teams think broadly about future investment
opportunities. Integrating ESG factors allows
them to include or discard opportunities basedon ESG considerations. For example, somestrategies identify the highest-rated ESG names
in an investment universe as a priority
for additional financial analysis.
During portfolio construction, ESG factors
can be used to screen companies, overweightor underweight positions, or tilt portfolios.
For example, many of our multi-factor portfolios
have a tilt away from carbon-intensive names
and towards high ESG performers.
Regarding risk management, we havea fiduciary duty to our clients to take all risks
into consideration, including ESG andsustainability risks.
Our proxy voting activity is led by ourstewardship team, which liaises with portfolio
managers to seek input on strategic votes.

4

FORWARD-LOOKINGPERSPECTIVE:
THE ‘3Es’*
Enhance investment
decision-making,preserve long-term
market performance

6

5

INVESTMENT
SOLUTIONS FORSUSTAINABILITY3

For investors wishing
to go further

CORPORATE SOCIAL RESPONSIBILITY (CSR)
WALKING THE TALK

Our corporate practices and disclosures should matchor exceed the standards we expect from the entities
in which we invest

3Es: Energy transition, Environmental sustainability, Equality and inclusive growth.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTOUR PROGRESS• 20 •Engagement on governance and sustainability
topics is typically also led by our stewardshipteam, while investment teams include ESG topics
in their ongoing company meetings.
Per our ESG Integration Guidelines, we monitor
the ESG score and carbon footprintof investments against their benchmarks withthe aim of outperforming on each. Our fundreports contain two Key Performance Indicators(KPIs) so that clients can better understandthe impact of their portfolios.
We believe our approach provides a strong
framework for embedding and managing
sustainability risks and opportunities in
the investment process.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESS

THE 6 PILLARS
OF OUR APPROACH
PRODUCT CLASSIFICATIONOur goal is to apply a consistent approach to classifying our products:
the ESG attributes of our products are reflected in product-level legal
documentation, providing enhanced transparency for our clients.

ESG INTEGRATION

ART. 8 & 9

EU SUSTAINABLE LABEL€306.8bn integrating ESG criteria
Applying a constraint qualifying for Art. 8 & 9 or applying
BNPP AM RBC (exclusion policy).

€235.9bn Article 8 or 9 under SFDR
Applying an ESG constraint, resulting in having ESG
scoring better-than-benchmark investment universe
for example. This constraint is controlled and documented
in funds’ legal documentation.

€121.9bn with an EU sustainable label
Receiving one or several labels, delivered by States
or independent organisations, such as ‘Label ISR’,‘Towards Sustainability’, ‘LuxFlag’, etc. This comes withstrict guidelines regularly audited by external parties.

ART. 9Pierre Moulin
Executive Committee Member
and Global Head of Products
and Strategic Marketing€20bn Article 9 under SFDR
Having a sustainable investment objective.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTWe are continuously
adapting our productrange to further integratesustainability criteria.
We adopt regulation
while answering diverseand changing client needs.
The challenge is to bringconsistency across our
product range, while
integrating the evolving
market and regulatory
standards.”• 21 •

OVERVIEWSUSTAINABILITY
GOVERNANCE
We expect high standards of governancefrom the companies in which we invest,
including on all sustainability matters,
and we hold ourselves to the same standards.
Our approach to sustainability
is managed by a company-wide
governance framework.
This framework ensures that our sustainability
policies and practices are embedded andimplemented appropriately throughout ourbusiness, and that any new initiative is wellconceived, properly structured and delivered
effectively.
It also means that the knowledge and uniqueperspectives of different investment teams
and functions can be leveraged and deployedappropriately.
The ultimate purpose of this framework is to deliveron our commitments and ensure that clients’ bestinterests are served.
Our governance system ensures board- andexecutive- level oversight of the implementationof the Global Sustainability Strategy (GSS)
and our business strategy.
On an operational level, it is an effective mechanism
to ensure that our policies and processes arealigned with our purpose and that continuous
communication among stakeholders takes place.
BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTCOLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSBNPP AM EXECUTIVE COMMITTEEBNPP AM FRANCE BOARD

Strategic oversight of sustainability approach

Approves Proxy Voting Policy
and Sustainability Report

CEO (Chair), Global Head of Investments, Head of Global ClientGroup, Global Head of HR, Global Head of Finance, Strategy andParticipations, Global Head of Product and Strategic Marketing, COO

BNPP AM management
and an independent director

SUSTAINABILITYCOMMITTEEINVESTMENTCOMMITTEESTEWARDSHIPCOMMITTEEGLOBAL PRODUCTCOMMITTEEEXECUTIVE CSRCOMMITTEE

Oversees and validates
our approach to sustainability

Approves sustainability
methodologies and monitors
ESG integration

Reviews voting and engagement
implementation

Approves sustainability
characteristics of products

CEO, Global Head of Investments,
Equities CIO (Co-Chair), Fixed
Income CIO, MAQS CIO, Global
Head of Sustainability (Co-Chair),Head of Global Client Group,
Head of Compliance, Global andRegional Heads of Stewardship

Global Head of Products andStrategic Marketing (Chair),Head of Product Strategy,
representatives from Compliance,
Risk, Legal, Investments,
Sustainability Centre, Global
Client Group and Marketing

Oversees the implementationof our approach to Corporate
Social Responsibility (CSR)

CEO (Chair), Investment Committee
members, Global Head of Products
and Strategic Marketing, Global
Head of Sustainability, Global Headof Sustainability Research, Global
Head of Stewardship, Head of
Global Client Group, Global Chief
Marketing Officer, Head of Brand
and Communication

Global Head of Investments (Chair),
CIOs of each Investment division,
Global Head of Sustainability,
Head of Global Trading Function,
Head of Macro Research,
Chief of Staff to the Global Headof Investments

INVESTMENT TEAMSESG INVESTMENT
AND GCG CHAMPIONSSUSTAINABILITYCENTRESUSTAINABLE REGULATION PROJECT
Global Head of Products and Strategic
Marketing (Co-Chair), Global Headof Sustainability (Co-Chair), members
from various other departments.
Oversees the development andimplementation of regulatory related
methodologies, definitions, disclosuresand processes.

• Implementation is monitored by our internal control systems• Integrated into BNP Paribas Group Sustainability Governance• 22 •

CMO, COO, Global Head of HR,
Head of Brand and Communication,
Head of Sales Europe, Headof Corporate Social Responsibility(Chair)OVERVIEWPEOPLEWe believe that our people make the most meaningful
impact on the world when they are living up to theirfull potential. We do this by focusing on building aculture of empowerment and a work environment thatis inclusive and inspiring. In addition to this, we believethat through our objective to embed sustainability inwhat we do – not only in our investments, but also in
our people processes, in our operations and in otheraspects of our business – we can build a culture ofsustainability that will help us to more authenticallydeliver on our business strategy.
A STRONG TEAM
WITH DIVERSEBACKGROUNDS…

• Consulting• Advocacy and policy• Non Governmental

Organisations (NGOs)• Intergovernmentalorganisations• Rating agency• Mainstream
investments• Sell-side analysis• Sales and marketing• Industry experience… AND A NETWORKOF 150+ ESG
CHAMPIONSCOLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSSUSTAINABILITY CENTRE

30

20

13+ 11

27 webinars on a wide range of sustainablefinance-related topics, with over 3,000
participants attending.

ESG CHAMPIONS

Our network of over 150 ESG Champions plays
a vital role in linking our investment andsales teams with our Sustainability Centre.
languages
ESG
new
years
The network is supported by leaders in our
AveragespokenSustainability Centre and Product and Strategic
experts
positions professional
Chinese, Dutch,
Marketing teams. They are subject matter experts
Across 3 continents
Since 2017
experience
English, French, German,(Asia, Europe andwithin their investment or sales teams, pursue
Greek, Hungarian,North America)
specialised education and have performance
Italian, Portuguese,
Russian, Spanish
objectives related to their responsibilities.
They meet monthly and are provided withtraining and briefings to keep their knowledge
current on relevant ESG market developments,and on our ESG research methodology, exclusion
policies and stewardship activities.
Topics covered in 2022 include:• U pdates to our various ESG-related scoring
The Sustainability Centre is a well-resourced
The ESG research team within the Sustainability regional expertise to the global team,frameworks.
but they are also able to work closely withteam of sustainability specialists who drive our Centre provides investment teams with research,• U pcoming regulatory changes, including theapproach to sustainability. 2022 saw the addition analysis and data at company and sectoral levels. local investment and sales teams.
Sustainable Finance Disclosure Regulationof new roles in the team, including an ESG
It also supports these teams in their efforts(SFDR) and Markets in Financial Instruments
Specialist to focus on private assets and a CSR
to integrate sustainability-related risks andDirective (MiFID).
Project Manager to help us implement employee- opportunities into investment strategies.
• O ur Net Zero Roadmap and the biodiversity
and community-focused CSR initiatives.
Our ESG research analysts’ insights arefootprint of our portfolios.
informed by a variety of external data and
The Sustainability Centre is responsible for
Many members of the Sustainability Centre and a• O utcomes of United Nations Framework
research sources. They also deliver a range
developing and implementing the firm’s
number of our ESG Champions count themselves as Convention on Climate Change (UNFCCC) COP27
sustainability strategy, ESG Integration Guidelines of educational opportunities to colleagues
part of the BNP Paribas Group’s Network of Experts and United Nations Convention on Biologicalacross the organisation.
and Policy, Stewardship Policy and Responsible
in Sustainability Transition, or NEST. The members
Diversity (UNCBD) COP15.
Business Conduct Policy, as well as our ambitious Members of the Sustainability Centre are highly• O verview of our 2022 voting strategy, outcomestargets on the energy transition, the environment qualified and have extensive relevant experience. of NEST work not only within their businesses
and entities, but also across the Group to sharefrom the 2021 voting season and updates fromand equality. It plays a crucial role in measuring,More than half of the team members identify
knowledge
andsupportclientsin
theirtransitions.
the proxy voting committee.
tracking and reporting on BNP Paribas Assetas women and we have team members located
The network comprises over 500 employees
Management’s (BNPP AM) impact and progress
in Boston, Hong Kong, London, New York, Paris• R eview of our ESG data strategy.
and since its inception in late 2021, it has hosted
on sustainability.
and Singapore. This means they not only bring

SUSTAINABILITY CENTRE

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTNETWORK OF EXPERTS
IN SUSTAINABILITY TRANSITION• 23 •

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSPEOPLE
CASE
ST
UDY

PROFESSIONAL
DEVELOPMENT:SUSTAINABILITY
ACADEMY @AM

CONTEXT
We recognise that the sustainable investing spaceand ESG issues are rapidly evolving, and it is criticalthat our employees keep up to date if they are to
be successful in achieving their objectives. We also
believe that sustainability education is a key lever tobuilding a strong culture of sustainability, to attract
and retain employees and to ensure we successfully
deliver on our business strategy.

ACTIVITY
We are investing significantly in ensuring that
our employees have the most current knowledge
on sustainability issues. In 2022, we formalised
our approach to sustainability education by
developing a sustainability education strategy
and launching the Sustainability Academy @AM.
This involved developing six different training
paths for our employees depending on the level ofsustainability knowledge they require in their roles.
Each training path requires between 4 and 15 hours
to complete with certain employee populations
needing to complete an external certification in
addition to this. We rolled out these training paths

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

to all employees in 2022 and completion of the
training was formalised into many of our employees
development plans for 2023.
Some highlights from training we developedin 2022 include:• L aunching a Sustainable Investing Primer

e-learning co-built with the CFA Institute to support

the understanding of the importance of acquiring
ESG skills. We integrated this into certain training
paths as well as making it available to our clients.

•M aking Net Zero the central theme of our annual

three-day Investment Symposium, which focusedon how net zero strategies can be further integrated
and used within our portfolio.

• D esigning a three-hour workshop for our Sales• E mbedding sustainability into our FAME (Financial
teams on our Global Sustainability Strategy.

& Asset Management Expertise) training curriculum
and our Demystification series designed for a wide
range of employees, focusing this year on climatechange and sustainability regulations.

•H osting a number of Climate Fresk workshops

open to all employees. These interactive three-hourworkshops are designed to teach the basic sciencebehind climate change and actions individuals
and companies can take to combat it.

OUTCOMEWe are pleased with the level of uptake of the
training strategy with employees spending
on average 3 hours and 13 minutes on internalsustainability-related training in 2022.

• 24 •• 470 employees have received a sustainable financeIn addition to internal training:

external certification such as Certification AMF Durable,
CFA Certificate in ESG Investing or Certificate in Climate
and Investing, EFFAS Certified ESG Analyst, or one of thecertificates offered by the PRI.

• Of the 470 employees with external certifications,

17 employees completed a certification programme
developed by BNP Paribas Group with the Universityof Cambridge’s Institute for Sustainable Leadership (CISL).
The CISL Positive Impact Business Certified Training is
a 7.5-day course, delivered online and in person in 2022,
over a three-month period 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. In addition to this, 98 employees
completed an 8-hour online version of the training.

We have added questions on sustainability skills
to our most recent employee engagement survey and
77% of employees said they had the correct level ofsustainability-related training to perform their role.
We believe we have developed an effective strategy forensuring that our employees have the skills and knowledge
they need to help us deliver our strategy over the long term.
We believe we have an effective approach to ensuring our
employees have the right training, however, sustainability
is evolving rapidly and we plan on introducing new topics
and dive deeper into existing topics in 2023 to continue
to keep them current. We also expect the percentageof employees completing their training paths to increasesignificantly in 2023 as we have recommended that
employees add completion of training to their individual
employee development plans or objectives.

470

employees
have received
a sustainablefinance external
certification

77%of employees
said they had
the correct levelof sustainabilityrelated training toperform their role

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSINCENTIVES
We have significantly tightened
the alignment of our Remuneration
Policy with our sustainability goals
over the past few years, integrating
sustainability with performanceassessments, financial rewards
and the professional developmentof our employees.

Our rewards strategy is designed to achieve asound, responsible and effective remuneration
policy and practice. In particular, it is designed
to avoid conflicts of interest, protect clients’interests and ensure that excessive risk-taking is
discouraged.
We use objectives to align an employee’s
activities with the company’s goals.
Sustainability-related roles and responsibilities
are defined for a set of key internal functions
most closely involved in delivering our GSS.
Within these roles, specific sustainability-related
objectives are assigned and cascaded down toteams and individuals. At the end of the year, thefulfilment of these objectives is assessed during
annual performance reviews, which are a key
input in the determination of the annual variable
remuneration awards. In addition, many roles,
such as our ESG Champions, have compulsory
ESG training incorporated into their annual
objectives.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

Specific sustainability objectives
were assigned to the following teams:
Executive
Committee:
Where relevant,Executive Committee
members have goals
related to thesuccessful
implementation of
BNPP AM’s Global
Sustainability Strategy
and the integrationof sustainability
risks throughout ourinvestment processes
and stewardship
activities.
The Sustainability
Centre:This team drives
our approach tosustainability andis responsible fordeveloping andimplementing the firm’s
GSS, ESG Integration
Guidelines and various
policies, including the
Stewardship Policy.

We continue to push sustainability-related
objectives to a number of key employees,
including all investment teams’ members andlarge portions of our sales teams as well as
our ESG Champions.

• 25 •

Investment teams:

Centre, help promotesustainability andAs part of theintegrate sustainability
investment process,risks within each team.
analysts and portfolio
managers integrate ESG Each investment teamhas at least one ESG
factors into company,
Champion responsible
asset and sovereignevaluations in different for communicating
issues related to
ways. Successfully
sustainability risks to
implementing
team members. ESG
our ESG Integration
Champions’ objectives
Guidelines, includingreflect this, including
the aim to beat theadditional goals specificrelated universe or
to their Champion role.
benchmark on ESG
scores and carbon
footprint objectives,is a goal of our Chief
Investment Officers
and is disseminated toinvestment teams.
ESG Champions:
ESG Champions havebeen appointed within
Investments and the
Global Client Group
and, liaising with
the Sustainability

Quantitative ResearchGroup (QRG):
Members of this teamco-develop ESG Scoring
Research and monitor
the link between
ESG integrationand investment
performance. Thisis reflected in theobjectives of thisdepartment, andcommunicatedto its members, where
relevant.
Product and Strategic
Marketing:This team leadson the alignmentof BNPP AM productswith sustainable
regulation and labels,
which is reflected in its
objectives. It also plays
an important role inhelping to lead the GCG
ESG Champions network
and in educating ourclients and colleagues
on sustainable
regulation topics.
Risk function:
Sustainability risks
are included in the riskfunction’s controls.
This is reflected in theobjectives of this groupand communicated toits members, where
relevant.

OVERVIEW

COLLECTIVE INSIGHTS

CONFLICTS
AND ASSURANCE
We have fiduciary duties to our clients and beneficiaries,
and we believe that by putting our clients’ interests above ours
or our employees’, we can assure stakeholders of our integrity.

CONFLICTS OF INTEREST
Our executive team has embedded a culture
throughout our business where clients’ interests
must be given priority and no client will bedisadvantaged. To ensure this:• BNPP AM is appropriately segregated from• Providing clients with the most suitable
other businesses within BNP Paribas Group.
products and services, consistent with their
We use ring-fenced IT systems to conductaims, resources, knowledge and experience.
our business.
• Decisions within BNPP AM must be taken in the• Giving clients clear, honest and noninterests of its clients, even if such decisions
misleading information and, when requested,
may be detrimental to, or conflict with, thean opinion related to expected performance,interests of a client of another business area
associated risks and pricing.
or a proprietary interest of BNP Paribas Group.
• Providing quality service that promotes the• Staff working for BNPP AM must remainclient’s best interests.
• Treating clients fairly, without giving any client independent and neutral in the performanceof their duties and responsibilities.
(or other counterparty) undue preferential
treatment.
• Behaving transparently, notably by making
available, at the client’s request, any information
related to the execution of their transactions.
All employees of BNPP AM are bound by the
BNP Paribas Group Code of Conduct, which
imposes obligations to work in clients’ bestinterests by:

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTOUR APPROACH

OUR PROGRESS• The governance arrangements for the asset

management activities of BNPP AM also function
independently from the BNP Paribas Group.
This includes BNPP AM’s hierarchical reporting
line, which is separate from those of other
BNP Paribas Group businesses and converge
only at the level of the Executive Management
Committee of BNP Paribas Group.

Employees are reminded of applicable policies
and procedures during mandatory annual training
and other training sessions during the year, andby regular communications of regulatory changes.
In addition, as a matter of policy, procedures(including those related to conflict management)
are regularly reviewed and updated as required.
If a conflict of interest arises and theimplemented policies and procedures are notsufficient to ensure with reasonable confidence
that the interests of a client will be protected:• BNPP AM must clearly disclose the generalnature and sources of the conflict to the client
before undertaking business for the client andsuch disclosure must be approved by Compliance.

• Under BNPP AM’s policy, over-reliance on disclosure
without adequate consideration of how conflicts
may be managed appropriately is not permitted.

Identification and management of conflicts

These registers are an essential tool for the
management of actual or potential conflictsof interest.

• Senior management of BNPP AM receive written
To identify potential conflicts of interest, areports at least annually on the situations
mapping exercise is conducted periodically bycontained in the conflicts of interest records.
the BNP Paribas Group and the results have beenused to create Conflicts Registers for BNPP AM,• Moreover, senior managers must takewhich are maintained by our local Complianceappropriate steps in their oversight of theteams. They contain details of actual or potential
business and are required to demonstrate theirconflicts that may arise between BNPP AM andaccountability, including conflicts of interest
its clients (or between clients of BNPP AM).
management.

• 26 •

COLLECTIVE INSIGHTSOVERVIEWOUR APPROACH

OUR PROGRESSCONFLICTS AND ASSURANCEASSURANCE

Delivery of our business strategy, including our sustainability activities, is subject to a set of internal
controls comprising three lines of defence, per BNP Paribas Group’s Internal Control charter.

1

2

3

Our first line of defence,
our core philosophy, is thatinternal control is a matterfor every BNPP AM employee,
whatever their hierarchicalposition or responsibilities.
The managers and theirrespective staff constitutethe first line of defence.
They are accountable, at eachlevel of the organisation, forachieving the objectives andmonitoring the risks of thebusinesses or services they
operate or deliver.

Our second line of defence isprovided by entities exercisingsecond level controls,
namely, risk, compliance, legal(integrated control function),Group tax and Group finance.
They are responsible fordefining and implementing
the management frameworkof accounting and financial
information risk (nonintegrated control functions).

Our third line of defence
is provided by the Inspection
Générale of BNP Paribas
Group, an independent andhierarchically integrated
internal audit function, which
reports directly to the Chief
Executive Officer (CEO)of BNP Paribas Group.

Finally, we seek external assurance in certain areas of our businessto provide third-party verification and validation of our approachand outcomes:• E Y provides an independent assurance report on the alignmentof BNPP AM’s impact management systems with the Operating Principles
for Impact Management.
• E Y also audits our Socially Responsible Investment (SRI) labelled funds
marketed in France. We are currently assessing the feasibility of having
future years’ Sustainability Reports externally assured.
We review our procedures every three years to ensure they are still
current and effective. In practice, the main policies governing sustainability
within our investment approach are reviewed at least annually either
in our Sustainability Committee or in our Stewardship Committee.
In 2020-2021, the Sustainability Centre benefitted from a review
of our processes by Inspection Générale, BNP Paribas Group’s internal
audit department, which provided us with second-party validationof our policies and processes.
We have also had a review by Inspection Générale in 2023, this time
focusing on sustainability governance, communications, sustainability
product definitions, and the control framework in place surrounding
sustainability.
This approach provides us with an arms-length opinion of the validityof our policies and processes and helps to ensure our communications
are fair, balanced and understandable.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 27 •

OVERVIEW

COLLECTIVE INSIGHTSREFLECTING CLIENT NEEDSIN OUR INVESTMENT SOLUTIONS
We have several touchpoints with our clientsto ensure that we are responding to their needs
and that our investment solutions are alignedwith their objectives:• Client Relationship Managers have a deep
and detailed knowledge of their clients’businesses, understanding both the challenges
they face now and those they are likely
to face in the future.

• Client Account Managers are responsible forthe day-to-day management of clients invested
in mandates or dedicated funds.

During the pitching process and the client
onboarding process, we make an assessmentof a client’s investment policies and gain
an understanding of their sustainability goals,
including how they will impact investment
risk and investment time horizons.

from these meetings, including those related
to investment needs. These themes are thendiscussed internally on an ongoing basis. Client
Relationship Managers are tasked with following
up with clients on their specific challenges
or needs, sustainability-related or otherwise.

Then on an ongoing basis, we use a structured
approach to engagement and contact
management, with sales teams meeting withclients regularly to seek their views and ensurethat we are being as effective as possible.
Through our client management system,
managers can track any key themes emerging

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTPARTNERING WITH THE CFA INSTITUTETO LAUNCH THE SUSTAINABLE INVESTING PRIMER
With the CFA Institute, the global
association of investment professionals,
we launched an e-learning primer
to support the understanding of theimportance of acquiring ESG skills and thegrowing need for greater sustainability
knowledge and awareness among financeand investment professionals. This is partof an ongoing partnership that started withthe award-winning Sustainable Investing
Gameshow. The e-learning module isavailable to all our clients and staff, andwas jointly developed with the CFA Institute.

The Sustainable Investing Primer consistsof a 2- or 3-hour online course covering topics
such as:• climate change and the mainstreamingof sustainability,• an introduction to ESG analysis
and the concept of materiality,• different approaches to sustainability,• greenwashing and• ways to assess sustainability
credentials.

It is important for us to ensure our clients understand evolutions in the marketplace
and we see this training as opening the door to this.

•T hird-party consultants conduct periodic
studies based on in-depth interviews withinvestment decision-makers.

We also recognise that we have a roleto play in bringing our clients along thesustainability curve. We do this largely
through the training we provide them via ourInvestment Academy, created in 2009 withthe purpose of sharing knowledge and expertisewith our clients.

OUR PROGRESSOUR APPROACH

Classes have been delivered online andin-person, with over 15,500 people attending
since inception.
We cover a number of technical and regulatory
topics affecting the asset management
industry and we have always had a focus
on sustainability. Some of the topics we
included in the 2022 curriculum were:• The basics of Sustainable Investing:
The importance of sustainable investing,types of ESG products, introduction
to regulation and sustainability
stakeholders.

• 28 •• Stewardship: Introduction to stewardshipand proxy voting.
• ESG implementation: A custom training
covering the fundamentals of integrating
ESG within portfolios.
• Sustainable Investing Advanced: A four hourin-depth training built in conjunction with
our Sustainability Centre experts.
• CFA x BNPP AM: Sustainable Investing Primer.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSREFLECTING CLIENT NEEDSIN OUR INVESTMENT SOLUTIONS
HOW WE COMMUNICATE WITH AND REPORT TO OUR CLIENTSOur goal is to provide our clients with information that can help them better understand how we have
implemented what they’ve asked of us and the sustainability characteristics of their investments.
On an annual basis

On a semi-annual basis

On a quarterly basis

We publish our Sustainability
Report, Stewardship Report,
Voting Report and Principles for
Responsible Investment (PRI)
Transparency Report to provide
readers with an overview of oursustainability-related activities
for the year. We also repackage
this content into more digestible
pieces that are shared withclients throughout the year.

We produce a Solidarity
Investment Report for our clients
who invest in funds that financethe development of the social
economy. The report outlines
the outcomes and impacts ofthese investments along withcase studies of various individual
investments.

We produce bespoke reports forour institutional clients invested
in dedicated funds or mandates
and hold meetings with themto discuss the reports. Portfolio
managers or product specialists
usually join the meetings and go
through performance in detail.
Sustainability topics are often
covered in these meetings.

• For applicable funds, we• We publish reportings linked to

On a monthly basis

generate fund reports andfactsheets that include ESG
metrics such as the carbon
footprint, the ESG score
and the ESG contributionof their portfolios versus theirrespective benchmarks.

• We have introduced a newchapter on sustainability
metrics in our reporting
to institutional clients.

On an ongoing basis

on sustainability topics
in our Viewpoint blog.

labels or any other sustainableclassification such as extrafinancial reporting for French
SRI label, fund transparency
reports or Impact reporting• We publish key policies,

amendments, we start topublish European ESG Template(EET) reporting• We send ad hoc updates on• In line with MiFID II regulation• We release thought leadershipto our clients on sustainability
topics throughout the year,
and publish shorter pieces,
podcasts and videos

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

guidelines and annual reports
covering stewardship, voting,compliance and assurance,
on a dedicated page on our
corporate website.
new developments related to
net zero, including podcasts,
videos, blogs and other thought
leadership, the Sustainable
Finance Disclosure Regulation(SFDR) and other policy
matters.

The dialogue established by our
In 2022, dedicated campaigns weresales teams with our clients on
carried out aimed at informing oursustainable investing is essential.
clients about SFDR regulations,
To do this efficiently, it is important our stewardship activities andto provide our sales representatives our biodiversity and net zerowith the right tools, in a variety
roadmaps. To ensure that we areof formats and for educationalbuilding our business around our
purposes, to ensure a relevant and clients and their needs, a Client
useful dialogue with our clients.
Engagement team comprised
The marketing and communication of Client Experience and Client
Communications was created.
teams have long been committed
to reporting on our actions
and producing multiple media(brochures, videos, client events,
podcasts, articles, infographics)
allowing our customers tounderstand the challenges
and opportunities offered bysustainability.

To improve the effectivenessof our client communications,a sustainability coordinationcommittee meets monthly withmembers of the sales, marketing,communications and Sustainability
Centre teams to ensure activations
and share best practices. The headof the coordination committee also
contributes information at eachmeeting of GCG ESG Champions
on the activations and tools madeavailable to them.

• 29 •We delivered new communication
packs on topics such as MiFID
and SFDR for sales teams, as well
as direct-to-client letters. These
were supported by management
calls and training modules. We
also developed a section dedicatedto our voting and engagement
activities on our corporate website.

In 2023, we plan to further
strengthen our communication
system with our clients including
developing enhanced educational
materials and a sustainability
educational kit for our clientsand enhanced reporting.

GAINING BETTER INSIGHTSINTO CLIENT NEEDSIn 2021, we partnered with Greenwich
Associates to survey investment decisionmakers around the globe to help us
better understand their needs andultimately improve client satisfaction.
On the basis of feedback from 130
clients participating in these institutional
and intermediary studies, in 2022, we
conducted an in-depth analysis of theresults related to the studies’ ESG
questions, soliciting candid input from
relationship managers responsible foreach of the clients who responded.
The aim of this exercise was to provide
qualitative feedback to better understandour quantitative results, in which weranked highly compared to leading peers.
We extrapolated seven key takeaways
ranging from the need for improved
data accessibility to the strength of ourstewardship efforts. This analysis wasshared with our leadership team to beactioned by the appropriate departments.
We also engaged with Greenwich in 2022
on another market study aimed at better
understanding changing client needs
and preferences in sustainable investing.
The takeaways were shared across ourorganisation, and our Client Engagement
team spearheaded a 9-point action plan
to reinforce elements of our existing
offering and to develop new services tobetter suit client needs going forward.

OVERVIEWOUR
PROGRESSCOLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSIn this section of the report, we outline
the progress we have made in furthering
the six pillars of sustainability
into our business.

31 • ESG INTEGRATION

40 • OUR APPROACH TO VOTING AND ENGAGEMENT
73 • RESPONSIBLE BUSINESS CONDUCT
77 • THE 3Es

86 • INVESTMENT SOLUTIONS FOR SUSTAINABILITY

90 • OUR CORPORATE SOCIAL RESPONSIBILITY APPROACH

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 30 •

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSESG
INTEGRATION
By integrating a considerationof relevant Environmental, Socialand Governance (ESG) factors into
our investment decisions, we canidentify and assess areas of risk
or opportunity. Our ESG scoringand integration approach is applied
across a wide range of investment
strategies.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 31 •BACK TOTHE 6 PILLARSOVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSESG INTEGRATION
We believe that analysing
investments using ESG criteria
helps us account for a wider setof risks and opportunities, which inturn helps us make better-informed
investment decisions. In otherwords, our fiduciary duty is alignedwith sustainability.
We believe that many areasof sustainability are imperfectly
understood, under-researched
and inefficiently priced, withinconsistent levels of disclosure.
Against this background, ESG
integration provides investors
with an opportunity to achieve
better risk-adjusted returns,
via differentiated integrationof sustainability considerations
into investment processes.

We continue to implement our
ESG Data Programme to support
effectively developing and deploying
our various research methodologies.
Through this programme weare developing robust internal
capabilities to clean and manipulate
data that can be used to support
investment analysis, portfolio
construction and measurement andreporting. The functional relationshipbetween our Sustainability Centre,
Quantitative Research Group,
Digital and IT teams is criticalto our ability to develop and maintainour proprietary and third-party
ESG datasets and deliver the results
to our investment teams, clientsand regulators.

ESG Integration Guidelines

Proprietary Sustainability Research

Our ESG Integration Guidelines shape how our analysts
and portfolio managers incorporate relevant ESG factors
into their company or asset evaluation and portfolio
construction decision-making processes. Specifically:

We chose to build our own proprietary scoring frameworks
to ensure that they are tailored to our needs. For ESG
scores, we believe in the merits of looking beyond aheadline value to evaluate individual metrics that canbe valuable sources of insight into investment risk andopportunities.

•W e avoid investing in entities without associated ESG
research and;•W
 e apply better-than-benchmark (BTB) constraints
on ESG and carbon for portfolios in the scopeof our guidelines.

We apply an additional layer of data quality and control
to the underlying metrics we source from third parties tonarrow our focus to the indicators that we deem to havesufficient coverage, quality and insight.

We believe that we should apply these principles to all
asset classes, to the extent possible. We actively promotethese guidelines to our existing delegated managers andmanagers we partner with, and we will not delegate to new
external managers that do not incorporate sustainability
policies and practices.

In some cases, we also use qualitative overlays to correct
data, update it or infuse it with our first-hand knowledge
and insights. Covering more than 13,000 issuers of
securities, it helps our portfolio managers pinpoint
an issuer’s performance on material ESG issues andintegrate these into their investment decisions.

For client mandates, we will apply as many of theseprinciples as we can and promote increased incorporationof sustainability principles, while respecting the wishesof our clients.

We believe our methodology is markedly differentiated,with a more focused number of ESG metrics and a clear
preference for ‘performance’ over ‘policy’ indicators.

We accomplish this primarily
in two ways: through our ESG
Integration Guidelines and throughthe development of proprietary
sustainability research.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 32 •We also recently launched our proprietary Sustainable
Development Goals (SDG) scoring framework. Similar
to our approach around ESG scoring, we wanted moreinsight into the SDG performance of researched companies
than we could obtain from off-the-shelf third-party datasolutions. The SDG framework embedded in our SDG model
provides granularity at the SDG Target level and assesses
the alignment or misalignment of company revenues at thebusiness line or activity level. This information informs our
Sustainable Investment determination, which is critical for
Article 9 portfolio construction and security selection.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSESG INTEGRATION

CASE
ST
UDY

THE EVOLVINGREGULATORY LANDSCAPECONTEXT
There is a growing politicaland social drive to reallocate
capital to activities that help
tackle the sustainability issues
the world faces. As part ofthis, regulators are requiring
greater transparency on
the degree of sustainabilityof financial products. Theiraim is that more private
investment can be channelledtowards sustainableoutcomes while preventing
greenwashing.
The complexity and evolving
nature of these rules mean
asset managers needto remain vigilant.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

They must, in fact, ensure
adherence to regulations
and deliver on the claims
their products are making
in order to keep the confidenceof their clients.

ACTIVITYIn late 2020, we launcheda Sustainable Regulation
Programme (SRP) to oversee
the development andimplementation of regulatoryrelated methodologies,
definitions, disclosure
and processes. The SRP
includes representatives
from almost

every department within
our organisation. It is
responsible for developing
standards for our
products to ensure thatthey align optimally withthe sustainability preferencesof our clients.
This included developing adefinition for Sustainable
Investment and explaining how
we address Principle Adverse
Sustainability Impacts (PASI)
by each pillar of our approachto sustainability. This program
also included developing amethodology to measurealignment against the European
Union (EU) green taxonomy.

OUTCOMESThe SRP implemented anumber of key initiatives
including building acomprehensive methodology
to meet the ESG preferencesin MiFID II and Insurance
Distribution Directive (IDD).
This methodology covers
Principal Adverse Impacts(PAIs) on sustainability
factors in the meaning of
the regulation and identifies
Sustainable Investments
defined by SFDR. We
accomplished this in partby sourcing robust data that
demonstrates compliancewith the Technical Screening
Criteria (TSC) in the EU
Taxonomy regulation.
We made commitments ina wide range of products on
the three ESG preferences
criteria to meet end client
preferences:•M ost of our open Article
8 and 9 funds take into
account the PAIs in theirinvestment strategy;•M ost of our open Article
8 and 9 funds have an• 33 •

ambitious minimum
commitment to invest in
Sustainable Investments;•W e have a meaningful rangeof Article 8 and 9 funds witha minimum commitment toinvest in the EU Taxonomy
even though the available
universe is still very small.
We set minimum standards
for the “promotion ofenvironmental or social
characteristics” for Article
8 products to ensure arobust framework is in place
to deliver extra-financial
characteristics marketed
to clients.
In 2023, we will centralisethe validation of all changes
to methodologies andother regulatory-relatedchanges through a validationcommittee that is an outcomeof the SRP.

Regulation is a core componentof how we implement sustainability
in our investment strategies.
We welcome standards thatprovide a common framework
for all investors. Our goal is
to make our range of products
as ambitious as possible, after
a significant effort by teams
in implementing SFDR indicatorssuch as PAIs, sustainable
investments and taxonomy.”
Leila Lhuissier
ESG Product Specialist

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROPRIETARY ESG RATINGSOUR PROGRESSESG INTEGRATION

BNPP AM’S PROPRIETARYESG SCORING FRAMEWORK IS:

Our proprietary ESG scoring framework benefits from the combined knowledge and expertise of three teams,
helping to generate robust ESG insights for better-informed decisions.

Powered by the expertise of our sustainability, investment and quantitative teams

Sustainability Centre

Quantitative Research Group

Investment teams• Selects data providers, and assigns
metrics and weights to sectors• Analyses data quality, bias and metriccorrelations to inform and enhance
the selection of metrics• Involved in every step of the ESG
scoring development process and related
enhancements• Normalises the distribution of metrics scores• Provide inputs for data corrections
and overlays• Assesses data quality and coverage(with the Quantitative Research Group)• Manages data corrections and qualitative
overlays• Reviews key themes and sectors
to identify key trends, and update
data models and overlays accordingly

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• Provides technical expertiseand solutions to build and maintaina robust scoring framework• Utilise scoring to support investment
decision-making• 34 •• Comprehensive: Covering more than 13,000 issuers• Focused on materiality: Using a limited number of material,insightful metrics for each sector• Investment insight-driven: Built with and for investment
professionals• Robust: With a statistically rigorous model developedwith our Quantitative Research Group• Dynamic and forward-looking: Integrating unique insights
through qualitative overlays• Managed by the Sustainability Centre: To ensure the integrity
and consistency of the framework
Thanks to these features, we believe our ESG scoringis a powerful tool to help investment teams generate
long-term sustainable returns for investors.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSESG INTEGRATION
Data, research and voting
service providers
Our ESG research analysis andfindings are independent andbased on a wide variety of sources
not limited to ESG data providers.
They include the knowledge wegain from participating in various
investment forums and communities,
our relationships with academic
institutions and other aspectsof civil society.
We select our ESG data providers
using a two-step due diligenceprocess. Our Quantitative ResearchGroup begins by analysing providers’data sets. This includes examining
the coverage of data and its
quality, and a statistical review of
estimation methodologies, among
other items. At the same time, theSustainability Centre performs a
qualitative review of methodologies
used and the relevance of selection
criteria. Once we have selected aprovider, we upload the data sets
into our IT systems. We have anumber of controls in place to ensure
the completeness, accuracy andconsistency of the data. Our market
data team oversees governancerelated to the relationship with theprovider and as part of this process,we perform an annual review ofour market data contracts. We havelong-term relationships with our data
providers and this means working
closely with them to ensure they

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

are evolving their products andservices in a way that meets our
expectations. If after dialogue, a data
provider continues to fall short, we
will look to terminate the relationshipand replace them with one that isbetter suited to our needs.
ESG research brokers are selected,
monitored and assessed througha formal process organised by ourSell-Side Relationship department.
This means we count on and value
the interactions our teams have withthe research brokers and follow upinternally where we see declines inusage to understand why. This feeds
into a process where twice a year,
we assess the quality of the researchand rate the provider. Annually, we
conduct a formal review involving ourChief Investment Officers, researchusers (including the Sustainability
Centre) and Sell-Side Relationshipmanagement where we decide
whether to continue relationships
with research brokers basedon use and quality.

OUR SPECIALISED EXTERNAL DATA PROVIDERS• Sustainalytics provides us with
raw data metrics that we use
selectively to feed our ESG scoringmodel. We also use this provider
for United Nations Global Compact
analysis and controversies
offerings.
• Trucost, CDP, Bloomberg, 427, TPI,
SBTi and Climate Action 100+:
we use these data sources for our
climate change and physical risk
analysis. Bloomberg and Trucost
also provide us with corporate
Scope 1 & 2 carbon emissions data.
• CDP, Trucost, Forest 500, TRASE,SPOTT, FAIRR and Iceberg Data
Lab provide us with water,

deforestation and biodiversity
metrics we use to assess andreport on the biodiversity
footprints of our portfolios andholdings.
• ISS and Proxinvest provide us withgovernance research and data to
feed our ESG scoring model.
• Beyond Ratings provides us withdata and research used in our ESG
sovereign research and scoring
framework.
• FactSet provides us with financial
and enterprise value data.
• Bloomberg provides us with EU
Taxonomy alignment rate data that

Gathering and assimilating thegrowing array of ESG data entering
the marketplace represents a
tremendous challenge. It also
represents one of the biggest
opportunities the investment
management industry has seen for
decades to drive value for clients
while promoting positive real
economy outcomes. Our proprietary

We use proxy voting providers to
help us implement our voting policies.
We do not delegate decision-making
authority to them and we willtake each voting decision for every
shareholder’s meeting internally withno outsourcing of the final decision.
This ensures that our service provider
delivers the outcomes we are looking
for. Arrangements with proxy voting
providers are reviewed annually.

• 35 •

we use as part of our Sustainable
Investment definition and EU
Taxonomy alignment thresholds.
• We partnered with Matter tocreate a revenue-based SDG
alignment model for corporates
leveraging FactSet Hierarchy
data which is used as part of the
Sustainable Investment definition.
• CDP, Bloomberg, Trucost, Factset,
Sustainalytics and ISS are also
used to source certain SFDR
Principle Adverse Impact (PAI)
indicators.
• ESG and mainstream brokers
provide us with research papers
and other market information.

scoring framework provides portfolio
managers with our differentiatedviews on the ESG characteristics ofinvestees. And our industry-leading
ESG Integration Guidelines help
client portfolios realise better-thanbenchmark ESG performance.’
Bérénice Lasfargues
ESG Analyst, Sustainable Development
Goals Lead

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSESG INTEGRATION
Encouraging change in our value chain
We extend our analysis of companies’
sustainability performance to some of our
suppliers, and specifically our execution brokers.
We have developed a process for assessing andrating the ESG performance of the brokers weuse. The purpose is not only to help encourage
good corporate social responsibility practices
within our value chain, but also to encourage
the creation and expansion of the market forsustainability instruments.

In 2022, we joined Sustainable Trading,the non-profit organisation looking to better
embed ESG practices in the financial markets
trading industry. They achieve this in part byco-developing a set of best practices to be shared
between members. The goal is to eventuallyassess members on the progress they are making
in implementing these best practices within
their respective organisation. Another goal isto provide benchmarking tools so that members
can learn from each other.

We see Sustainable Trading as
an important catalyst of change
within the value chain of the asset
management industry. Joining
this organisation will help us tocollectively have a deeper impact aswell as help us to progress the goalsof our Global Sustainability Strategy.”
Emmanuel Blanc
Head of Sell-Side Relationship Management

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 36 •

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

EXAMPLES OF ESG INTEGRATIONESG INTEGRATIONEURO HIGH YIELD BOND (FIXED INCOME)

Portfolio strategy
committee

Credit strategy committee•D iscussion of macro and credit
outlook.
•D efinition of top-down views:
sectors including ESG indicatorsfrom Sustainability Centre andSustainability Risk Assessment,
rates and spread.

OUR PROGRESS

Based on top-down views fromstep 1, portfolio manager defines
monthly model portfolio with
Duration Time Spread contribution
by rating & sectors based on credit
research sector views and ESG
indicators.

GLOBAL EQUITIES (EQUITY)

Issuer selection

Portfolio construction•F undamental assessment ofissuers (including ESG indicators
and Sustainability Risk
Assessment).

•B uild a robust portfolio taking
into consideration client andstrategy objectives including theoverall ESG and carbon scoresof the portfolio relative to thebenchmark.

• Selection based on:- Fundamentals- Relative value- Pricing & Technicals- ESG score•C urve positioning, instrument
choice, capital structure.

BLUE ECONOMY EQUITY (INDEX STRATEGY)
Index provider selection

Methodology development

Index monitoring

Engagement with issuers•R eview of index construction
methodology, including the
integration of sustainability inthe index construction, index ESG
characteristics and the strengthof the index provider’s ESG
research.

•A lign index rule book asbest as possible to BNPP AM
Responsible Business Conduct andactivities prohibited by Towards
Sustainability label.

•C ontinuous monitoring andengagement with the index
provider to adjust rule book whensignificant discrepancies are
identified.

•D edicated engagement strategy
where we engage with selected
constituents of the ETF to improvetheir sustainability practices,track their progress and reportback to stakeholders.

•D etermine definition,
methodology and sub-themesof the Blue Economy investment
clusters with the index provider
in order to develop a custom
methodology for rule book.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT•T argets pre-defined investments
clusters: Fish & Seafood
companies (in 2021) and Shipping
Lanes companies (in 2022) withthe support of Asia Research &Engagement (ARE).

• 37 •

Idea generation• Proprietary
screening forcompanies witha combinationof sustainable
quality, businessmomentum andvaluation.

ESG& fundamental
analysis• Comprehensive
ESG process using
in-house scoring
methodology and
RBC Policy.
•D etailed company
researchincluding further
ESG analysis,desk review,external researchand company
meetings.
• Financial
modelling,
integrating
sustainability
and non-financial
criteria togenerate IRRs.

Portfolio
construction& riskmanagement•R isk Management
focused onrevenue exposure,diversification,and sustainability
criteria.
• Better-thanbenchmark ESG
ratings and low
carbon footprint.

Company
monitoring& engagement• Ongoing
monitoring of
all relevant
companies.
• Continuous
engagement byinvestment teamon company
performance
including ESG.
• Firmwide,
global coverageof voting,engagement andstewardship.

COLLECTIVE INSIGHTSOVERVIEWOUR APPROACH

OUR PROGRESSESG INTEGRATION
CASE

Passive investment strategies
are a growing part of our productmix, and for a long time, they
have contributed to our solutions
to investing in sustainability,
including by being pioneers onsome ESG strategies like Low
Carbon or Circular Economy.

ACTIVITY
Since mid-2017, our ETF launches
have focused on sustainableindices replication. We haveworked with index providers to
shift a number of our existing
ETFs to ESG – and Paris-aligned
or Carbon-Transition benchmark
indices – in order to strengthen
the sustainability characteristics
of our BNP Paribas Easy ETF& Index funds range.

OUTCOME
88% of the BNP Paribas Easy
ETF & Index funds range,

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

representing €20 billion in AUM,
is now classified as Article 8
or Article 9 according to SFDR
regulations. This will deliver
real results: as an example, the
MSCI SRI S-Series 5% Capped
range will aim to reduce thecarbon intensity of its portfolio
by an initial 50% when comparedto the traditional index it isderived from, followed by annual
decreases of 7%, in line withthe 1.5°C trajectory of the Paris
Agreement. Our ETF & Index
funds range covers equity
and bond markets, several
geographic areas and multiple
ESG thematic investments.
Our aim is to continue expanding
it in 2023.

UDY

UDY

CONTEXTSTST

ESG INTEGRATION
IN EXCHANGE TRADED FUNDS (ETFs)

CASE

SCORING
SOVEREIGNSCONTEXT
Rating the ESG performance of sovereigns
is fundamentally different than for corporate
issuers.

ACTIVITY
We adapted our ESG scoring methodology
to provide a view of the ESG performance ofa country and enable us to compare countries
with different levels of economic development
across a variety of environmental, social andgovernance dimensions.
Notably, we assess countries’ ambition
for tackling climate change with regards
to their National Determined Contributions(NDCs), through the detailed information on
the policies adopted by countries to address
climate change, and their forward-looking
physical climate risk exposure. In addition,
we take into consideration countries’commitments concerning climate change,
thus informing our engagement with themon this issue.
We also apply the BNP Paribas Group’s
sensitive countries framework, which
includes risk mitigation measures on certain• 38 •

countries or activities that are consideredparticularly exposed to money launderingor terrorism financing.
And finally, as with our company scoringmodel, we incorporate qualitative inputs frominvestment teams’ in-depth knowledge, andfrom dialogue and engagement with debt
management officials and policymakers.
Our Sovereign ESG data model has equal
weighting for each of the E-pillar (14 themes),
S-pillar (12 themes) and G-pillar (7 themes),
comprising a total of 225 Key Performance
Indicators (KPIs) structured around 33 key
themes.

OUTCOMEWe have developed a robust scoring systemthat covers almost 110 countries. We havealso supplemented our scoring with direct
engagements with governments. This
includes discussions with policy makers inmembers of the European Union, Japan, theUK and Chile about their green, social andsustainability bond issuances, helping toclarify their strategy on climate change, theactions they are taking, progress achieved
and constraints they are facing.

Our sovereign ESG methodology
provides a robust analysis
of a country’s ESG performance.
It’s differentiated by its inclusionof forward-looking views on
climate risk in addition to typical
ESG data points. It also provides
a balanced view that enables us
to compare countries with highly
different levels of economic
development. In addition,
it benefits from investment teams’
in-depth knowledge and fromour engagement with regulatorsand policymakers, adding aview on countries’ perceived
evolution beyond our quantitative
assessment of ESG performance.”
Malika Takhtayeva
Sovereign ESG Analyst, Sustainable
Fixed Income Lead

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSESG INTEGRATIONSUPPORTING CUTTING-EDGE
RESEARCH THROUGH GRASFIIn 2018, we established an academic
partnership with the Global Research Alliancefor Sustainable Finance and Investment(GRASFI) so that our investment teams haveaccess to leading research, helping to informthe broader debate as well as our own
methodologies and investment approaches.
Their annual conference brings researchers
together from around the world to present
their findings on a range of topics related tosustainability. Each year, prizes are awarded forthe best work in several categories. 2022’s best
paper was by Julia Bingler, Mathias Kraus,
Markus Leippold and Nicolas Webersinke,
entitled Cheap Talk in Corporate Climate
Commitments: The Role of Active Institutional
Ownership, Signaling, Materiality, and SentimentFirm sustainability: How do investors drive it
ahead, if at all?.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTThe researchers analysed the link between
by institutional investors can raise the quality‘cheap talk’ – otherwise interpreted as companies and decision-relevance of climate risk disclosuresengaging in greenwashing – and three elements: and commitments by investee companies.
stewardship; public support for the Task Force on This paper was one of 42 presented at the
Climate-related Financial Disclosures (TCFD) or
conference (hosted by the Center for Sustainablejoining the Science-Based Targets Initiative (SBTi); Finance and Private Wealth (CSP) and the Centerand material climate exposure or disclosuresof Competence for Sustainable Finance (CCSF),
focused on downside risks.
University of Zurich), attended by members of our
Their study analysed 14,584 annual reports ofinvestment and sales teams. We later presented
MSCI World index constituent companies between a summary of the conference papers to our ESG
2010 and 2020. They found that active institutional Champions as well as published summaries
ownership and targeted engagement strategies, as on a number of the papers on our blog, giving
well as climate risk exposed sectors and downside investment staff the opportunity to incorporaterisk-focused disclosures suppress ‘cheap talk’. In
the findings into their own thinking.
contrast, publicly voiced support for the TCFD was
associated with more ‘cheap talk’.
We believe the paper underscores the value of
stewardship activities. It shows that engagement• 39 •ENGAGEMENT BYINSTITUTIONAL INVESTORSCAN RAISE THE QUALITYAND DECISION-RELEVANCE
OF CLIMATE RISK DISCLOSURESAND COMMITMENTS
BY INVESTEE COMPANIES.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSBACK TOTHE 6 PILLARSOUR APPROACH
TO VOTING
AND ENGAGEMENT
As long-term investors, we use voting, engagement
and policy advocacy to influence companies
and the world for the better. Promoting good ESG standards
is an essential part of our ownership responsibilities.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 40 •

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENTA FUTURE MAKER
We are committed to being a ‘future maker‘,using our investments and our influencewith companies, policy makers and standard
setters, to contribute to transitioning to lowcarbon, environmentally sustainable andinclusive economies. We use the tools of voting,engagement and public policy to realise thisambition.
We encourage companies to improve theirperformance on sustainability topics. We also
encourage policy makers to deliver legislation,
regulation and standards that foster sustainable
equitable development, addresses systemicrisks and market failures. Promoting good ESG
standards is an essential part of our ownership
responsibilities.
To ensure that our activities are effective,
consistent and support our objectives andduties as fiduciaries, they are not only rooted
in our Global Sustainability Strategy (GSS) but
also codified in our Stewardship Policy and ourGovernance and Voting Policy, reviewed annuallyand revised as needed – and approved by the
Stewardship Committee.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

VotingEngagement

Public policy

We exercise our rights
and responsibilities bymaking considered voting
decisions in line with ourpolicy. Voting is core todelivering on our fiduciary
duty. It drives better
corporate governance andsustainability practices.

Informed proactive
engagement with equity
and bond issuers aims to
improve their performanceon governance andsustainability. Engagementin turn informs our votes
and influences issuers’
eligibility for investment
and ESG ratings. It is also
designed to counter global
systemic risks and market
failures.

We actively engage
with regulators andpolicymakers to help shape
the markets in which weinvest and the rules thatguide and govern company
behaviour.

• As a sustainable investor, we believe that
we should use voting, engagement and policy
advocacy to influence companies and the world
for the better.
• If done well, our voting and engagement
can reduce risk, unlock value and positively
impact the world around us by encouraging
the adoption of better corporate practices
and transparency.

FOR US THE WORLD HAS TWO KINDS
OF INVESTORS: FUTURE TAKERS AND FUTURE
MAKERS. FUTURE TAKERS STAND BY AND
WATCH HOW EVENTS UNFOLD. FUTURE MAKERSUSE THEIR INFLUENCE TO HELP SHAPE
THE WORLD AROUND THEM.
• 41 •OUR CONVICTION:VOTING AND ENGAGEMENT
ARE BOTH AN OBLIGATION
AND AN OPPORTUNITY• We believe that engagement is generally
more effective than exclusion but divestment
can be effective as a last resort.
• Appropriate and comprehensive corporate
disclosure is a fundamental requirement
for sound investment decision-making.
• Collaboration with other long-term investors
and stakeholders can help to achieve ourcommon environmental and social aims,
particularly when engaging with companies
and regulatory bodies.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENTSCOPE OF OUR VOTING AND ENGAGEMENT ACTIVITIESESCALATION PROCESS

Our voting and engagement are governedby policies that apply to BNP Paribas AssetManagement Holding (BNPP AM Holding)*, theparent entity of BNP Paribas Asset Management
France (BNPP AM France), which is the asset
management business of BNP Paribas Group.

We engage with companies in the context of voting
at their AGMs, coordinating such dialogue withportfolio managers, ESG analysts and stewardshipanalysts, so that final voting decisions can feed
into the qualitative elements of our ESG ratings.

Investor-issuer dialogue is the foundation of goodstewardship – it allows for trusting relationships
to be built over time, permitting candid solutionoriented discussions about issues that might
not otherwise be addressed.

Our engagement encompasses our public equity
As an integral element of our investment process, holdings – both actively and passively managed –we vote on behalf of our clients at annual general and extends beyond them. We regularly engage
meetings (AGMs) and Extraordinary Generalwith issuers of various types of sustainable bonds
Meetings (EGMs) of companies in which we invest. to help us understand the environmental andVoting rights are exercised on equities for mutualsocial risks and expected benefits of the issuance,
funds, UCITS, Accredited Investment Fiduciary
ensure that the investment is appropriate for(AIF), foreign investment funds, mandates
our clients, and to promote better sustainability
and for Employee Investment Funds for which
practices and reporting.
voting rights are delegated to BNPP AM.
We also engage with sovereigns on material

Dialogue, however, is a two-way street and there
are times when stronger measures are necessary
to encourage a company to come to the table anddiscuss our concerns.

We are committed to consistently exercising
our voting policy across portfolios and markets,
subject to technical and legal constraints.
We also accommodate certain custom voting
policies for specific client dedicated funds
or mandates. For pooled funds, our custodian
and voting providers’ platforms are not currently
set up to enable this.
External investment managers to whom
we delegate portfolio management with related
voting rights are required to have a proxy voting
policy and to exercise voting rights in linewith market practices.
*

When more robust action is required to ensure
protection and enhancement of our clients’interests and shareholder value, we can, interalia, make public statements, propose shareholder
resolutions, call an extraordinary general meetingor intervene jointly with other institutions. These
decisions are taken on a case-by-case basis, toensure that our concerns have been properly
heard and dealt with.

ESG issues, including climate change, which may
impact the value of our investments in sovereign
bonds or their ability to meet their obligations
to investors.

Our shareholder proposal filing strategy isapproved by the Stewardship Committee oncea year, as are specific decisions about filingeach shareholder proposal. We note examples
throughout this chapter of the report.

Within our private debt business, we engage
corporate borrowers on a wide range of ESG
characteristics (including compliance with our
Responsible Business Conduct (RBC) policy, ESG
risks and opportunities assessment at a projectlevel, environmental and climate assessments,etc.) and apply strict environmental standards
to our Real Assets portfolios.

 ll 100% owned entities of BNPP AM Holding, including BNP Paribas Asset Management
A
UK (Limited), are subject to and adhere to BNPP AM Policies.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 42 •

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENTVOTING: EXERCISINGOUR RIGHTS ANDRESPONSIBILITIESOur approach to voting is governed by a setof principles which underpin our expectationsof the companies we invest in and act as our
guidance in carrying out our ownership duties.
Our Governance and Voting Policy sets the rules
we apply to proxy voting, including on ESG-related
matters. It is updated each year. We vote proxies
solely in our clients’ best interests, and theultimate beneficiaries of the funds for which
we are responsible.
We seek to develop a constructive and positive
approach with the boards of companies weinvest in, clearly setting out our expectations
as a diligent steward of assets. However, we will
not hesitate to abstain or oppose management,or to support shareholder proposals, when applying
our voting guidelines. When companies do notmeet our expectations, we oppose the following key

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

categories of management resolutions, dependingon the market: Board Elections; Discharge of Board
and Management or Financial Statements.
To help us implement our policies, we use
the services of proxy voting providers ISS, which
provides global voting research and a voting
platform for all companies, and Proxinvest, which
provides research on French companies. However,
we do not delegate decision-making authority
to them and we will take each voting decision
for every shareholder’s meeting internallywith no outsourcing of the final decision.
Our 2022 full proxy voting record is publicly
available on our website. The following is asummary of our voting activity in 2022, including
details on our most significant votes and ourrationales for votes on environmental and social
proposals.

Voting and dialogue with companies are core to our stewardshipstrategy. The AGM season is an important opportunity for us to makeour voice heard. During 2022, we opposed a third of all resolutions
we voted on because we did not believe they were in the best interestsof our clients. Moreover, the integration of environmental and social
considerations into our voting policy led us to oppose around
1,400 resolutions, mainly on climate and biodiversity grounds.”
Michael Herskovich
Global Head of Stewardship

KEY REVISIONS TO OUR VOTINGPOLICY FOR THE 2022 SEASON
Each year, we review our Governance and Voting
Policy to adapt it to current market practices
and remaining challenges in the fields ofcorporate governance and sustainability. Our
2022 Governance and Voting Policy strengthened
and reinforced the link between voting and ESG
integration.
We continued to sanction issuers on ESG topics
such as non-disclosure of GHG emissions
or about their climate lobbying, or misalignment
with respect toward our Responsible BusinessConduct (RBC) policy. We also reinforced our
climate-related expectations and added two newareas of focus: biodiversity and low ESG scores.

• 43 •We also included new criteria to guide our voting
decisions on ‘Say-on-Climate’ * management
proposals and boosted our expectations inrelation to including ESG performance criteria
in remuneration packages, specifically, in at least
one component of executive compensation.

Resolution on the agenda of the General Assemblies
on climate change.

*The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESS

CLIMATE-RELATED EXPECTATIONS:
We increased our expectations of companies
identified as the world’s largest corporate
greenhouse gas emitters. In light of theclimate crisis and our commitment to the
Net Zero Asset Managers (NZAM) initiative,
we consider it essential to strengthen our
expectations of companies in sectors that are
key to substantially cutting global GHG emissions.
We expected these companies to publicly
announce their ambition to achieve net-zero
GHG emissions by 2050 or sooner, underpinnedby credible decarbonisation strategies andintermediary targets, in line with global efforts
to limit warming to 1.5 degrees Celsius.

MITMENTSCBIODIVERSITY-RELATED EXPECTATIONSCOMPANIES WITH LOW ESG SCORESIn relation to our Biodiversity roadmap,
we expected companies to assess and reporton their key impacts and dependencies
on nature, beginning with companies
in high-impact sectors and with a priority
focus on deforestation and water. As a firststep, we targeted companies whose activities
have high impacts on nature and thatfailed to disclose through the CDP Water
and Forest questionnaires.

As we apply our proprietary ESG rating
system to all our holdings, we opposed
the key resolutions at companies’ annual general
meetings in the absence of improvement in theirpractices. We aimed to engage with companies
with low scores on our rating system, especiallythose in which we have active positions, and had
the option to sanction the noted resolutions
as an escalation measure if that engagement
was unsuccessful.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

2022 VOTING SCOPE

You will findthe updates
NET RO C
on the otherZE
commitments
we have made in
our Net Zero
Roadmap throughout
the Voting andengagement,
Corporate Social
Responsibility andResponsible BusinessConduct sections of
this report, which
will be identified
with this symbol.

OM

ZERO

OM

NET

MITMENTSOUR APPROACH TO VOTINGAND ENGAGEMENT

Each year, we monitor the total votable shares in theportfolios we manage and assess the percentage of
votes exercised during the year in alignment with our
Governance and Voting Policy. We use two principles
to select the shares for which we exercise voting rights.
We aim to concentrate our efforts on:• widely held positions• companies where our collective investment
schemes hold a significant portion of the issuer’s
capital.
Specifically, the total number of meetings we voteat is defined where our aggregated positions meetat least one of the three following conditions:• represent 90% of accrued total stock positions;•m ake up 0.1% or more of the company’s market
capitalisation; or• ad-hoc demand.

90%

We voted onof ourassets undermanagementin 2022.

33%

We voted against
management inof ourvotes in 2022.

The total value of the assets under managementthat fell within our voting scope (which is beyond
Undertakings for Collective Investments in Transferable
Securities (UCITS) with mandates) was €72 billion.
This voting scope represents nearly 52% of meetings
held by companies held in all our UCITS withmandates, which represented 78% of ballots voted.

• 44 •

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENTSECURITIES LENDING
PROGRAMMEKEY VOTINGSTATISTICS

Over the past three years, we have maintained
a high and rising opposition rate. Thisis because we set high expectations in allareas and because we review every itemon every agenda and make our own voting
decisions – a rare practice among large asset
This process comprises both quantitative
restrictions and a qualitative appraisal, to fully take managers. This year the percentage of votes
against management was 33%, the same
into consideration our clients’ long-term interests.
Our policy is to hold a significant minimum portion as in 2021, and one percentage point higher
than in 2020. Within our scope, we votedof votable shares for all general meetings, and werecall all votable shares for general meetings with at 1,976 general meetings in 2022, primarilyin Europe, reflecting the split of our assets
major issues at stake, as well as for some funds
under management.
where we vote on 100% of positions.

 Total AGMs at which we voted overthe last 3 years (2020, 2021 and 2022)
1,870

2,098

In 2022, we introduced a securities lending
programme. We have a systematic processof recalling shares for general meetings in order
to vote on a significant portion of our positions
and prevent ‘empty voting’.

Year

1,976

2022

2021
2020 2021

2020** Votes for and against,
and abstentions, in 2022

1,976

2,098

1,870

EuropeNorth
America

APAC*

Other
markets

908

526

432

110

46%

27%

22%

6%

974

554

467

103

46%

26%

22%

5%

923

476

130

341

49%

26%

7%

18%

 igures under APAC (Asia Pacific) column are for Japan only. We subsequently extendedF
our coverage of the region.

The main focus of our opposition,
excluding shareholder proposals(analysis presented on page 49),
continued to concentrateon three topics:

29%
Voted against• executive compensation;
67%
Voted for• 45 •

Meeting
voted

2022

4%
Abstained

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT Geographic breakdown of our votes• financial operations and• board elections.

Similar detail on all other types ofvotes is available in our 2022 Voting
Report. We outline examples in alater section that illustrate how ourengagement with several companies
in the run up to their AGMs informed
our voting decisions. In some cases,
we abstained or voted against
an item on the ballot to indicate
an escalation in our concern.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

COLLECTIVE INSIGHTSOVERVIEWOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENTOUR VOTES ON MANAGEMENT AND SHAREHOLDER PROPOSALSManagement proposals

Shareholder
proposals

Voting decision

Total

Board
ElectionsExecutive
Pay

Financial
Operations

Routine Businessand other

TOTAL VOTED

27,223

13,833

3,212

2,445

6,743

990

FOR

18,255

8,915

1,264

1,511

5,855

710

AGAINST

7,884

4,444

1,676

770

786

208

ABSTAINED

1,084

474

272

164

102

72

2022

33%

36%

61%

38%

13%

28%

2021

33%

37%

60%

39%

12%

30%

2020

32%

36%

59%

42%

11%

37%

% OPPOSITIONBNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 46 •

Executive compensation
61% opposition rate vs. 60% in 2021
Our opposition to executive compensation plans (e.g. stock
options, restricted stock plans, severance payments and ‘sayon pay’ proposals) falls into the following general categories:• A lack of transparency on the compensation policy (volume,
weight, nature of the performance criteria, targets, etc.);• The compensation practices are not in line withstakeholders’ interests, with excessive or disproportionate
amounts relative to the company’s performance;• Absent or weak ESG performance criteria, not clearly linked
to the company’s sustainability strategy;• A ‘pay for failure’ approach is in place, with
non-challenging performance criteria; or• Compensation is not oriented towards rewarding goodlong-term performance.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESS

We oppose management proposals regarding
financial operations, which generally request ashare capital increase, for the following reasons:•T he global volume is considered
too significant (authorisations exceed 50%of the share capital); or• It is a share capital authorisation without
pre-emptive rights and without a specific object
that leads to an excessive dilution for current
shareholders (more than 5% of share capitalor 20% with a specific purpose).
We also vote systematically against all
anti-takeover devices.

Board elections, addressing
independence, tenure and gender
diversity 36% opposition rate
vs. 37% in 2021

On pages 52-55, we provide several examplesof our engagement with respect to voting;commentary on our engagement and related
votes on gender diversity on boards can be foundon page 82.

NET

Our record of voting on
environmental and social topics
Where companies do not meet our expectations
in relation to various environmental and social
considerations, as set out in our voting policy,
we oppose management resolutions on theapproval of financial statements, discharge of theboard, or reelections (depending on the market).

ZERO

C

OM

Financial operations 38%
opposition rate vs. 39% in 2021

MITMENTSOUR APPROACH TO VOTINGAND ENGAGEMENT
BNPP AM LEADS THE FIELD IN OPPOSING DIRECTORS’ELECTIONS AT US CA100+* FOCUS COMPANIESA report published by U.S. Non
Governmental Organisation (NGO)
Majority Action analysed the proxyvoting behaviour and reporting of
the 75 largest members of CA100+
at the 2021 annual meetings ofthe 45 US focus companies of that
initiative. Their research foundthat despite the Net Zero Company
Benchmark demonstrating clear

failures of climate governance atthese companies, the majority of thelargest investors overwhelmingly
voted in favour of their incumbent
directors in 2021. However, BNPP AM
was the clear leader, having voted
for the fewest directors (31%)
at these companies, and in supportof the full Board at only oneof 30 companies where we voted.

OPPOSING KEY RESOLUTIONS LINKED
TO ENVIRONMENTAL AND SOCIAL EXPECTATIONSIn 2022, we opposed 1,391 resolutions at 248
companies for these reasons (55% related to ourclimate-related expectations, 24% related to our
RBC policy, 13% related to our biodiversity-related
expectations and 7% linked to low ESG scores –a substantial increase compared to 2021 (969resolutions at 168 companies)).

ESG topic

No. of resolutions% of total

No. of companies’
meetings% of companies’
meetings

RBC Policy

338

24%

41

17%

Climate-related
expectations

770

55%

140

56%

•A
 non-independent director with insufficient
overall board independence;

Biodiversity-related
expectations

187

13%

52

21%

•N
 on-compliance with our rules
on gender diversity;

Low ESG score

96

7%

15

6%

• Directors with poor attendance or termof mandate exceeding four years.

TOTAL

1,391

Our votes in opposition to individual directors
generally indicate our belief that there is weakcorporate governance and an issue regarding thebalance of power. Most votes against directors
fall into the following categories:

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT*Climate Action 100+.

• 47 •

248

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

COLLECTIVE INSIGHTSOVERVIEWOUR APPROACH

OUR PROGRESS

ZERO

C

OM

NET

MITMENTSOUR APPROACH TO VOTINGAND ENGAGEMENT

FOCUS ON ‘SAY-ON-CLIMATE’* PROPOSALS
A notable recent trend is the emergenceof ‘Say-on-Climate’ management proposals.
Such resolutions, proactively tabled by the
management, first appeared on ballots in
2020. They are designed to offer shareholders
a vote on the company’s climate strategy or
progress report. The number of climate-related
management proposals has almost doubled
in 2022, to 46 resolutions in total, mostly inEurope. In 2022, we voted on 40 Say-on-Climate
proposals that fell within our voting scopeversus 21 the previous year. Having strengthened
our Governance and Voting Policy in 2022, we
introduced criteria to assess these proposals(see section 3.6). We set precise expectations
with regard to companies’ climate action plans.
These included the commitment to achieve

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

net-zero GHG emissions by 2050 or sooner, in linewith global efforts to limit warming to 1.5°C.
As most companies’ transition plans or reports
did not meet our expectations, our overall
opposition rate (votes against or abstentions)increased substantially, from 21% in 2021 to 79%
in 2022. We judged most plans to be premature;
in many cases, they lacked absolute emissions
reduction targets for the short (2025) andmedium term (2030) or the targets covered
only some types of emissions, often excluding
Scope 3*. The level of support at the AGM gainedby the companies ranged from just over 50%
at Woodside Energy to 99% at EDF.
Indirect emissions not related to the consumption of electricity,heat or steam needed to manufacture the product.

*• 48 • BNPP AM votes on management
Say-on-Climate proposals in 2022
21%
Voted for23%
Abstained

56%
Voted against

In a December 2022
study entitled ‘What’s
Been Said on Climate andthe Changing Climate
on Investor Behavior’, theconsulting firm SquareWell
Partners highlighted ourrigorous approach andranked BNPP AM firstamong 25 large asset
managers in opposing
management-sponsoredclimate proposals in 2022.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

COLLECTIVE INSIGHTSOVERVIEWOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENTOUR RECORD ON VOTING ON SHAREHOLDER PROPOSALS
Shareholder proposals on ESG issues are
becoming increasingly common. In 2022, 990
shareholder proposals were proposed worldwide;
this was up from 826 in 2021 and 754 in 2020.
Because these resolutions are proposed bygroups of institutional shareholders with a strong
commitment to drive better company performanceon particular issues, or by stakeholders like NGOs
that work with investors, they are usually opposedby management. Therefore, a vote in favour ofthe proposal is a vote against management’s
recommendation.
Our principle is to vote in favour of shareholder
proposals when they are in line with the long-term
interests of the company and the action requested
is warranted given the prevailing practices of
the company. However, we abstain when we
believe the proposal not to be appropriate to thecompany’s specific circumstances or if the request
being made is already happening in practice.
Our rate of support for all types of shareholders’proposals increased. It was 72% for 2022,
compared to 70% in 2021 and 63% in 2020.
Specifically, we again demonstrated verystrong support for social proposals (99%in 2022 vs. 100% in 2021 and 86% for 2020)and for environmental and climate change
proposals (90% in 2022 vs. 89% in 2021
and 94% in 2020). Our rationales for all votes
are available in the 2022 Voting Report.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

ShareAction again highlights our voting recordon shareholder resolutions
In recent years, ShareAction, a UK-based NGO, has publishedan analysis of the voting record of large asset managers basedon how many shareholder resolutions each manager voted forin the previous year. They have also assessed their voting behaviour
on environmental, social, and pay and politics resolutions.
The total number of resolutions within the report’s scope for 2022
was 252 (substantially lower than all such resolutions that we voted on).
BNPP AM ranked in the top three of 68 managers assessed,with an overall score of 99%.

 Our votes for and against, and abstentions,on shareholder proposals
72
Abstained(7%)

208
Voted against
(21%)

710
Voted for(72%)

Total 990

 Support for shareholder proposals
70%

72%

2020 2021

2022

63%

OUR PRINCIPLE IS TO VOTE IN FAVOUROF SHAREHOLDER PROPOSALS WHEN THEY ARE
IN LINE WITH THE LONG-TERM INTERESTS
OF THE COMPANY.
• 49 •

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEWOUR APPROACH TO VOTINGAND ENGAGEMENTCOLLECTIVE INSIGHTSOUR APPROACH

ENGAGEMENTOUR PROGRESS

Our long-term investment horizon places acompany’s corporate governance arrangements
and the quality of its senior management
teams at the heart of our investment decisions,alongside their sustainability performance.
Sound governance and effective managementof sustainability impacts, risks and opportunities
are critical to companies’ long-term successand financial performance. They are therefore

a centrepiece in our engagements during
and outside the voting season. Engagement
is undertaken for the benefit of clients and theirbeneficiaries, on behalf of our equity and debt
holdings, with companies and with agency,
sovereign and sub-sovereign issuers. It supports
the implementation of our RBC policies, informs
our ESG research ratings and enhances
our investment decision-making.

Engagement with companies primarily takes three forms, although there can be overlap:

2

1
Discussions on governance mattersin the run up to annual meetingsand votes, which informs our annual
voting decisions.

Dialogue over one or more years
to improve companies’ managementof sustainability risks, opportunities,
dependencies and impacts, particularly
in relation to the 3Es (Energy transition,
Environmental sustainability, Equality
and Inclusive growth).

We also engage with agencies, states and regional
issuers of sovereign debt to provide feedbackon the structure of their bonds, evaluate theirlinkages to countries’ environmental and social
policies and to encourage clear annual reporting.

3
Engagement linked to ESG performance.
This can be triggered by new informationthat indicates a company might be inbreach of one of our responsible businessconduct (RBC) polices, stimulated
by regular revisions to our ESG ratings
or in relation to a new bond issuance.

varies by region only to the extent that we
adapt it to the prevailing regulations, the policy
environment, norms and cultural sensitivities.

We undertake our engagement individually,i.e. on a one-to-one basis with companies, as well
Given our global presence and the wide geographic as collaboratively, i.e. with other institutional
scope of our clients’ holdings, we endeavour toinvestors with aligned goals. See pages 84-85
engage consistently across all regions on key ESG for a list of collaborative initiatives of whichissues and in line with the 3Es. Our approach
we were members during 2022.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 50 •

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

COLLECTIVE INSIGHTSOVERVIEWOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENTOUR CORPORATE ENGAGEMENT IN FIGURESOver the past three years, we haveincreased our engagement both in termsof the number of companies and the volume
of interactions with them. In 2022, we
engaged with 373 companies through
634 interactions. Of these, we engaged
with 78% by sending letters or having
discussions with the companies
individually and in the case Total number of companies we engaged
with directly, and number of interactions Engagement by regionof the remaining 22%, we engaged
through collaborative initiatives
or with other investors. We also signed
543 letters sent to companies throughcollaborative organisations we area signatory to or supporter of(i.e. Business Benchmark on Farm
Animal Welfare (BBFAW) and CDP’s
Non-Disclosure Campaign).

 Engagement on Environment (E),
Social (S) and Governance (G)

634

373
281

G: 39%

E: 40%

296

S: 21%
2020

2021

2022

Companies
Interactions

EuropeNorth
America

APAC

OthersNumber

373

227

75

58

13

%

100%

61%

20%

15%

3%

In most of our engagements we covered multiple ESG topics rather than just one;in others we focused on corporate governance or addressed one or more of the 3Es/
thematic issues or focused on the ESG performance of the issuer.

Corporate Governance and Voting

106

Multiple ESG Topics*111

3Es / Theme specific69

ESG Performance87

RBC policies

9

Low ESG scores (corporates)

41

Green + sovereign bond issuances**TOTAL

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTIn the following section,
we set out selected examplesof our engagement to givea flavour of our overall activity.

 Engagement by type
Topics528

494

All regions

37
373• 51 •

This category indicates engagement that is not exclusive to one topic
or theme, i.e corporate governance, the 3Es, ESG performance.
**
This figure includes only those engagements recorded in our tracking
tool; other engagements took place that were not able to be recordedin that tool and which are referred to in a later section.
*

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR APPROACH TO VOTINGAND ENGAGEMENTUDY

ENGAGEMENT TO IMPROVE
GOVERNANCE AND INFORM OUR VOTES

CASE
ST

1

BACK TOENGAGEMENT

During proxy season, we ask companies to engage an increase compared to 2021 (28%). Wherewith us or respond to their requests for dialogue. our engagement does not lead to the company
We generally concentrate on our largest holdings. making the changes we request, and does
not indicate it will consider them, we escalate
The goal of such engagements is to:
our concerns by voting against selected items• c ommunicate our voting policy to promoteon the agenda, in line with our voting policy.
good corporate governance and to prepare
for the next general meeting;
The examples below focus on topics otherthan gender diversity on boards; on this topic• o btain additional information on individual
we were very active in 2022; engaging withproposals; andcompanies in all regions ahead of their AGMs.
• e xpress our concerns about specific resolutions 40
This engagement informed many of our votes
that do not meet the expectations set out
and is described in a later section in the context
in our voting policy.
of our engagement on our third E, which stands
for Equality and Inclusive Growth.
Beyond the busy proxy season, we also havediscussions with companies on topics suchas strategy, long-term performance, risk
management, ESG issues or other concerns.
We also proactively communicate our voting
policy to promote good corporate governanceand to prepare for the next general meetingof the issuer.
During the 2022 proxy season, we had 210
interactions with 106 companies related only
to voting issues, compared to 239 interactions
with 151 companies in 2021. Of all of theseengagements, 35 were successful* (33%),

BANCO SANTANDER:INTEGRATING ESG PERFORMANCE
CRITERIA INTO EXECUTIVE COMPENSATIONOUTCOME

In previous years, we had expressed our
expectation that the company incorporate
ESG performance metrics into its executive
compensation.

We were pleased to find that the
Remuneration Policy presented to the 2022
AGM reflected our feedback. It proposed,
for the first time, ESG performance criteria
in the deferred variable remunerationof the CEO’s remuneration carrying 20%
weight. The level of ex-ante disclosure wassatisfactory, with fair transparency of theperformance criteria and the sub-weights,
targets, minimum vesting thresholds andmaximum awards attached to each criterion.

• I n particular, we advocated for
operational criteria rather than thosesolely based on qualitative factors
or ESG ratings.

•  We also highlighted the importanceof transparent ex-ante disclosure of ESG
criteria (targets, vesting scales, thresholds)
because these enable shareholders
to understand the ambition level and towhat extent they challenge the company
to deliver strong performancein the relevant areas.

We consider a voting-related engagement to be successful if the company withdraws the proposal we are opposing, or if wechange our vote in favour of the proposal after a modification of the resolution from the issuer, or where we obtain additional
information. However, a potential modification of our voting decision is not the only criterion for success: some companies modify
their practices the following year and are not necessarily counted in the successful engagement statistics.

• 52 •INDIVIDUALENGAGEMENTENGAGEMENT ACTIVITY

In February 2022, we had several further
email exchanges about its proposed 2022
Remuneration Policy and in March 2022
we met the Lead Independent Director.
We outlined our views on the best approachto ESG integration in remuneration.

*

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTOUR PROGRESSVOTING ACTIVITY
Given these positive steps in line with
our requests, and our policy, at the 2022 AGM
we supported Item 8.a requesting approvalof the new Remuneration Policy. This
resolution received 91% support overall.

FURTHER ENGAGEMENT
We continue to engage with the company
as we expect further improvement
on other aspects of the remuneration in linewith the principles of our Voting Policy
on executive compensation (pages 45-47).

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENTCASE

VOTING ACTIVITY
At the 2022 AGM, we voted against
two items that proposed issuanceof 10% of issued capital without
preemptive rights and without aspecific objective (Items 5.b and 6).
Our policy sets a maximum limit of
5% of issued capital to avoid excessive
dilution of the value of shares heldby existing shareholders.
We also voted against Item 2.d‘Approve Remuneration Report’because the supervisory board adjusted
the performance outcomes of theshort-term and long-term incentives
for unrealised revenues for 2021.
The actual performance – before
adjustment – was below the pay-out
threshold whereas the adjustment
allowed partial payout. This wastherefore a significant decision.
The company failed to provide
a compelling rationale for the need

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

to adjust the outcome, while Philips’
performance was heavily impacted
by a product recall, which impacted
its share price performance.

OUTCOMEThe opposition rate to resolution
2.d was 79%, i.e. it was rejectedby shareholders. However, in
the Netherlands, the ex-post voteon the remuneration report is only
advisory and does not necessarily
lead to changes to payments.

FURTHER ENGAGEMENT
In light of this proposal being
rejected, the question of the needto make such votes binding in thismarket is under discussion among
the members of the Dutch asset
management association Eumedion,of which we are a member.

UDY

UDY

KONINKLIJKE PHILIPS NV
VOTE AGAINST KEY STRATEGIC ITEMS

CASE
ST

ST

INDIVIDUALENGAGEMENTTELEFONAKTIEBOLAGET LM ERICSSONDISCHARGE OF DIRECTORSINDIVIDUALIN RELATION TO CONTROVERSIES ENGAGEMENTENGAGEMENT ACTIVITY
Ericsson issued press releases in
October 2021 and March 2022 relating
to breaches of the agreement with the
U.S. Department of Justice (DoJ). Thesestatements noted that the DoJ had
notified the company that it had failed,
as required, to hand over certain
details mandated by the Deferred
Prosecution Agreement.
This breach raised serious concerns,
especially as it was not a one-off
breach. It was unclear whether
the settlement made with the DoJ in2019 covered more recent allegations
related to Iraq and therefore whether
Ericsson could face additional
potential fines from U.S. authorities.
In addition, NASDAQ began investigating
whether the company violated stock
exchange rules in connection withinformation published with regard
to Iraq, which could also lead to fines.

• 53 •

In such cases, where we have doubts
or concerns about whether companies
are appropriately exercising thefiduciary duties of directors, we do
not approve the discharge of board
members.

VOTING ACTIVITY
At the 2022 AGM, we voted against
the discharge of directors who wereon the board at the time of alleged
concerns (Items 8.3 a, b, c, d, e, f, g, h,i, j, k, l, n, r) on a precautionary basis
approach.

OUTCOMEThe voting results are not available
for this AGM.

FURTHER ENGAGEMENT
We will monitor the company’s
practices in the future.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENT
CASE

CASE
ST

ST

UDY

UDY

BBVA
ENSURING APPROPRIATEAND SUFFICIENT BOARD SKILLSINDIVIDUALENGAGEMENTSAP SEEXECUTIVE REMUNERATIONINDIVIDUALENGAGEMENTENGAGEMENT ACTIVITY

OUTCOMEENGAGEMENT ACTIVITY

We met BBVA in December 2021 andDecember 2022, each time well aheadof the company’s AGM (in March ofeach year), to discuss key updates andidentify areas for improvement before
the company finalised its proposals
and annual reports. In December 2021,
we had asked the company to adopt
the practice of publicly disclosing
a skills matrix showing individualcompetencies of each board director.

During our 2022 engagement
meeting, the company demonstrated
it had taken our recommendations onboard. It shared its draft corporate
report and presented a skills matrix
which now shows the competencies
of board members on an individual
basis. This improves BBVA’s
disclosure on corporate governance.

During the 2022 AGM, we voted against
the remuneration report presented
by the company. The overall level ofdissent was 15%. The company’s 2022
remuneration report contained several
features which did not align with our
expectations for good governance andour voting policy:

Skills matrices help investors to better
understand the composition of theboard, which skills are strong, andwhich need to be reinforced. They arealso a valuable tool for assessing thesuitability of candidates proposed by
the nomination committee for board
elections.

We voted in favour of all three board
members proposed for election at thelast AGM; they were all approved bymore than 97% of votes cast.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTVOTING ACTIVITY• First, a portion of the long-term
incentive plan was time-based,
contrary to the principle that executive
compensation plans should pay
out in relation to good long-term
performance.
•D isclosure on some key features of
the remuneration package was poor.
The targets for each performance
criterion under the Financial• 54 •

performance Share Units (FSUs)
of long-term incentive were notdisclosed, inhibiting shareholders’ability to link the company’s
performance with executive
remuneration, and the stringency ofthe criteria applied.
•P artial vesting at below-peer medianperformance levels under the
relative TSR performance metric waspossible, which also goes against ourgoal of not allowing pay rewards to bemade when performance is below themedian level of comparable peers.
•A total discretionary supplementary
payment of €4.0 million was paid tothe management board in 2021 basedon 2020 results, a practice we do notsupport.

We engaged with the company
following our vote.

OUTCOMESAP SE will remove the time-based
long-term component of the policy.
This improvement brought this feature
into line with our expectations. The
company also said that it will review
the KPI performance curve applied toshort-term and long-term incentives.

FURTHER ENGAGEMENT
We will closely monitor whether itmakes any amendments for the next
AGM and we will continue our dialogue
with the company on other issues.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSIn 2020, we drafted a shareholder
proposal encouraging companies
to align their direct and indirect
lobbying efforts with the goalsof the Paris Agreement. That proposal
has received six majority votes
at the AGMs of US companies since2020 (three of these majority votes
were achieved by other investors)
and is helping to raise the bar
for all companies. Our proposal
is being used as a template for two
collaborative engagement initiatives
in the US, Climate Action 100+
(CA100+), coordinated by Ceres,and by the Interfaith Center on
Corporate Responsibility (ICCR).
We are helping to advise both
initiatives.
In 2022, we continued our leadershipon this topic, submitting shareholder
proposals to Exxon, General Electricand UPS, and continuing a numberof dialogues with other companies.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTWe also helped to launch a Global
Standard on Corporate Climate
Lobbying, to more clearly detailour expectations (see ‘Climate
Lobbying in Europe’ on page 58).

OUTCOMES
Exxon Mobil
Our proposal at Exxon Mobil
received a 64% vote in 2021.
We resubmitted the proposal forthe company’s 2022 annual meeting,as we did not have a concretecommitment from the company
to comply with our request until
after the filing deadline. After a seriesof meetings with the company,
we ultimately withdrew our proposal
in exchange for the publication of
Exxon’s inaugural climate lobbying
report. The report contains thecompany’s first public statement
supporting alignment with the‘well below 2 degrees’ goal of theParis Agreement, and the first public

ZERO

C

NET

MITMENTSUDY

ENGAGEMENT ACTIVITY

NET

7.

ZERO

C

OM

ST

CONTINUING OUR LEADERSHIP ON CLIMATELOBBYING RESOLUTIONS IN THE US

OM

CASE

MITMENTSOUR APPROACH TO VOTINGAND ENGAGEMENT

evidence that Exxon had conducted
an assessment of the company’s
direct or indirect lobbying against
any temperature goal. However,InfluenceMap gave the review
a score of 36/100, indicating scopefor substantial improvement.
The company committed to update
this analysis and publish it annually.
We are leading this engagementin partnership with Boston
Trust Walden.
General Electric
We withdrew our proposal atGeneral Electric, in exchange for
a commitment to publish GE’s first
Paris-aligned lobbying report, which
GE included in its 2021 Sustainability
Report later in the year. We played
an active role in the negotiations
on the proposal, in partnershipwith the New York City Comptroller’s
Office, who served as lead filer.

• 55 •COLLABORATIVEENGAGEMENTUPS
Our proposal at UPS, co-filed with
Mercy Investment Services, received
a 33% vote at the company’s annual
meeting. This was a relatively strong
showing, although not the majority
support we have received at othercompanies, possibly because of thecompany’s dual class share structure.
Towards the end of 2022,
we resubmitted the proposal
for the 2023 AGM.
Chevron
After a majority vote on our proposal
at Chevron in 2020, followed bypublication of its first climate lobbying
report, Chevron did not produce any
climate lobbying reporting in 2022.
When we informed the company that
we were considering resubmitting our
proposal, the company informed us
it will begin annual climate lobbying
reporting with its next sustainability
report in the spring of 2023.

In 2022, we continued ourleadership on corporate climate
lobbying in the US, encouraging
companies to align their direct
and indirect lobbying efforts withthe goals of the Paris Agreement.
We submitted four shareholder
proposals on corporate climate
lobbying for the 2022 proxy season.”
Adam Kanzer
Head of Stewardship - Americas

INDIVIDUALENGAGEMENT
To round out the year, in December,
we also wrote to our largest holdings
in each region (35 in Europe, 10 in theAmericas and 10 in Asia Pacific) to provide
them with our updated 2023 Governanceand Voting Policy, as well as outlining ourpriorities for engagement during the year.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR APPROACH TO VOTINGAND ENGAGEMENTOUR PROGRESS

CASE
ST

THEMATIC ENGAGEMENT: FOCUS ON THE 3Es

UDY

2

BACK TOENGAGEMENT

Our ‘3Es’ – namely ‘ENERGY TRANSITION’,
by, for example, encouraging them to:‘ENVIRONMENTAL SUSTAINABILITY’, ‘EQUALITY• A lign their corporate strategies and capital
AND INCLUSIVE GROWTH’ – serve as the focus
deployment with the goals of the Paris Agreement;for our global engagement. This type of• R educe their environmental impacts
engagement is central to being a ‘future maker’.
and dependency on nature;
It is designed to deliver a low-carbon global
 rovide greater opportunities for women
economy which operates within the nine planetary • P
at all levels of the organisation;boundaries while providing everyone with the• R espect human rights within their own
opportunity to play their part in that economy
and to be treated in accordance with international operations and across their supply chains;
human rights principles and standards.
• A dopt more equitable and transparent
remuneration policies that ensure that wealthWe deliver this engagement through bothis distributed more fairly across the value chain,collaborative and direct engagement. We aim
where value is created.
to establish in-depth dialogues with companies,

ZERO

C

OM

NET

MITMENTS

7.

BNPP AM is one of 700 investors,
responsible for over $68 trillion in
AUM, that engage collaboratively withthe world’s largest emitters to improveclimate change governance, cut
emissions and strengthen their climaterelated financial disclosures.
The initiative publishes regular updates
to the Net Zero Company Benchmark(NZCB), which tracks companies’
performance on ten key performanceindicators and forms the basis of
our engagement. On each indicator,
companies can score ‘Yes’ (meetsall criteria related to the indicator),‘Partial’ (meets some criteria) or ‘No’
(does not meet any criteria). Thisbenchmark provides investors and otherstakeholders with a means by which to
track progress by companies towards fullachievement of all criteria. During the

MAKING A SUBSTANTIVE CONTRIBUTION
TO THE LOW-CARBON ENERGY
TRANSITION
The majority of our engagement to drive
the energy transition is undertaken throughcollaborative initiatives like Climate Action 100+
(CA100+) and the Asia Investor Group on Climate
Change (AIGCC) Asian Utilities Engagement
Programme. However, we also engage withcompanies individually to advance our financed
emissions reduction goals.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

CLIMATE ACTION 100+: ACHIEVING
THE NET ZERO COMPANY BENCHMARK

Launched in 2017, this investor-led
initiative works to ensure the world’s
largest corporate greenhouse gas emitterstake the necessary action to stem climatechange. Formed in the wake of the 2015
Paris Agreement, it aims to restrict therise in global average temperatures towell below two degrees Celsius above
pre-industrial levels and pursue efforts
to limit warming to 1.5 degrees Celsius.

3Es: ENERGY TRANSITION• 56 •COLLABORATIVEENGAGEMENT

year, CA100+ published updates both inMarch (based on disclosures made by 31st
December 2021) and in October (based on
disclosures made by 13th May 2022).
BNPP AM leads, or co-leads, engagementwith ten companies: Iberdrola, Naturgy,
Nestlé, Saint-Gobain, Repsol, Stellantis,
Sinopec, Power Assets Holdings, PTT Pcl
and Exxon Mobil. We also take part inother dialogues led by other investors in
CA100+, including Danone and Unileverin Europe and Chevron, Delta, Dominion
Energy, General Electric, NextEra andSouthern Co. in the US, and lend ourname to all engagements undertakenin the name of this initiative with allcompanies, in our capacity as supporter.

FURTHER ENGAGEMENT
Following the release of the October
2022 NZCB, we started to prepare forcontinuing engagement with the six
European companies we co-lead or leadby developing engagement plans withparticipating investors as required by
CA100+ and submitting them to theinitiative. We also joined calls with theinvestor groups engaging with Danone
and Unilever, which we support, todevelop plans for engagement withthese two companies.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEWOUR APPROACH TO VOTINGAND ENGAGEMENT
Company

Collaborative activity

REPSOL SA(Spain)•H eld two calls with senior management and had several
email exchanges.
•R equested that the company improve its approachto addressing and calculating Scope 3 emissions.
•A sked the company to offer a Say on Climate* voteat the AGM and provided model wording for management
to consider.

Outcomes

 ad several calls and email exchanges to discuss the
SAINT-GOBAIN SA • H
results of the March 2022 benchmark, particularly topics(France)where the company did not score well.

•T he March 2022 NZCB showed that the company
improved its score on one indicator (10, disclosure)compared to March 2021.
Its rating on indicator 7 (lobbying commitments
and disclosure) fell to only ‘Partial’.
•T he company told us that it had started mapping
its industry associations. We await its annual
publications in 2023 to determine how it has
improved its disclosure in this area.
•N o improvements made on other indicators
between the March 2022 and October 2022
benchmarks.

NATURGY
ENERGY GROUPSA(Spain)•H eld two calls with company management to discuss
the results of each NZCB.
•P
 rovided feedback from Transition Pathway Initiative(TPI), the organisation that undertakes research for the
NZCB, on how the assessment had been undertaken andguidance on how the company could improve its reporting
to ensure that its transition plan and related activity
would be fully reflected in future iterations of the NZCB.
•A
 sked the company to publish a review of its lobbying
activities (see below).

Resolution on the agenda of the General Assemblies on climate change.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

Company•T he company said it would review
its approach to Scope 3 emissions and how
it is communicated.
• It published a detailed statement on its climate
strategy and included an advisory vote on its
energy transition strategy on the 2022 ballot.
(Voting activity: We voted against this item;
see page 48).
•T he company did not improve its score between
the March and October 2022 benchmarks.
•T he company’s new strategy led to better scoreson seven out of nine scored indicators of theOctober 2022 NZCB.
• It meets the expected standard of Indicators
1 and 2, and achieved a partial score on indicators
3, 4, 5, 8 and 10.
•B y the end of the year, it had not publisheda review of its lobbying activity.

•U rged the company to improve its disclosure of its Scope
3 emissions and green revenues.
•P ressed for better disclosure on how the company
is aligning its Capital Expenditures (CAPEX) and future
investments to deliver on its climate commitments.
•A sked the company to publish a review of its lobbying
activities (see below).
•A sked for specific metrics within executive remunerationplans fully aligned to the company’s GHG reduction
targets.

OUR APPROACH

OUR PROGRESSThe following examples all relate to our activity as the lead or co-lead investor, with an indication of how companies are progressing against the NZCB.
We acknowledge that it is not our engagement alone that has led to any improvements shown.

•H eld several calls and had multiple email exchanges
STELLANTIS NV
calls in the run up to, and following publication(the Netherlands) andst
on 1 March 2022, of its unified corporate strategy andtransition plan (following the merger of PSA and Fiat).
•O utlined the necessary commitments and disclosure
CA100+ investors expect.
•R equested that the company address remaining gaps
in its disclosure after reviewing its new strategy.
•O utlined our expectations on lobbying (see separate
section on page 58).

*

COLLECTIVE INSIGHTS•T he October 2022 NZCB reflected many
improvements with higher scores on four
indicators: it meets the necessary standard
for indicators 1, 2 and 4 relating to emissions
reductions commitments and targets and improved
its rating from being non-compliant to Partial
on indicator 5 (decarbonisation strategy).

Collaborative activity

Outcomes

NESTLÉ(Switzerland)•H eld one call In December 2022 as a new co-lead withseveral senior representatives from different functions.
•A sked for a separate call to discuss how the company’s
current disclosure on climate lobbying could be
improved (see below for more detail).
•R equested more detail in reporting about the specificdecarbonisation measures the company plans to takeacross its supply chains.
•A sked for well-defined metrics in executive
remuneration plans related to its GHG emissions
reduction commitments; Asked whether the company
plans to offer a vote on delivery of its transition plan.

•T he company agreed to have a separate callin early 2023 to discuss how to improve its
disclosure on climate lobbying.
•T he company’s score did not increase between
the March and October 2022 benchmarks; they
pre-dated the beginning of our engagementwith the company.

IBERDROLA(Spain)•G iven the company’s relatively good performanceon the NZCB, we focused on encouraging the company
to improve its disclosure around climate lobbying,and its score on indictor 7. (See section below
on lobbying.)•H aving made several improvements on the NZCB
between March 2021 and March 2022, due toimprovements in its disclosure by the end of lastyear, the company did not increase its scores on
any indicators in the October 2022 benchmark.
•T he company noted it had drafted a policy
on climate lobbying which it intended to publish
along with enhanced disclosure, by the endof 2022. An update carried out by InfluenceMap
in the first quarter of 2023 of Iberdrola’s climate
lobbying and ‘intensity’ of its positive lobbying
activity put the company in Performance B,
making it one of the highest performers among
CA100+ companies and in the utilities sector.
•H owever, by the end of the year it had not yet
published its own review of the positions
and activity of associations it belongs to.

POWER ASSETSHOLDINGS LTD.
(China)•H
 eld one call with the management team to review
its performance against the March 2022 NZCB.

•W
 e helped the company provide feedback
to TPI on the areas it has been improving
on, including climate governance witha board-level sustainability committee
overseeing climate risk.
•S core on indicator 10 of the October 2022 NZCB
on disclosure increased to ‘Partial’.

PTT PCL(Thailand)•H ad one call this year to continue previous
engagement and encourage PTT Pcl to enhance
its climate commitments in line with the expectationsof the NZCB, starting with the first indicatorof adopting a net zero by 2050 ambition.

• In March 2022 the company announced
its plans to aim for ‘net zero’ GHG emissions
by 2050, which resulted in an improvement
in its score on indicator 1 to ‘Partial’.
•T he company also set up a new Net Zero Task
Force to help drive its net zero ambitions
and outlined other steps it is exploring
to improve its climate strategy.

• 57 •

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENT
CASE
ST
UDY

Climate Action 100+ has been runningfor five years now and the requests
are clear. If you’re one of the largest
corporate GHG emitters in the worldand you don’t have a meaningful net
zero by 2050 target, we think it’s timeto escalate. For US companies, thatmeans we’re voting against the fullboard.”
Adam Kanzer
Head of Stewardship – Americas

CLIMATE LOBBYINGENGAGEMENT IN EUROPE

OBJECTIVE
In addition to leading or co-leading
engagement with ten CA100+ companies
globally and helping to guide investor
engagement on corporate climate
lobbying globally, BNPP AM is one ofthree co-leads of a working group for
CA100+ in Europe on corporate climate
lobbying. Each year, this working group
identifies those European companies
that perform most poorly on thisissue within the Net Zero Company
Benchmark and identifies ways inwhich engagement can be stepped up
to improve their performance. We thensupport the companies’ CA100+ co-leads’
engagement on lobbying or undertake
separate engagement directly.
Our goal is to encourage companies toalign their direct and indirect climate
lobbying activities with the temperature
goals of the Paris Agreement, and to
produce annual reports on these efforts
consistent with the Global Standard
on Responsible Corporate Climate

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 58 •COLLABORATIVE
AND INDIVIDUALENGAGEMENT

Lobbying which we launched last yearwith other investors.
InfluenceMap, an independent thinktank, assesses CA100+ companies’
policy positions and lobbying activity
on an ongoing basis, assigning eacha rating from A to E. It also evaluates
the quality of companies’ lobbying
reviews once they publish them andprovides a score for each review outof 100. These assessments provide
investors and other stakeholders
with valuable tools to use to evaluate
companies’ performance and progress.

ENGAGEMENT ACTIVITY
In this context, we had discussions
during the year with the following
companies, providing them withdetailed guidance on what is required
to meet both the Investor Expectations
and the Global Standard. Several havemade good progress.

OUTCOMES
Air Liquide: the company published
an update to its webpages on‘Engagement with Public Stakeholders’
to better reflect its commitments on
climate change and related lobbying.
Further, it committed to publish, oncea year, an assessment of the positions
and activity of the trade associations
in which it is most active in Europe
and the US. It accepted our offer, madetowards the end of the year, to review
its draft assessment. We provided
an extensive critique and await the
publication of the final assessmentwith the Universal Registration
Document (URD) in March 2023.
CRH plc: in March 2022 the company
published the lobbying review we hadrequested. InfluenceMap, an expert
NGO that publishes analysis
on companies’ climate lobbying,gave the review a score of 36/100,
indicating scope for substantial
improvement.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR APPROACH TO VOTINGAND ENGAGEMENTOUR PROGRESS

3Es: ENVIRONMENTAL SUSTAINABILITY
Reducing the negative environmental impact of our investments
and stimulating positive impact.

CASE
ST

COLLABORATIVEENGAGEMENT

BNPP AM PLAYS LEADING ROLE IN DEVELOPING
AND LAUNCHING NATURE ACTION 100

UDY

AIGCC ASIAN UTILITIESENGAGEMENT PROGRAMMEOBJECTIVE

OUTCOME

Encourage Asian power utilities
to accelerate coal phase-out.

In August 2022, TNB announced that
it is exploring the early retirementof its coal plants, and that as a start,
one of its plants Kapar Energy Venture
will shut one year before the expirationof its power production agreement(PPA). The company also explained
other steps it is taking in relation
to other PPAs and noted its intention
to step up decarbonisation investments
over the next two to five years.

ENGAGEMENT ACTIVITY
As co-lead for Tenaga Nasional Berhad(TNB) we had several meetings during
the year. The company has announced
a net zero ambition and has started
to work on its decarbonisation planand targets to achieve it. While
its targets align with Malaysia’s
NDCs they are not yet sufficient
to align with the Paris Agreement
or with frameworks such as ScienceBased Targets Initiative (SBTi).
We underlined investors’ expectations
to phase out coal by 2040 at the latest
for non-OECD based companies, theurgency of embedding an accelerated
coal exit within its plans and aligningwith frameworks such as SBTi.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTIn April 2021, we launched ourRoadmap for Biodiversity ‘Sustainableby Nature’ which includes a dedicatedStewardship section outlining our highlevel expectations of corporations andour plans to make nature loss a corefocus of our corporate engagements.
Much of our engagement on theenvironmental sustainability theme isdriven by this roadmap, building on ouryears of engagement on deforestation.
In that paper, we announced that wewere working to launch a collaborative
investor initiative to reverse nature
loss. Over the course of the past
year, we have been meeting regularly
with a core group of about a dozen
institutional investors to determine theright approach.
The effort, which we’re calling Nature
Action 100, will have three work
streams, guided by an investor-led
steering group and a secretariat:
Corporate Engagement, Public Policy
Engagement and a Technical Advisory

FURTHER ENGAGEMENT
We will continue to engage withthe company on the refining of its
decarbonisation plan and to shareglobal best practice, while working
alongside other investors to emphasise
to policymakers a sense of urgency
in accelerating the transitionand strengthening NDCs.

• 59 •

Group (TAG), to ensure that our workis guided by the science and thelatest tools. In October, we announced
that after a focused RFP process, weselected Ceres and the Institutional
Investors Group on Climate Change(IIGCC) to serve as secretariat andcoordinate the corporate engagement
workstream, and Finance for
Biodiversity Foundation and Planet
Tracker to coordinate the TAG.
The Public Policy workstream will follow,
after our initial work is underway. We
participated in a ‘soft launch’ of theinitiative at the COP15 in Montreal,in December 2022, and are working
towards a more formal launchin spring 2023.
During 2023, we will identify thecompanies that will be the initial
focus of the initiative. We expect theapproach to be multi-sectoral, with
an emphasis on those companies thatare the most systemically important toreversing nature loss by 2030.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENTCASESTCOLLABORATIVEENGAGEMENTOUTCOMESUDY

IMPROVING DISCLOSURE
OF ENVIRONMENTAL IMPACTS

Overall, the campaign had a 27% success rate, with 390 companies disclosing
via at least one CDP questionnaire (vs. 25% in 2021 and 21% in 2020).

 Breakdown of the final submission results for all 3 themes and the combined‘distinct’ results

OBJECTIVE
Improve corporate disclosure of impacts on climate, water and forests.

ENGAGEMENT ACTIVITY
In 2022, we participated in the annual CDP Non-Disclosure Campaign designed
to encourage companies with big impacts on climate, forests and water
to improve their disclosure using the long-established and widely used CDPquestionnaires. We were among more than 700 investors with US$140 trillion
AUM that supported the engagement with 1,468 companies. We selected
379 companies to engage with by signing joint letters (on all three topics)
and we led engagement with 14 companies with a focus on forests and water.

Climate Change

Water• Covers climate risk
• Questions focused on
management andcurrent state, water
opportunities, and GHG risk assessment
emissions and targets.
and opportunities,• Additional modules for oil water accounting,and gas, electric utilities, governance, strategy,
compliance, targets
auto, food, beverageand initiatives.
and tobacco and more,

Forests• Responses based on fourmain forest risk commodities:
timber, cattle products,
palm oil, and soy.

• Questions focused on
deforestation risks, business
opportunities, deforestation
policies and targets, supply
as well as for the Supply • Companies targeted inchain, engagement,
Chain Programme.
water-intensive sectors. traceability and certification.

EngagedDisclosed%

CLIMATE CHANGE

1,052

295

28%

FORESTS

405

46

11%

WATER SECURITY

551

104

19%

DISTINCT COMPANIES

1,468

390

27%

In relation to the engagement where we were directly involved, we had
an encouraging 21% success rate, in terms of companies actually disclosing
to CDP as of 2022.

 Company responses to BNPP AM’s
engagement

Success rate per theme

As human activity increasingly
strains the world’s natural
resources and drives climatechange, joining the CDP NonDisclosure Campaign was a
logical step for us. Boosting
corporate transparency aroundclimate, deforestation andwater security is key not only
for companies to monitor andimprove their practices, butalso for investors to manage
their risk exposure and seek
new opportunities. We believe
collective engagement is anefficient avenue to do so. In thisregard, the positive results of thisfirst campaign are promising.”• Climate: 21%• Forest: 19%

21%
Submitted• Water: 22%

79%
Not submitted
Paula Meissirel
Stewardship Analyst

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 60 •

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENT
It is critical that companies and investors act now to counter theconsiderable risk of investing in unsustainable food practices.
Deforestation linked to production of crops such as soy and beef has
been described as the ‘new coal’ in portfolios. That is, investment
in companies that drive deforestation can generate financial, regulatory
and reputational risks. We also believe that it is in our interests, andthose of our clients and our stakeholders, to encourage governments
and other policymaking bodies to provide the frameworks and guidance
needed to support the transformation of the global food system.”

FOOD SYSTEM TRANSFORMATION
Given the enormous impact the current food system has on the
climate, nature and people’s health, this year we consolidated
and ramped up our engagement to drive a transformation
towards a healthier and more sustainable food system.
This was achieved principally but not exclusively by working
with three collaborative engagement initiatives:• Access to Nutrition Initiative (ATNI);• Farm Animal Investment Risk and Return Initiative (FAIRR);• ARE’s Asia Protein Transition platform.
We focus here on our engagement through ATNI and FAIRR
because the Asia Research and Engagement (ARE) platform wasonly launched in December. We will report more on our workthrough that platform next year.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTRachel Crossley
Head of Stewardship – Europe• 61 •

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEWOUR APPROACH TO VOTINGAND ENGAGEMENTCASE

COLLECTIVE INSIGHTSOUR PROGRESSSTCOLLABORATIVE
AND INDIVIDUALENGAGEMENT

UDY

INCREASING HEALTHY FOOD
SALES BY MAJOR EUROPEAN FOOD RETAILERSENGAGEMENT ACTIVITY

OUTCOMESIn May, the Access to Nutrition
Initiative (ATNI) published the firstever UK Retailer Access to Nutrition
Index that rated the ten largest foodretailers’ performance in tacklingthe high rates of diet-related diseasein the country. Using the ATNI
scorecards and in the context of theInvestor Expectations on Nutrition,
Diets and Health, which we support,
we co-led engagement with Tesco plc
and supported engagement withJ Sainsbury plc.

J Sainsbury plc

Tesco plc

Carrefour SA

J Sainsbury plc agreed to addresssome of the requests we made, suchas being more transparent about its
membership of industry associations
and public policy positions on healthand nutrition issues and to review
its policy on marketing breast-milk
substitutes.

While Tesco plc ranked first on the ATNI
Index, its score of only 5.2/10 revealed
that it had scope to do more. During our
engagement the company reiterated
various initiatives already in place
related to diets and health and clarified
some aspects of those initiatives.
However, we were disappointed that it
did not make any firm commitments toimprove its performance on any items
we raised.

Carrefour SA explained its thinking
on sustainable healthy diets and how
it sees its approaches evolving. The
company has recently conducteda similar exercise and launched in
November its new strategic plan out
to 2026. Its redefined corporate
purpose is ‘Food Transition for All’ andit will continue to deliver its ‘Act for
Food’ programme. Rather than setting
a target for sales of healthy products,
it has set targets to increase by 40%
from 2022 levels sales of certified,sustainable products, to €8 billion by2026 and to achieve €500 million inplant-based sales in Europe. It has set
other targets for food waste, emissions
reductions and deforestation.

We kicked off our engagement by
writing to the CEOs of each company.
Our aim was to encourage themto address weaknesses identified
by ATNI’s extensive research.
In addition, because as yet there
is no equivalent to the ATNI index
for European food retailers,
we wrote directly to Carrefour SA
and Ahold Delhaize NV to ask
to discuss their commitments andapproach to increasing sales of healthy
foods and otherwise supportingfood system transformation.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTOUR APPROACH

It also agreed to consider creating an
external, independent stakeholder
council, made up of experts, to advise
the board on its nutrition and healthstrategy.
J Sainsbury plc was reluctant to put
more information in the public domain
about how it applies its nutrient
profiling model or to set a value-based
sales target for healthy products;
we will continue to press for thistransparency during our engagementin 2023.

We will send another letter in early 2023
to the CEO to reiterate our requests.
Ahold Delhaize NV
Ahold Delhaize NV explained its
thinking on sustainable healthy
diets and how it sees its approaches
evolving. The company began a
stakeholder consultation soon after our
engagement designed to inform its next
steps and new commitments.
We contributed to that consultation
and will review any new plans Ahold
Delhaize NV publishes in response.

• 62 •

We will continue to engage with thecompany to ensure that it places a firm
focus on improving the healthinessof its products alongside addressing
the other important environmental
impacts of food production.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENT
CASE

CASE

INDIVIDUALENGAGEMENTSTST

COLLABORATIVEENGAGEMENT

UDY

UDY

ACCELERATING
THE PROTEIN TRANSITION

IMPROVING HAZARDOUS
CHEMICAL DISCLOSUREOBJECTIVE

OUTCOMEOBJECTIVE

Secure commitments from European
retailers to increase sales of sustainable
proteins.

In October, FAIRR published an interim
qualitative assessment based onprogress made by the companies
since the previous engagement, using
its own evaluation framework, andprovided a forward-looking outlook
on the companies’ preparedness
to take advantage of coming proteintransition. Ahold Delhaize NV was
rated eleventh out of 58, given
a positive outlook, and put in the‘proactive’ category. Carrefour was
rated seventeenth, also given a
positive outlook and categorised
as being ‘active’ on this agenda.
The companies will be fully assessed
and rated again on FAIRR’s Sustainable
Proteins Index in 2023.

Improving chemical companies’
disclosure of chemical management.

ENGAGEMENT ACTIVITY
Through our membership of FAIRR,
we joined the 2022 collaborative
engagement initiative on protein
diversification. In total, 84 investors
with almost US$23 trillion AUM fromamong FAIRR’s signatories supported
this engagement. BNPP AM joined
calls with Carrefour SA and
Ahold Delhaize NV.
Each discussion focused on the company’sview of the materiality of the issue ofsustainable proteins, its strategy withrespect to sustainable proteins, emissions
measurement – particularly Scope 3*–
as well as consumer engagement,
marketing spending and reporting.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

Indirect emissions not related to theconsumption of electricity, heat or steam
needed to manufacture the product.

*

ACTIVITYIn the autumn, we wrote to 29 chemical
producers in Europe and the US to
ask them to review their preliminary
ratings on the ChemScore benchmark,and to engage with ChemSec, theSwedish NGO that publishes the ratingsin order to ensure that their final scores
captured all relevant information.
ChemScore provides investors andother stakeholders with consistent,
comparable information on the effortsof the world’s largest chemical
producers to reduce their chemical
footprint and transition to portfoliosof safer, less persistent chemicals.
It also rates companies’ chemicals
management strategies.

• 63 •

Better disclosure of this type of
information helps us to score thesecompanies more accurately in our ESG
ratings, thus feeding into investment
decisions, and helps us to identify key
areas for engagement.

OUTCOMES
The vast majority of the companies,
recognising the importance ofreporting on their chemical footprint,
engaged with ChemSec. Twocompanies did not: Bayer (Switzerland)and Mosaic (US). (Notably, towards
the end of the year 3M, one of thecompanies we contacted, announced
it would be phasing out the productionof ‘forever’ chemicals. Although wecannot claim credit for this significant
victory, we believe it attests to theimportance of supporting ChemSec’swork, joining four others that had
already done so.)

FURTHER ENGAGEMENT
The 2022 ChemScore was released in
December. We have signed up to takepart in collaborative engagement in
2023 using the ChemScore scorecards
as the basis for that engagement, andunder the auspices of a new initiative:
the Investor Initiative on Hazardous
Chemicals (IIHC). BNPP AM will also
serve on the Steering Committee forthis initiative.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEWOUR APPROACH TO VOTINGAND ENGAGEMENTCOLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESS

3Es: EQUALITY AND INCLUSIVE GROWTH
Promoting a more equitable and sustainable distribution of value
to ensure the long-term stability and resilience of societies and ecosystems

CASE
ST

INDIVIDUALENGAGEMENTUDY

IMPROVING BOARD INDEPENDENCEAND GENDER DIVERSITYENGAGEMENT ACTIVITY
One set of expectations in our voting
policy is that boards have sufficient
independence and gender diversity.
Extensive evidence shows thatcompanies with more diverse boards
or management teams generate moresustainable value creation overthe long term. Our goal is for 40%
of all board members to be womenby 2025.
We set out our expectations on gender
diversity in our 2022 voting policy:
for Europe, North America, Australia,
South Africa and New Zealand, we
expected a minimum of 30% female
board membership, and in Latin
America, Asia, Middle East and Africa(ex. South Africa) our threshold

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

was 15%. (Under certain conditions,
we will support boards with a ratio
just below this, for example, if
the company has made significant
improvements in recent years orcommits to reaching our thresholds
within two years.)in line with our expectations. These
results informed our votes in relation
to board members’ (re-)elections atthese companies, which are guided
both by gender diversity levels orcommitments, and independence levels.

VOTING ACTIVITY

In 2022, as in previous years,
to advance our goal, we identified
40 companies (14 in Europe, 11 in
North America and 15 in Asia) held in
our active equity portfolios to engage
with because their board diversity
was not in line with our expectations.

We supported board members’
elections at 13 companies (32%), but
at seven companies (18%) even though
the gender diversity met our threshold
we opposed board members’ elections
for other reasons. At the AGMsof the other 20 companies (50%),
their failure to meet this thresholdmeant we opposed the (re-)electionof one or more male board directors.
Today, the percentage of women on
boards in our portfolios exceeds thatin the ISS universe of listed companies.

OUTCOMEENGAGEMENT ACTIVITY

We achieved a 50% success rate withAt Telefonica SA’s 2021 AGM, althoughthese companies, meaning 20 companies the company had a high level ofadopted changes on gender diversityboard independence (53%), we did• 64 •

40%

Our goal is forof all Board
members to be
women by 2025

not support the (re)election of all
directors because the proportion of
female directors was 29%, just below
the required minimum level of 30%
set by our voting policy. We discussed
this issue with the company before andafter the 2021 AGM and sent a letterin 2022, for the second consecutive
year, outlining our gender diversity
expectations.

Similarly, we engaged with Tencent
during 2021 and 2022 and voted
against all male directors last year.

OUTCOMES
On a call just ahead of the 2022
AGM, Telefonica SA confirmed theappointment of a new independent
female board director. This increased
women’s representation on the board
to 33%, above our minimum threshold.
We therefore supported all director(re)elections (Items 4.1 to 4.5) in theabsence of any other concerns.
Tencent also added a female director
to its board in the third quarter.
This boosted the percentage of womenfrom 12% to 22%, in line with ourthreshold for Asia, which means thatat next year’s AGM, we will not voteagainst directors for this reason.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENTCASESTADDRESSING FORCED LABOUR IN
THE APPAREL AND FOOTWEAR SECTORCOLLABORATIVEENGAGEMENTUDY

PROTECTING HUMAN RIGHTSIN THE DIGITAL SPHEREIn 2019, we joined 160
investors managing more than
US$7 trillion AUM to endorse
a set of investor expectations
for addressing forced labourin global supply chains. The
statement was coordinatedby the Investor Alliance for
Human Rights (IAHR) and Know
the Chain, an organisationthat produces benchmarksof company policies andprocedures to combat forced
labour in the apparel andfootwear, the information andcommunications technology(ICT) and food and beverage
sectors.
Forced labour is a particularly
salient risk within the business
operations and supply chainsof apparel and footwear
companies, an industry
increasingly reliant on migrant
workers. At least 25 million
people are currently estimatedto be victims of forced labour,

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

coerced to work under threatsof violence, imprisonment andintimidation, in supply chainssupporting many of the world’s
favourite brands.
In the fourth quarter, we
signed up to the collaborative
investor engagement initiative
coordinated by Know the Chain
and IAHR to open dialogue
with apparel and footwear
companies to tackle theseissues.
In 2023, we plan to engage
with eight companies in bothlead and supporting roles. The
aim of the engagement is tosecure specific improvements
to practices and reporting
based on performance
weaknesses identified by
the 2020/21 Know the Chain
benchmark.

ENGAGEMENT ACTIVITY
BNPP AM is a board member of the Global Network Initiative (GNI),
a multi-stakeholder organisation focused on addressing threats to freedomof expression and privacy in the information and communications
technology (ICT) sector. Specifically, GNI focuses on requests bygovernments to censor content or seek information from companies
on their consumers.
GNI has established a set of Principles and Implementation Guidelines,
based on the UN Guiding Principles on Business and Human Rights,
to guide company decision-making and uphold the rule of law.
Corporate members of the GNI, which include some of the largest
internet and telecommunications firms in the world, agree to adhere
to the Principles and to subject themselves to periodic independent
assessments of their compliance with that commitment.
We participated in seven GNI company assessments during the year.
The non-company members of the GNI board (investors, academics,
human rights groups) review assessment reports prepared by external
auditors and law firms, question the assessors and companies,
and vote whether each company is upholding their GNI commitments‘in good faith, with improvement over time’.
A public report will be published by GNI at the end of this process,with details on each company’s assessment, in addition to public reportingby the GNI companies themselves.

• 65 •BNPP AM SIGNS UP
TO ADVANCE, A NEW
PRI COLLABORATIVEENGAGEMENTINITIATIVE ON
HUMAN RIGHTSIn December 2022,
PRI launched its new
collaborative engagement
initiative called Advance.
BNPP AM was among
220 investors to sign up.
Overall, the initiative
has the support of over
US$30 trillion AUM. It
will encourage companies
to fully implement the
UN Guiding Principles
on Human Rights andthe OECD Guidelines
for Multi-National
Companies (MNCs), thereby
contributing to delivering
equality and inclusive
growth. It will run for five
years and tackle companies
across several sectors.
We will co-lead
engagement with Arcelor
Mittal starting in 2023.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENT

3ENGAGEMENT LINKEDTO ISSUERS’ ESG PERFORMANCE
Engagement related
to our Responsible BusinessConduct (RBC) policy
In order for us to be able to invest incompanies, they must:• meet their fundamental obligationsin the areas of human and labour
rights, protecting the environment
and ensuring anti-corruption
safeguards, wherever they
operate, in line with the UN Global
Compact Principles and OECDMNE Guidelines;• comply with a series of Sector
Policies (e.g. coal policies),
established to set out theconditions for investing inparticularly sensitive sectors;•m aintain good ESG performanceto mitigate ESG risks acrossportfolios.
These requirements are codified
with our Responsible BusinessConduct (RBC) policy. In relation to
our passive investments, where the
RBC policy cannot be fully applied,
we aim to address ESG risks throughactive corporate engagement

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTBACK TOENGAGEMENT

and voting. As a last resort, we may
divest entities which do not respondto engagement and show no signsof improving and are therefore
considered as not in line with ourRBC. In total we engaged with ninecompanies in relation to our RBC
policies, some on multiple issues:• Coal policy: Of four companies
we engaged with due to concernsthat they did not comply with therequirements of our coal policy,
three were found to be in breachand excluded from our portfolios.
• Human rights: We engaged
with four companies over concerns
about their human rights policies
and practices. All provided
sufficient information or assurance
and remain on our watchlist.
• Climate change and biodiversity
issues: We engaged with threecompanies on these issues.
In two cases, they remainon the watchlist. One company
was excluded due to beingin breach of our coal policy.

We continued our
engagement in relation
to corporate thematicand sovereign bondissuances. We also joined
a collaborative sovereign
engagement initiative
facilitated by the PRI. Our
goal is to shape companies’
and governments’ policies
and practices over the
medium to long term by
outlining our view about
how such issuances can bebest structured to tackle
critical sustainability
challenges.”

Engagement with companies
with low ESG scores
We have a dedicated engagement process withcompanies with low ESG scores on our internal ESG
rating system. This process is closely linked to ourvoting, in the sense that companies that are notresponsive to our engagement will be sanctioned,
i.e. we may vote against or abstain on key items(discharge of board members, board elections or
financial statements, as available and appropriate).
We wrote to 41 companies that scored poorly torequest a dialogue about the apparent weaknesses
we identified. By the end of the year, we had had
discussions with ten companies, outlining to themwhere we felt improvements could be made.
Our next revision of the ESG ratings will reveal
whether these companies’ performance has
improved. We will report next year on the final
outcome of those engagements.
Engagement with fixed income asset issuers
We are becoming increasingly active in our
engagement with bond issuers. We see thisas an important part of our stewardship activity.
We continued to strengthen and apply ourframeworks for assessing green, social andsustainability bonds, which provide the basis
for our engagement with issuers of those bonds.

Arnaud-Guilhem Lamy
Head of Euro Aggregate Fixed Income• 66 •Engagement with corporate bond issuers
Debt investors are more limited in their ability
to influence bond issuances compared to equity
investors, given the legal mechanisms available
and how the market functions. Our fixed income

teams engage with issuers of various typesof corporate bonds as part of their investment
and portfolio monitoring processes.
The global corporate credits team joins Q&A
sessions with loan issuers and arranging banks
to carry out due diligence of various aspectsof the credit and to negotiate financial and legalloans transaction documents (term-sheet
and SFA key terms).
In respect of European high-yield bonds,
investments in the funds are constantly
re-evaluated and monitored; ad-hoc interactions
occur with management when warranted,
as well as one-to-one meetings withmanagement during conferences.
We outlined on page 37 how ESG ratings
are integrated into fixed income instrument
selection. In addition, each year or prior
to initial investment, the credit analysts within
our private assets teams, where an ESG rating is
not available (most typically for middle-market
sized issuers), ask the issuer to complete an ESG
questionnaire. The Sustainability Centre usesthat information to maintain the ESG score,
which feeds into fund construction.
Engagement in relation to thematic bonds
We seek to engage with issuers in bothdeveloped and developing markets, as wellas with multilateral agencies. We engage
on a one-to-one basis and join roadshowswhere issuers present to multiple investors
at the same time.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENT
During 2022, our bond specialists within
the ESG research team had 64 interactions
in relation to thematic bond issuances, compared
to 63 last year. In 2022, 58 were withindeveloped markets, six with emerging markets.
Some of these interactions were ex-ante, i.e. prior
to issuance, and others focused on reporting
post-issuance. We aim to participate in ex-ante
investor meetings with thematic bond issuers
either via the roadshow related to a specificissuance or ‘non-deal roadshows’ where issuerssound out investors’ comments or expectations.
Our engagement can focus on:• information discovery – gathering informationthat is not expressed in documentation that
can help us form a more complete assessmentof the proposed thematic bond;• encouraging improvements in the structure of
the thematic bond that could lead to ‘greener’assets being selected, or ‘less desirable’ assets
being dropped from the eligible portfolio.

THIS YEAR WE HAD 30
DIALOGUES WITH SOVEREIGNAND SUB-SOVEREIGN ISSUERS.
BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTExamples of our engagement
Sovereign and sub-sovereign bond issuers
We engage in dialogue with sovereignand sub-sovereign bond issuers about the termsof their bonds and on the countries’ policies
and frameworks that govern their green, socialand sustainability bond issuances. This year
we had 30 such dialogues, including:•K ingdom of Denmark – Green Bond issuance,
January 2022: We had a one-to-one call with
Denmark’s Treasury to discuss the issuer’s
green bond framework ex-ante and the
proposed ex-post reporting. We were pleased
to hear of the co-operation between ministries
about the final allocation of the proceeds andthe clear link of the bond to the EU Taxonomy.
Moreover, the Climate Act provides stability
to the Green Bond Programme because thewhole Parliament is accountable for delivering
it. We asked the issuer to consider quantifying
how the green bond would contributeto the country’s climate strategy.
• Canada – Green Bond issuance, March 2022:
We had a one-to-one call with Finance Canada
and Environment and Climate Change Canada
to discuss the issuer’s green bond framework
ex-ante and the proposed ex-post reporting. We
were pleased to learn that eligible expendituresare scored according to various considerations
such as indigenous impacts and their links
to national existing programmes. Further, theissuer confirmed it plans to report annually.

• 67 •• Italy – Debt Management Office discussion,
June 2022: Members of our ESG researchteam and the sovereign portfolio managers
had a call in June 2022 to discuss the macroeconomic and the debt management outlookof the country. We encouraged them toconsider updating their Green Bond Framework
and potential issuances in 2022.
• Greece – Minister of Finance, September 2022:
We joined other investors for an in-person with
the Minister of Finance of Greece and Chair of
the Council of Economic Advisors, organised by
JP Morgan. The Minister outlined the improving
condition of the Greek economy and the Greek
government’s approach to the current energy
crisis. He noted that the Greek Treasury and
PDMA have developed a Green Bond Framework
but were reluctant to pursue green bondissuance at the current time. We encouraged theMinister to introduce the framework to investors
via a non-deal roadshow in order to solicit their
feedback before deciding whether or not to go
ahead with issuances.
• Uruguay – Head of the Debt Management Officeat the Ministry of Economy and Finance, October
2022: Our sovereign ESG analyst discussed theissuance of a new Sustainability-linked bond
(SLB). The country’s intention is to mainstream
its goals related to the Paris Agreement andto link them to financial consequences, while
highlighting the country’s ESG credentials
and ambitious environmental agenda.

The issuer outlined their view that the two-way
pricing structure of the transaction would allow
Uruguay to create incentives to achieve substantial
progress in the creation of environmental public
goods, such as the reduction in GHG emissions andthe preservation of native forests. We informed theissuer that investors such as BNPP AM integrate
and analyse ESG indicators and metrics suchas the sovereign carbon footprint at the issuer
level. At the instrument level, we support Use ofProceeds instruments rather than SLBs because
it is very challenging to track the positive impactof an individual issuance without annual impact
reporting and the ex-post stage of the analysis.
Agencies and supra-nationals
We made good progress this year inestablishing a framework to analyse agencies
and supra-nationals. The framework looks
at the social mandate of these agencies
and uses various environmental metrics
and maps their activities against the SDGs.
We regularly monitor the activities of theseagencies and engage with them if we have any
questions. Examples included calls with WorldBank / International Bank for Reconstruction
and Development (IBRD) to discuss theirsustainability bonds, with KFW to discuss therole it had played in the bailout by the German
government of the energy company Uniper
and with the Council of Europe to discuss thisissuer’s Social Bond Framework.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENT

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8.

COLLABORATIVE SOVEREIGN ENGAGEMENT ON CLIMATE CHANGE
In 2022, BNPP AM joined the PRI-coordinatedCollaborative Sovereign Engagement on Climate
Change. We are one of seven investors that sits
on its advisory committee.
Governments have a pivotal role to play inachieving net zero in many ways, particularly
by creating an enabling environment forthe private sector. Through public expenditure,policy and regulation, policymakers can set
norms and incentives to transition whole
economies to net zero.
Sovereign debt accounts for a large share of
global assets under management - an estimated
US$60 trillion. It is therefore essential thatinvestors address climate risks associated

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTwith this asset class to achieve their net
zero commitments.
Through engagement with sovereigns, thispilot initiative of the PRI supports institutional
investors to reduce their exposure to risks
associated with a failure to rapidly transition
to net zero, including risks to sovereign debt
holdings, and the systemic risks that diversified
and universal investors face.
The goal of the initiative is to support
governments and associated entities, likefinancial regulators and central banks, to takeall possible steps to mitigate climate changerisks in line with the Paris Agreement.

• 68 •The investor group identified major sovereignissuers where collaborative engagement could
have the greatest impact based on these issuers’
contribution to the risks investors face related
to climate change. Following the electionof a new government in Australia, the investor
group saw an opportunity to support climate
policy action there.
The Advisory Committee discussed proposed
climate legislation, which aims to reducegreenhouse gas emissions by 43% by 2030
compared to 2005 levels. However, studies
have shown that to reach a 2°C scenario,
a 51% reduction in emissions is required,while to reach 1.5°C, a 74% emissions reduction

would be required. This is significantly higher
than what the new government is proposing.
Following the introduction of the Climate ChangeAct, the group approached several different
government entities to ask for meetings to better
understand how different institutions view theirrole in managing climate risk across the financial
system. To date, discussions have been held with
the Australian Treasury and the Australian Officeof Financial Management. Requests are pending
with the Department of Climate Change, Energy,
the Environment and Water and the Climate
Change Authority with equivalent requests.
The group intends to have similar engagementwith other sovereign issuers in the future.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

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We again signed the annual Global Investor Statement
to Governments on the Climate Crisis ahead of COP27* in Egypt
in November 2022. This statement was the most ambitious sofar, with 533 signatories representing almost US$39 trillion AUM.
It called on governments to ensure that the 2030 targets in their
Nationally Determined Contributions (NDCs) align with the goalof limiting global temperature rise to 1.5ºC and to implement
domestic policies and take early action to realise that goal.
More specifically, it called for the effective implementationof the Global Methane Pledge to reduce emissions by 2030
by at least 30% from 2020 levels. It also encouraged governments
to scale up the provision of climate finance from the public andthe private sector for mitigation, and for adaptation and resilience,with a particular focus on the needs of developing countries.
Finally, it urged countries to strengthen climate disclosuresacross the financial system through TCFD-aligned reporting.

Given the important role played byaccounting and other professional
bodies, we also aim to shape thestandards and guidance they develop
and oversee.

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GLOBAL INVESTOR STATEMENTTO GOVERNMENTS ON THE CLIMATE CRISIS

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NET

MITMENTSNET

we sometimes meet agencies
and policy makers individually,
we favour engagements undertaken
in partnership with other investors,
in formal or informal networks,
wherever possible.

One of the core tenets of the
Principles for Responsible Investment, Our approaches include:
to which we are a signatory, is• Public submissions to legislators,
participation ‘in the development
regulators and multilateralof policy, regulation, and standard
institutions, e.g., responding
setting (such as promoting andto public consultations;protecting shareholder rights)’.
We also operate within the provisions • Participation in the developmentof the Group’s Charter for Responsible of policy proposals in public andprivate fora, such as technicalRepresentation with Respect to theadvisory committees and investor
Public Authorities. Our Public Policy
associations;
Stewardship strategy is available on
our website.
• Meetings with policymakers;
We contribute to initiatives• Publication of white papers; andat the international, regional and• Endorsement of public statements
national levels on matters relating
and commitments developed
to sustainable finance, corporate
by investor and other stakeholder
governance and disclosure,initiatives.
as well as on a wide rangeof sustainability issues. While

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT8.

OM

BNPP AM has a long-standing
commitment to policy advocacy
to advance our sustainability goals,
contribute to a well-functioning
financial system and mitigate
systemic risks. We believe that
helping to shape legal frameworks,
regulation, standards and guidanceis integral to the fulfilment of our
fiduciary duties to our clients.

OUR PROGRESS

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Examples of our policy engagements:
MITMENTSOUR APPROACH TO VOTINGAND ENGAGEMENTCOLLECTIVE INSIGHTSOMOVERVIEWINVESTOR CALL FOR GLOBAL ROADMAPTO 2050 FOR FOOD AND AGRICULTURE
Along with other investors representing
US$17.45 trillion in AUM and organisedby FAIRR, we signed a letter that called on the
Director General of the United Nations Food andAgriculture Organisation (FAO) to produce a Global
Roadmap for the Agriculture, Food and Land-Use
sectors. These sectors account for over 30% of
total global emissions.
The roadmap would set out the actions neededby food system actors to achieve a 1.5˚C future
by 2050. The lack of this type of guidance hinders
countries’ ability to include food system related
emissions reductions in their National Determined
Contributions (NDCs). The FAO Director Generalannounced at COP27 that the organisation would
produce a roadmap for COP28.

U.S. SEC: THE ENHANCEMENT AND STANDARDISATION
OF CLIMATE-RELATED DISCLOSURES FOR INVESTORS
Building on work started in 2021, theU.S. Securities and Exchange Commission(SEC) proposed a rule that would require
publicly traded companies to disclose
comprehensive information about theirapproach to tackling climate change,
including Scope 1** and 2*** GHGemissions, and Scope 3**** emissions
for companies that have set Scope 3

reduction targets, or for whichsuch emissions are material.
The rule also includes details on
governance and stated commitments,
supported by attestation requirements.
We contributed to the BNP Paribas Group
comment letter, expressing broad support
for the rule and recommending that
Scope 3 disclosures be mandated

for all large companies. We urged
the SEC to ensure that its approachclosely align with climate disclosure
standards being developed by otherjurisdictions, arguing that doing so will
promote market efficiency by ensuringthat investors and other stakeholders
have consistent information.

Conference of the Parties. / ** Direct emissions from fossil fuel combustion. / *** Indirect emissions related to the consumption of energy, heat or steam needed
to manufacture the product. / **** Other indirect emissions related to the manufacture of the product or its use by customers.

*• 69 •

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENT
INTERNATIONALEUROPEUN Plastic Pollution Treaty High Ambition
Business Coalition

We participate actively in several tradeassociations through their dedicated committees
and working groups on sustainable financeand stewardship. We have long-establishedmemberships in many national associations such
as Association Française de la Gestion Financière(AFG, France), Association of the Luxembourg
Fund Industry (ALFI, Luxembourg), Belgian AssetManagement Association (BEAMA, Belgium) and
Assogestioni (Italy), and also at the European
level in European Fund and Asset Management
Association (EFAMA) and International CapitalMarket Association (IMCA). We have contributed
to several consultations and calls for evidence
during the year.

We have long actively supported efforts to address
the global plastics crisis. In 2018, we endorsed
the New Plastics Economy Global Commitment
launched by the Ellen MacArthur Foundation andthe United Nations Environment Programme (UNEP),
followed by the call for implementation of Extended
Producer Responsibility schemes for packaging.
We are also a member of the PRI Plastic Investor
Working Group.
In 2021, BNPP AM became a signatory to theBusiness Call for a UN Treaty on Plastic Pollution,
urging UN Member States to establish an
Intergovernmental Negotiating Committee (INC)
at United Nations Environment Assembly (UNEA)
5.2 to develop an ambitious international, legallybinding instrument on plastic pollution, which it did.
The treaty negotiation process, expected toconclude at the end of 2024, will largely determine
the trajectory of the plastic pollution crisis forgenerations to come. In anticipation of the firstmeeting of the INC in November 2022, in September
we signed the statement of the multi-stakeholder
Business Coalition for a Global Plastics Treaty
convened by the Ellen MacArthur Foundation andWorld Wildlife Fund (WWF). The statement outlines
the characteristics members hope the UN treaty
will embody. BNPP AM spoke on behalf of thecoalition at a multi-stakeholder event in the run up
to the first INC meeting held in November 2022.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

via our trade associations (AFG, Eumedion and
EFAMA). Questions related to market participants’
perception of the scope and effectiveness of the
SRD2 provisions.

best practices, serving the interests of theircustomers while treating issuers and otherstakeholders fairly, with accuracy, integrity
and responsiveness.

We also participated in a direct discussion
with the ESMA at a full-day event in November.
Our principal message was that we consider
the current legal framework developed by SRD2
in relation to proxy advisors to be sufficientand the role of the Best Practices Principles
Oversight Committee (BPPOC) to be an adequate
self-regulation system. Our Global Headof Stewardship is a member of BPPOC.

We expressed the view that the framework should
focus on increasing data and rating providers’transparency on the methodologies used,on how data is obtained and verified, as wellas accountability requirements, notably tacklingconflicts of interest, market abuses, and an open
dialogue with rated companies.

ESMA consultation on ESG rating providers

ESMA also called for evidence on the market
characteristics for the Environmental, Socialand Governance (ESG) Rating Providers in the
The Shareholder Rights Directive, as amended
European Union. BNPP AM contributed throughby the SRD2, lays down a common regulatory
a consolidated response of BNP Paribas Groupframework with regard to the minimum standards
as well as through trade associations.
for the exercise of shareholder rights in EU-listed
We urged the EU to create a holistic regulatorycompanies. By facilitating the involvement
framework for data and rating providersof shareholders in the corporate governance of(for both financial and non-financial information).
investee companies, the SRD2 aims to encourage
their long-term engagement with EU-listed
We advocated for a similar approach to thatcompanies to enhance sustainable long-term
applied to the proxy advisor industry, withvalue creation in EU capital markets.
a code of conduct, and a ‘comply or explain’model overseen by the BPPOC. This oversight
We provided our own answer to the Callshould provide the market with independentfor Evidence from the European Securities
assurance that providers are meeting agreed
and Markets Authority (ESMA) and contributed
ESMA call for evidence on the Shareholder
Rights Directive 2• 70 •

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

Monetary Authority of Singapore
consultation on proposed disclosure
requirements for retail ESG funds
The Monetary Authority of Singapore (MAS)issued an industry consultation on Proposed
Disclosure Requirements for Retail ESG Funds.
We participated in an engagement session with
MAS, as members of the group which drafted
the Singapore Environmental Risk Management
guidelines. Our Global Head of Sustainability
Jane Ambachtsheer was also appointed to
the MAS Sustainable Finance Advisory Committee
during the year.
The focus of the regulation is quite similar
to the approach taken by the Hong Kong Securities& Futures Commission (SFC) with its circularon ESG funds, i.e. focusing on funds that callthemselves ESG/sustainable and have ESG
as a key investment focus.
MAS confirmed that they were aware of – andwanted to limit – compliance and regulatoryburden. As such, they are considering accepting
disclosures under the EU SFDR as sufficient under
the planned Singapore regime, once the fund hasreceived its initial approval as an ESG fund by MAS.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTNETMITMENTS

APAC

8.

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OUR APPROACH

OUR PROGRESSA CRUCIAL YEAR FOR SUSTAINABILITY STANDARDS DEVELOPMENTOM

OUR APPROACH TO VOTINGAND ENGAGEMENTCOLLECTIVE INSIGHTS

BackgroundWe outlined several perspectives:

In April 2022, the European Financial Reporting
Advisory Group (EFRAG) – a multi-stakeholder
expert body that provides technical advice tothe EC - published its draft European Sustainability
Reporting Standards (ESRS). The EFRAG launcheda public consultation in August.

• Start with climate reporting standards:
Given that climate risk is a global issue,
we believe it needs to be addressed as a priority
and consistently at the international level.
Global standards are essential to ensure that all
corporates publish the same type of informationaccording to common methodologies; minimum
requirements such as the EFRAG standards
will be mandatory for all corporates within
the scope of the Corporate Sustainability
Reporting Directive (CSRD).

The purpose of the standards is to specify
the new sustainability reporting requirementsof the amended Accounting Directive. In parallel,
the International Financial Reporting Standards(IFRS) Foundation established the International
Sustainability Standards Board (ISSB)
to ‘deliver a comprehensive global baselineof sustainability-related disclosure standards
that provide investors and other capital market
participants with information about companies’
sustainability-related risks and opportunities
to help them make informed decisions.’
We believe these standards will be critical bothto driving more sustainable corporate practicethrough more comprehensive and consistentreporting as well as to facilitating sustainablefinance and investment. We dedicated substantial
time to reviewing and commenting on them,working closely with BNP Paribas Group.

• Interoperability: Both for preparers andusers of sustainability reports, it is essentialthat EFRAG adopt a ‘co-construction’ approachwith the newly established ISSB in order to designa ‘common core’ of EU standards that fit exactlywith internationally recognised standards andensure interoperability. Adopting different regional
approaches will create confusion and complexity
and thus undermine the quality of information.

• Align with TCFD: We urged EFRAG to ensurethat European climate standards are structured
around the TCFD’s four pillars to enhanceusability and comparability, not least because• These standards will also enable investors
ISSB’s climate-related disclosure is based
to comply with their own disclosure requirements,on the TCFD structure.
based on data published by the companies inwhich they invest. The more real data that is• Clearly differentiate financial and sustainability
available, the less investors will need to rely on
reporting standards: The dividing line between
estimates and proxies produced through varying
financial and sustainability reporting should
methodologies that can differ significantly.
be clear in both standards to avoid misalignment.
While the degree of robustness is clearly
While EFRAG clearly stated that the sustainability
embedded in the CSRD/EFRAG framework, it willreporting provides information beyond what
only work to the extent that the ISSB standards
is already taken into account in financial
are aligned and are adopted by all jurisdictions.
statements, ISSB did not provide a similarly
Further, starting with standards on climateclear view on the frontier between financial
related matters is appropriate, because market
reporting and sustainability reporting.
participants will need time to adapt and collect
This could lead to misinterpretation
the required information.
and misalignment between standards.

• While positive that the ISSB has made climate
the only objective covered by its draft standards,
We welcomed both initiatives and submitted written this poses a challenge for EFRAG and the EUcomments on the first two proposed draft IFRS
Commission. We believe they should align by
exposure standards developed by ISSB: the General
first implementing climate reporting standards
Requirements for Disclosure of Sustainabilitythrough interoperability with ISSB, in order torelated Financial Information and Climate-related
avoid a double burden of reporting and an uneven
Disclosures.
playing field with non-European competitors.
Our views of the two sets of proposals• 71 •

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR APPROACH TO VOTINGAND ENGAGEMENTA GLOBAL DEBATE ABOUT WHAT IS MATERIAL TO INVESTORS
There is a critical concept at the heart of the
EFRAG and ISSB proposals that has sharply
divided investors and corporates aroundthe world. In technical terms, it is a debate
about ‘materiality’, but in common language,
it is a debate about what matters to investors.

which impacts are the most significant or where they
are coming from. Without this information, we cannot
hope to reverse the systemic risk of nature loss,
climate change or even child labour. This also meansthat we cannot hope to mitigate some of the mostsignificant financial risks to our clients.

Are investors only interested in how external
events affect the financial prospects of individualcompanies, or are we also interested in how
corporate actions affect society, the environment,
our economies and other companies in our
portfolios? Do we want to understand how climatechange may impact a company’s prospects or
do we also want to understand that company’scontribution to global GHG emissions? The answer
to those questions is critical because it determines
what information is disclosed to investors andwhat information is left out.

The EU has offered a new term – ‘double
materiality’ – in its Corporate Sustainability
Reporting Directive (CSRD), requiring that‘companies have to report not only on how
sustainability issues might create financial
risks for the company (financial materiality),
but also on the company’s own impacts on people
and the environment (impact materiality).’

We told ISSB that their focus was too narrow andfailed to meet investor needs for information on
corporate impacts on people, the planet and theeconomy, as well as how they contribute to systemicrisks such as climate change and biodiversity loss.
Investors need this information to better manage
these risks and to assess enterprise value overthe short, medium and long term. We followed
up on these written comments during an in-person
meeting with representatives of ISSB in New York.

This issue was also at the centre of a series ofengagements we conducted with the Task Forceon Nature-related Financial Disclosures (TNFD),
an organisation that BNP Paribas Group helped
The concept is old, but the term is new. The Global to launch. TNFD’s first iteration of its corporate
reporting framework to address nature-related
Reporting Initiative (GRI) – the most widely used
corporate sustainability reporting framework in the risks focused on enterprise value. It offereda framework for data collection and strategy
world – has always used a definition of materiality
development that, to us, appeared designed
If we’re only concerned about how climate may impact that is focused on a company’s external impacts.
to help companies protect themselves from
And, in a sense, double materiality is a misnomer
a company, then that company’s GHG emissions,because all of this information is potentially material nature loss, as opposed to helping us all protect
climate strategy, etc., is only ‘material’ to the extent
nature from destructive corporate activity.
to the reasonable investor. Nevertheless, the termthat it may have a foreseeable impact on the valueof that company. That’s a rather narrow lens through has helped to clarify the debate.
Nature loss, like climate change, is a systemic
which to evaluate global systemic risk and, in practice, The EFRAG and ISSB consultations took veryrisk. As such, we must focus first and foremost
very little information about corporate climate
on the drivers of the crisis. After a series ofdifferent approaches to this key question, withperformance is included in regulated securities filings. EFRAG following a ‘double materiality’ approachin-person and written engagements with the
Further, very large global companies may
TNFD secretariat, we believe TNFD is now moving
and ISSB focusing on information deemed
be able to create significant harms that may amountin the right direction, with version 0.3 of the TNFD
necessary to evaluate a corporation’s ‘enterprise
to rounding errors on their books, due to their size.
beta release reflecting explicit requirements
value.’ In our comment letters, we supported
Diversified investors, however, carry all of thesefor companies to measure and disclose both
EFRAG’s approach and challenged the ISSB
impacts. Without a full inventory, we cannot assess
their impacts and dependencies on nature.
to take a more holistic view of risk.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 72 •

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSRESPONSIBLE
BUSINESS CONDUCT
We expect companies to meet theirfundamental obligations to respect humanand labour rights, protect the environment
and ensure anti-corruption safeguards
wherever they operate. We also have a seriesof policies that set out the conditions forinvesting in specific sectors and guide ourscreening requirements and engagement
approach. We engage with many companies
in areas in which they fall short and exclude
the worst offenders.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 73 •BACK TOTHE 6 PILLARSOVERVIEW

COLLECTIVE INSIGHTSOUR APPROACHRESPONSIBLE
BUSINESS CONDUCTRBC STANDARDS
United Nations Global Compact (UNGC)& OECD MNE Guidelines
A universal benchmark for assessing
companies
Based on 10 principles covering:
Human Rights, Labour, Environment,
Anti-corruption
Including the UN Global Compact Watchlist

OUR APPROACH TORESPONSIBLE BUSINESSCONDUCT
It is our belief that companies’ business conductimpacts the value and reputation of entities
in which we invest. We expect companies
to meet their fundamental obligations torespect human and labour rights, protect
the environment and ensure anti-corruption
safeguards wherever they operate, in line with
the UN Global Compact Principles and OECD
Guidelines for Multinational Enterprises (OECDMNE Guidelines).
We will avoid investing in companies in violationof these standards and companies struggling
to meet the standards will be put on a watchlist.
A series of policies set out the conditions underwhich we will invest in specific sectors andguide our screening requirements and related
stewardship activities. These criteria are basedon relevant international conventions andregulations (including the supplemental criteria

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTOUR PROGRESS

Sector Policies
Implementation of policies
for sensitive sectors
Exclusions: Controversial Weapons,
Coal, Tobacco, Unconventional Oil & Gas
Sectors with minimum requirements:
Palm oil and Wood Pulp, Nuclear,
Mining, Agriculture

The following principles govern our implementation of
Responsible Business Conduct within our investment processes:

provided by the OECD for sensitive sectors
such as responsible agricultural supply chainsand conflict minerals), BNP Paribas Group CSR
Policies, and voluntary industry standards.
In each sector, we highlight mandatory
responsible business conduct requirements thatmust be met by issuers in order for us to invest.
In addition to the compulsory standards, wehave also developed criteria that we encouragecompanies to comply with. The latter provides
a good framework for further analysis
and dialogue with companies.
Finally, we also have a set of policies thatcommit us to exclude certain sectors or activities
when we deem them to be in violation ofinternational norms, or of causing unacceptable
harm to society or the environment, without
counterbalancing benefits. These are generally
sectors where engagement makes little sense.

1

2

3

Investment universes are
periodically screened witha view to identifying issuersthat are potentially in breachof UN Global Compact Principles
and OECD MNE Guidelines
or mandatory requirements
applicable to controversial
sectors and products.

This assessment is conductedby our Sustainability Centre
based on internal analysis
and information provided
by external experts, and in
consultation with BNP Paribas
Group CSR.

As a result of this process,we maintain two lists:• An exclusion list of issuers thatare associated with serious
and repeated breaches of UN
Global Compact Principles
or mandatory requirements
related to controversial sectors
and products.
• A watchlist of issuers thatare at risk of breaching ESG
standards and with whom
we may engage in dialogue
to encourage improvements.

Our Sustainability Committee, which includes our most senior executives and is chairedby our CEO, must approve all changes to the Exclusion List. The list is updated at least once a year.
The Sustainability Committee must also approve the implementation of all new or updated sector
policies as well as the initial exclusion list or changes to the list as a result of these policies.

• 74 •

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSRESPONSIBLE
BUSINESS CONDUCTGETTING TO NET ZEROREDUCE THE CARBON FOOTPRINTOF OUR SELECTED INVESTMENTSALIGN INVESTMENTS
WITH NET ZEROEXIT COAL
SUBSTANTIALLY INCREASEOUR CLIMATE AND ENVIRONMENTALLY
THEMED INVESTMENTS
ENGAGE WITH OUR CLIENTSON THEIR TRANSITION TOWARDSNET ZERO INVESTING

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTVOTE FOR CLIMATE ACTION,
VOTE FOR THOUGHTFULSHAREHOLDER PROPOSALSENGAGE WITH COMPANIESON NET ZEROADVOCATE FOR NET ZERO ALIGNEDCLIMATE POLICYREDUCE OUR OPERATIONALEMISSIONS FOOTPRINTREPORT ON PROGRESS
IN TCFD-ALIGNED REPORTS

C

We plan on reducing the carbon footprint of
our investment portfolios for in-scope holdings
from a 31 December 2019 baseline by 30% by
2025 and by 50% by 2030. At the end of 2019,the aggregated carbon footprint of BNPP AM’s
funds under the scope of our commitment
was 91.72 tCO2/m€ invested. 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.
Scope 3 emissions are not included in thecalculation as the measurement of theseemissions is not yet standardised or considered
reliable enough to be used in reporting. Given theimportance of Scope 3 emissions in most sectors,
we are evolving our approach to calculating
Scope 3 emissions with the aim of including
them in the future.
In-scope: our initial commitment covers
50% of our assets under management, andwe have the aim of increasing the proportionof AUM included in our net zero commitments
and strengthening our targets to ensure
we reach net zero by 2050 or earlier.
• 75 •NET

MITMENTSZEROREDUCE THE CARBON FOOTPRINT OFOUR IN-SCOPE CORPORATE INVESTMENTS(SCOPES 1 AND 2):

ZERO

C

OM

MITMENTSNETOM

In late 2022, we published our Net Zero Roadmap, our long-term planto achieve net zero portfolio emissions by 2050 or sooner. The plan not
only covers investments, but also how we plan to leverage our stewardship
activities to help achieve our goal, and how we will walk the talkby reducing the emissions of our operations.

ZOOM ON COMMITMENTS RELATEDTO OUR INVESTMENTS:
ALIGN WITH
NET ZERO (NZ):
Our goal is for 60% of our in-scope 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 alignmentof our corporate portfolio by 2050.
CURENT NZ: AAA BREAKDOWN OF BNPP AM’S
AUM in-scope corporate holdings(fixed income and equity)
21%
Aligned to a
Net Zero Pathway

4%
Achieving Net Zero

15%
Aligning
Towards a Net
Zero Pathway
Source: BNPP AM based on TPI, SBTI, CA 100+and CDP data, as at June 2022.

60%
Not Aligned

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSBNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

ZERO

C

Our goal is to substantially increase our climate
and environmentally themed investments.
In 2022, we launched new sustainabilityfocused ETF strategies, including one on thegreen hydrogen economy. We also launched a
Sustainable Asian Cities Bond strategy to help
address and capitalise on the infrastructureneeds of cities in Asia as they implement
mitigation and adaptation projects.

• 76 •NET

MITMENTSNETINVEST IN CLIMATE SOLUTIONS SUBSTANTIALLY INCREASEOUR CLIMATE AND ENVIRONMENTALLY
THEMED INVESTMENTS:

ZERO

C

OM

We will exclude mining companies that do nothave a strategy to exit thermal coal activities
and power generators that still have coal capacity
in their generation mix by 2030 in European
Union and OECD countries, and by 2040
for the rest of the world.
In 2022, we also introduced new and tighter
restrictions related to unconventional oil and gas
activities: we will now exclude companies thatgenerate more than 10% of their revenues fromunconventional oil and gas or from activities
in the Arctic and we will not invest in companies
with oil and gas reserves in the Amazon.

MITMENTSCEXIT COAL:

OM

ZERO

OM

NET

MITMENTSRESPONSIBLE
BUSINESS CONDUCTCLIENT
ENGAGEMENT:Engage with our clients to transition towards
net zero investing. This is a key lever of actionthat builds on the previous commitment related
to expanding our offering of climate-focused
solutions. A central component to this is providing
our clients with a range of education and training
tools, notably via our Investment Academy.
In 2022, we provided our clients with a summary
paper, a podcast and short videos on our net zeroroadmap and the topic in general. We also planon working with our clients to better understandwhat they need to help them on this topic.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSBACK TOTHE 6 PILLARS

THE 3Es
We believe a better world is one with an economic model
built on a successful energy transition, environmental
sustainability, and equality and inclusive growth – our 3Es.
These are critical preconditions that together represent
the pathway to the economic sustainability that enables
us, as investors, to safeguard long-term returns.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 77 •

OVERVIEWA FORWARD-LOOKINGPERSPECTIVE

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESS

THE 3Es

Through the process of developing
our Global Sustainability Strategy,
we identified three systemic risks
that we believe are critical preconditions for a more sustainable
and inclusive economic system: theenergy transition, environmental
sustainability, and equality andinclusive growth.
Moreover, we believe that
addressing these issues is critical

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

to financial market stability. We
have established a set of targets
and developed Key Performance
Indicators (KPIs) relating to these
3Es, addressing how we will alignour investment research, portfolios,
and company and regulatory
engagement in support of each.
This section details how we are
addressing these risks to help topromote well-functioning markets.

MARKET-WIDE RISKS
The identification ofmarket-wide risks is an
essential task for any asset
manager and is performedby different groups within
the Investments divisionof BNP Paribas AssetManagement.
Management (BNPP AM).
Our Macro Research andInvestment
Strategyteam
teamis is
Investment Strategy
charged with providing wellresearched, high-conviction,
counter-consensus views
to portfolio managers to
support their investment
decisions. The team has fiveeconomists responsible forcovering macroeconomic,
macroeconomic
economic
policyand andand economic
policypolitical developments in
key
regionsof ofthetheglobe,
asin keyregions
globe,
well
as threestrategists
as wellas threestrategists
responsible for covering thecore asset markets: fixedincome, foreign exchange,commodities and equities.

• 78 •

The credit research teamwithin the Global Fixed
Income department
performs the same function,
focusing on analysis of thefundamentals of privatesector issuers within theuniverse of corporations
that we invest in.
Our investment teams arepermanently engaged inassessing potential market
moves and the risks toindividual positions or
to their entire portfolios.
Risk managers within our
Fundamental Active Equities
and Global Fixed Income
investment divisions work
closely with investment
teams to carry out
regular and ad-hoc stresstesting analysis using ourinvestment management
system.

Combined with andsupplementing other risk
measures and reports, suchastracking
volatility
andsuch
as tracking
volatility
VaR
Shortfall,and /Expected
Value at Risk
(VaR)/
stresstesting
gives us
Expected
Shortfall,
importantinsights
stress testinggivesinto
us how
portfolios
expected
important are
insights
into howtoperformare
in aexpected
range ofportfolios
possiblescenarios.Therisk
to perform
in a range ofmanagers
regularlyThe
conduct
possible scenarios.
risk
analysisofregularly
prospective
andmanagers
conduct
customised
scenarios, as
analysis of prospective
andwell
as reviewing
historicalcustomised
scenarios,asscenarios
for relevant
data.
well as reviewing
historicalscenarios
for relevant
While
we know
historydata.
neverexactly,
While repeats
we knowitself
historysuchtoneverreviews
repeatsallow
itselfus
exactly,
identify
acuteallow
sensitivities
such reviews
us totofactors
thatsensitivities
manifested
identify
acutethemselvesin pastmarketto factors thatmanifested
regimesandinenvironments
themselves
past market
andassessrelevance
regimesandtheirenvironments
toandtoday’sassessconditions.
their relevance
to today’s conditions.

OVERVIEW

COLLECTIVE INSIGHTS

THE 3Es

In the long run, it is the only
plausible growth we can aspire
to and those that do not adapt
will be left behind.
Our objective is to make a
substantive contribution tothis transition. We work towards
this objective in three ways:• A lign our investment portfolios withthe goals of the Paris Agreement.
• E ncourage our investee companies
and countries to align theirstrategies with the goalsof the Paris Agreement.
• E ncourage policymakers to adopt
measures that align with the goalsof the Paris Agreement.

A LONG-TERM COMMITMENT TO
MEASURING AND REDUCING THE CARBON
FOOTPRINT OF OUR PORTFOLIOSCONTEXT
There are a variety of measurement
frameworks in place to support anassessment of the carbon profile, andassociated climate risk, of companies.
In the end, the only thing that reallymatters is a reduction of absoluteemissions to zero by 2050 in order tohave any meaningful chance of staying
below 1.5°C. Investors need to starton this journey now if they wantto avoid the systemic risks driven
by a changing climate.

ACTIVITY
We started measuring the carbon
footprint of our SRI-labelled equity
funds and mandates in 2011. 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 updated our methodology
to align it with the European Union’s
Principal Adverse Impact (EU PAI)

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTOUR PROGRESSUDY

Energy transition is the term
now widely used to describe thestructural shifts that are occurringin the global energy system. Ignitedby the climate crisis, there are
four main drivers of this energy
transition:• public policy;• technology;• changing consumer preferences;• changing investor preferences.
These four factors operate ina feedback loop, so the energy
transition will likely intensify andaccelerate over the next decade.
The transition is an opportunity inthe short, medium and long term toboost growth, both from increased
investment in the low-carbon
economy and by fostering innovationand technological progress.

ST

ENERGY
TRANSITIONCASEOUR APPROACH• 79 •

definition for carbon footprint, which
underpins our carbon footprint’s ‘Betterthan-Benchmark’ (BTB) target, as
outlined in our ESG Integration Guidelines.
For funds and mandates covered bythese Guidelines, our objective is to holdportfolios with lower carbon footprints
than their relevant benchmark
or universe.

OUTCOMES
We are happy to see that 98% of ourin-scope open-ended funds where we
could calculate a footprint have a carbon
footprint lower than their relevantbenchmark or universe as at end of
December 2022. That we have had thispractice in place for a number of years
has put us in a reasonably good place tomeet our net zero commitments, where
we aim to reduce the carbon footprintof our investment portfolios for inscope holdings by 30% by 2025 and by
50% by 2030. Used in conjunction withother strategies outlined in our Net Zero
Roadmap, we believe our BTB rule iseffective in helping to mitigate against
the risks posed by climate change.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESS

THE 3Es

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTOur overall objective is to improvethe environmental impact of ourinvestments. We have two targets
with respect to our water and forest
footprints:• I mprove the water efficiency of
our investment portfolios, especiallyin water-stressed areas, and measureand disclose the water footprintof our portfolios. We encouragewater-intensive companies
operating in water-stressed areas
to significantly improve their water
efficiency while ensuring water
access to local communities.
• S upport global efforts to end
forest loss by 2030. Our target
is for relevant companies
in our portfolios to:	Adopt No Deforestation, No Peatand No Exploitation (NDPE)
commitments for agriculturalcommodities (palm oil, soy, paper,
timber and beef products).
	Adopt NDPE commitments by
2030 from non-agricultural sectors(mining, metals, infrastructure, etc.).

BNP PARIBAS ASSET MANAGEMENTMEASURED ITS BIODIVERSITY FOOTPRINT

UDY

Unless we act immediately andradically to reverse environmental
degradation, not only will we
destroy our natural capital, we will
be unable to sustain the economic
growth rates and prosperity levels
that populations in developed
countries enjoy, let alone extend
them to developing nations.
We need to first stabilise total
demand for natural resources,
then reduce it in the context
of a growing population. And weneed to substantially improvenatural resource productivity or,
where possible, find substitutes.
We also need to drastically reduce
the ecological impact per unitof production and move towards
net-zero impact. Finally, we must
develop a circular economy thatallows natural resources to recoverand to regenerate themselves.

CASE
ST

ENVIRONMENTALSUSTAINABILITY‘MAKE IT MANDATORY’CONTEXT
Biodiversity footprinting is an assessment
tool that helps investors combine
investees’ modelled and reported data
to quantify their potential biodiversity
impact, without the need to measure
actual biodiversity change on the ground.
This would be an impossible task forlarge, globally diversified asset owners
and managers. The lack of comprehensive
data and modelling techniques has meantthat investors have faced difficulties
in assessing the biodiversity impactsof their portfolios.

ACTIVITYA year after releasing our biodiversity
roadmap, we published the first resultsof our research to determine thebiodiversity footprint of our investments.
We collaborated with Iceberg Data Lab
and I Care & Consult to develop a tool
to identify and quantify the potential
negative biodiversity impacts of portfolio
companies.

• 80 •

We carried out an analysis based on
the Corporate Biodiversity Footprint
methodology, which covers more than
1,800 companies included in our equity
and bond funds, equating to 70% of our‘corporate’ assets under management.

OUTCOMESThis first biodiversity footprint
assessment enables us to establish abaseline against which we can monitor
our future performance. It also provides
a high-level compass to identify wherecloser analysis of individual issuers
is warranted.
We are optimistic about the usefulnessof this analysis, though we wish tohighlight that many challenges remainahead. There is still a lack of data thatis usable by investors that link specificimpacts to individual companies. Our
plan is to continue to work with Iceberg
Data Lab and I Care & Consult to enhance
the methodology. We will update theassessment on a yearly basis or as needed.

BNP Paribas Group recently
signed the Business for Nature‘Make it Mandatory’ campaign.
This campaign, signed by morethan 330 businesses and financial
institutions with more than USD
1.5 trillion in combined revenues,
urged world leaders to use
COP15 to set mandatory
requirements for all large
businesses and financial
institutions to assess and disclose
their impacts and dependencies
on biodiversity by 2030.
For BNPP AM, it is important
to know how companies
perform when it comes tobiodiversity, as this may
influence our decision whether
or not to invest. This is why
we provided funding to CDP
to introduce new questions
linked to nature loss andbiodiversity in their disclosure
questionnaires.
The data showed that a majority
of companies worldwide are
not translating commitmentson biodiversity into action. Thisis despite promising findings,
which show readiness from
corporates to commit to,
and disclose, on biodiversity.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

EQUALITY AND
INCLUSIVE GROWTHOUR PROGRESS

THE 3Es

Amid growing wealth and income
inequalities, questions are being
raised about how capital is
distributed within the corporate
enterprise and society at large, fromthe Chief Executive Officer (CEO) tothe average employee, the consumer,
government and shareholders.
There is a growing focus on therole companies play in seeking
to influence the rules of the gamethrough lobbying and otherpolitical activities.
In addition, the politicalconsequences of rising inequality
and social exclusion are beginningto be felt. The failure to equitably
distribute the gains fromBNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

globalisation and capitalism isperceived by many economists asa root cause of growing populist
movements around the world.
The changing political landscape –and the policies that could emerge
alongside – could negatively impact
the foundations of democracy.
Consequently, inequality has risen
to the top of the policy agenda.
Investors can play an important
positive role by incorporating asocial equity bottom line into theirinvestment analysis and practices,and by encouraging companies
to take account of and manage theirlabour and employment practices
and their impacts.

Our objective is to promote a
more equitable and sustainabledistribution of value to ensure thelong-term stability and resilienceof societies and ecosystems.
We have started our efforts
in three areas:• E nsure that senior corporate
management teams areappropriately incentivised toprioritise the success and long-termsustainability of their businesses
through reform of executive
compensation and the mitigationof excessive CEO-to-median
employee pay ratios.

• E ncourage companies to promote

all forms of diversity and provide
greater opportunities for womenand minorities, at all levelsof the organisation.
• E ncourage companies to adopt
more transparent tax strategies.
Encouraging these actions will help
to rebalance the inequalities of
wealth, income and opportunitythat threaten the long-term stabilityof our economies.

• 81 •

40% BY 2025
OUR GOAL:

of all board members
to be womenin all markets

COLLECTIVE INSIGHTSOVERVIEWOUR APPROACH

OUR PROGRESS

THE 3Es

CASE
36%
29%

23%

UDY

30%

ST

36%

23%
15% 14%GENDER DIVERSITYON BOARDSCONTEXTNorth America

EuropeAfrica

31%

32%

Asia

35%
30%

17%

14% 13%

12%

South America

MENASouth Africa

Australia &New Zealand

Extensive evidence shows that companies
with more diverse boards or management
teams generate more sustainable value
creation over the long term. Recognising
this, in 2019 we introduced specific AGM
voting criteria on gender diversity, whichvary according to region. For Europe,
North America, Australia, South Africa
and New Zealand, a minimum thresholdof 30% female board membership applies,
against 15% for Latin America, Asia,
Middle East and Africa (ex. South Africa),
regions we consider less advanced interms of diversity issues. We’ve also
incorporated gender diversity into our
proprietary ESG rating methodology andinto our own hiring practices.

ACTIVITY
30% rule

15% rule

Percentage of women on boards
In BNPP AM portfolio

To test the effectiveness of our voting
policy and dialogue with shareholders
on the topic of diversity, we conducteda global study of the number of women

ISS universe of listed companies

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 82 •

on boards ahead of the 2022 AGM season.
The study compared the 3,500 companies
in which we invest with the 17,000
listed companies in the Institutional
Shareholder Services.

OUTCOMES
The study demonstrates the effectivenessof our approach to voting andengagement, finding that women makeup an average of 25% of the boards of thecompanies in which we invest, compared
to 18% for the broader universe of listedcompanies. Regional differences are
considerable, with Europe, South Africa
and Australia the most advanced in termsof board director parity, whereas Asia,
South America and the Middle East areless diverse.
For the 2022 voting season, we increased
the thresholds of our voting policy toensure we achieve our medium-term goalof 40% of all board members to be womenby 2025 in all markets.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

THE 3Es

PARTICIPATION IN
ADDITIONAL REGULATORY AND
MARKET-SHAPING INITIATIVES
We engage with policymakers, regulatorsand other market participants in various
market-shaping initiatives to better alignregulations and policies related to the functioningof financial markets, corporate governanceand other topics related to the 3Es.
BNPP AM has a long-term commitment to,and successful track record of, public policy
engagement to advance its sustainability
goals. We advocate both to strengthen ESG
considerations within the financial sector and,more broadly, to improve sustainability-related
regulation for the markets in which we invest.
We actively engage policymakers, helping toshape the markets in which we invest and therules that guide and govern company behaviour.
Public policy can affect the ability of long-term
investors to generate sustainable returns andcreate value. It can also affect the sustainability
and stability of financial markets, as well
as social, environmental and economic systems.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTWe also add our voice to the advocacy of manyorganisations on the forefront of calling forurgent, far-reaching policy action to address
the priorities related to the 3Es:
• J ane Ambachtsheer, our Global Head of
Sustainability, is a trustee of CDP and a memberof the FSB’s Task Force on Climate-related
Financial Disclosures (TCFD).
•M embers of the Sustainability Centre holdpositions on the leadership committees orboards of the ICGN, Global Network Initiative,
and the TNFD.
•W
 e are a founding member of the Institutional
Investor Group on Climate Change (IIGCC).
•W e are a Strategy Partner of the Inevitable
Policy Response.
•W e are a member of the Investor Agenda
and are robustly implementing its framework.

• 83 •OUR PROGRESSOVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESS

THE 3Es
We believe that being an active participant in these discussions is an effective manner
to promote well-functioning markets. In the table below, you will find some of the memberships,
investor statements and other initiatives we take part in. Participation in these bodies
and initiatives keeps us current on systemic and market-wide risks and how they are evolving.
In addition to this, we plan on updating our Global Sustainability Strategy in 2023 and during
this process, we will review the system risks identified – the 3Es – to ensure they remain
relevant to our clients and our investment strategies.

OUR MEMBERSHIPS AND PLEDGESINVESTOR STATEMENTS WE HAVE SIGNED IN THE PAST 2 YEARSSUPPORTER SINCEENERGY TRANSITIONENVIRONMENTALSUSTAINABILITY

Business Call for a UN Plastics Treaty

2021

X

Financial Institution Statement ahead of the Convention on Biological Diversity COP15 (Ceres/Finance for Biodiversity Foundation)

2021

X

2021, 2022

X

Financial sector statement on biodiversity for COP15 (Investor Agenda)
Global Investor Statement in Support of an Effective, Fair and Equitable Global Response to COVID-19 (Access to Medicine Index)

2021

Global Investor Statement to Governments on the Climate Crisis (Investor Agenda)

2021

X

Global Roadmap to 2050 for Food and Agriculture: Statement to FAO (FAIRR)

2022

X

Global Standard on Responsible Climate Lobbying

2022

X

Investor Position Statement on Corporate Net Zero Transition Plans (IIGCC)

2021

X

Investor Statement (FAIRR)

2021

Investor Statement in Support of the Maintenance and Expansion of the Bangladesh Accord

2021

Statement of Support for Extended Producer Responsibility Schemes for Packaging (Ellen MacArthur Foundation)

2021

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 84 •

EQUALITY AND INCLUSIVEGROWTH

X
X

X
X
X

OTHER

OVERVIEW

THE 3Es

COLLECTIVE INSIGHTSOUR APPROACH

MEMBERSHIPS AND INITIATIVES WE PARTICIPATE INOUR PROGRESSSUPPORTER SINCE

Align (European Commission, WCMC Europe, Capitals Coalition, Arcadis, ICF, UNEP-WCMC)

2021

Asia Investor Group on Climate Change (AIGCC)

2018

Association Française de la gestion financière (AFG)

ENERGY TRANSITIONENVIRONMENTALSUSTAINABILITYEQUALITY AND INCLUSIVEGROWTHOTHER

X
X

10+ years

X

CDP

2012

X

X

Ceres

2019

X

X

Climate Action 100+

2017

X

Council of Institutional Investors (CII)

2018

X

Eumedion

2018

X

European Fund and Asset Management Association (EFAMA)

10+ years

X

Farm Animal Investment Risk and Return Initiative (FAIRR)

2021

Forum pour l’investissement responsable (FIR)

X

X

10+ years

X

Global Network Initiative (GNI)

2018

X

GNI Principles on Freedom of Expression and Privacy (GNI)

2018

X

Green Bond Principles (International Capital Markets Association)

2017

Hong Kong Principles of Responsible Ownership (Hong Kong Securities and Futures Commission)

2019

Inevitable Policy Response (IPR)

2021

X

Institutional Investors Group on Climate Change (IIGCC)

10+ years

X

International Corporate Governance Network (ICGN)

10+ years

X

X

X

Investidores Pelo Clima (Brazil)

2022

X

Investor Agenda (AIGCC, CDP, Ceres, IICC, IIGCC, UNPRI, UNEP-FI)

2018

X

Malaysian Code for Institutional Investors (Securities Commission Malaysia)

2019

Montréal Carbon Pledge (PRI, UNEP-FI)

2015

Nature Action 100

2022

Net Zero Asset Managers initiative

2021

New Plastics Economy Global Commitment (Ellen MacArthur Foundation, UNEP)

2018

Operating Principles for Impact Management (International Finance Corporation)

2019

Partnership for Biodiversity Accounting Financials (PBAF)

2021

PRI Advance2022

Principles for Responsible Investment (PRI)

X
X
X
X
X
X

X

X

X
X

Founding member

SPOTT Palm oil, Timber, Pulp and Paper (Zoological Society of London)

2018

Sustainable Trading

2022

Task Force on Climate-related Financial Disclosures (TCFD)

2017

Tobacco-Free Finance Pledge (Tobacco-Free Portfolios)

2018

Transition Pathway Initiative

2018

UK Stewardship Code2022

UN Environment Programme Finance Initiative (UNEP-FI)

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

X

10+ years• 85 •

X
X
X
X
X
X
X
X

X

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSBACK TOTHE 6 PILLARSINVESTMENT
SOLUTIONS FORSUSTAINABILITY
Our goal is to integrate sustainability dimensions acrossour investment strategies, according to the four corepillars of our approach. For investors wishing to go further,
we also offer solutions: promoting environmental and/or
social characteristics (for example having an ESG scorebetter than investment universe); receiving one or several
labels (delivered by independent organisations, such as‘Label ISR’ in France); or having a sustainable investment
objective (for example sustainable thematic strategies).

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 86 •

COLLECTIVE INSIGHTSOVERVIEWOUR APPROACH

OUR PROGRESSINVESTMENT SOLUTIONSFOR SUSTAINABILITY
CASE
ST
UDY

SFDR: 89% OF THE ASSETS OF OUR EUROPEAN-DOMICILED OPEN-ENDED FUNDSINCORPORATE ESG CRITERIA ACCORDING TO THE SUSTAINABLE FINANCEDISCLOSURE REGULATION (CLASSIFIED AS ARTICLE 8 OR 9)

CONTEXTThe Sustainable Finance
Disclosure Regulation (SFDR)
is a central plank of theEuropean Commission’s (EC)2018 Action Plan for financing
sustainable growth. The SFDR
provides greater transparency
to the degree of sustainabilityof financial products. The EC’s
objective is to channel private
investment towards sustainable
companies and activities while
preventing ‘greenwashing’.
The adoption of the SFDR andother regulations has driven
new ways of working within
the asset management industry.
Our long history of sustainability,
including the launch of our
Global Sustainability Strategy(GSS) in 2019, has put us
in a favorable position for thisBNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 87 •

transition. Nonetheless, weestablished in 2022 a dedicatedproject team to steer and deliver
the transition of our productrange into the SFDR level 2
regulatory categories.

ACTIVITY
We invested in a firm-wide effort
to meet the new regulatory
obligations in terms of portfolio
management capabilities,
disclosures and controls.
This includes:•D evelopment of new policies
and methodologies to analyse
individual securities under thecriteria introduced by the new
regulatory framework.
• Training and raising awarenessabout the new regulatory
framework, and the actions taken

and methodologies developedby BNPP AM to conform to it.
•U pgrade of IT systems toindustrialise the treatmentof extra-financial informationin the context of the new
regulatory framework.
•D ue diligence on data providers
to increase the breadthof extra-financial data.

OUTCOMES
Our efforts have resulted in 89%
of the assets of our Europeandomiciled open-ended funds
being classified as Article 8 or
Article 9 according to the SFDR.
Moreover:•O ur SFDR Disclosure Statement
details how we integrate
principal adverse impacts
into our investments.

•W e are using this existing
structure to simultaneously
work on the integration into
the product range of the
new portfolio-level criteria
introduced by the MiFID
regulation in 2022.
•W e updated our funds’
documentation with newsustainability indicatorsin accordance with SFDR
level 2, to bring even moretransparency to investors.

TARGET
90% of the assets of our
European-domiciled openended funds to incorporate
ESG criteria according to the
Sustainable Finance Disclosure
Regulation (classified as article
8 or 9) by 2025.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSINVESTMENT SOLUTIONSFOR SUSTAINABILITY

89%

SFDR CLASSIFICATION DECISION TREESFDR Transformationof our open European range
is Article 8 or 9

Product
Any product distributed in the EU (fund, mandate, etc.)

Article 6
Does not integratesustainability risks

Article 6

Article 8

Article 9Integrates
sustainability risks

Products complying with the BNPP AM
definition of the notion of ‘promotionof environmental or social characteristics’
through material binding elements

Products with a sustainable
investment objective

Our Article 8 and 9 fund range has been transformed to integrate the criteriaof the ESG preferences, when possible, through demanding portfolio-level commitments

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

These Article 8 products

These Article 9 products• Most of the time, take into accountPrincipal Adverse Impacts (PAIs) indicators;• Most of the time, take a demanding commitment
to invest a minimum proportion of theirassets in Sustainable Investments;• When possible, commit to invest a minimum
proportion of their assets in the EU Taxonomy.

• Take into account all the mandatory
PAIs indicators;• Only invest in Sustainable Investments;• When possible, commit to invest a minimum
proportion of their assets in the EU Taxonomy.

• 88 •€200bn

ESG Preferences Integration
More thanof our product range take
into account the PAIs

€200bnMore thanof our product range
is demandingly committedon Sustainable Investments€18bn

More thanof our product range commits
to invest in the EU Taxonomy
Source: Morningstar EET Data, as of 2 January 2023.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

GH

LIGH

TS

HI

INVESTMENT SOLUTIONSFOR SUSTAINABILITYOUR PROGRESS

20 YEARS OF SRI FUNDSAT BNPP AM

A NEW SUSTAINABLE THEMATIC ASIANFIXED INCOME FUND

A NEW BIODIVERSITYPARIS-ALIGNED-BENCHMARK ETF

Sustainable investing is rooted in BNPP AM’svalues and history. In 2002 we created a
dedicated ESG research team and launched
our first socially responsible fund, and today
we are continuing to strengthen our rangeof SRI-labelled funds.

This sustainable thematic fixed income fundoffers investors exposure to a differentiatedstrategy that is both regional and thematic,
aiming to capture the multi-decade growth
opportunities offered by sustainable urbanisationin Asia. This is the first Asia-focused fixedincome strategy in the market classified
as SFDR Article 9.

This new ETF offers investors exposure
to companies with a lower potential impact
on biodiversity than their peers. This thematic
fund is Paris-Aligned Benchmark (PAB) aligned
and classified as SFDR Article 8. Responding toinvestors’ growing interest in United Nations
SDG 15* that aims to ‘Protect, restore andpromote the sustainable use of terrestrial
ecosystems’, this new fund enhances BNPP AM’s
range of thematic ETFs, which already covers
low carbon, circular economy, blue economy(according to the World Bank, the blue economy
seeks to use ocean resources sustainably
to generate economic growth, improve
livelihoods and create jobs, while preserving
the health of marine ecosystems), innovative
medical technologies, green hydrogenand green, social and sustainable bonds.

•1
 971: The first SRI fund, Pax World Fund,was launched by two American pastors
from the Methodist Church. Its creation
was inspired by poor corporate conduct
linked to conflict and ecological disasters.
•2
 002: BNPP AM launched its first SRI fund,taking a leading role in local initiatives
in responsible investment and sustainable
development, in France, Europe and globally.
•2
 006: BNPP AM became a founding signatoryof the Principles for Responsible Investment(‘PRI’), an international network of investors
supported by the United Nations.
•2 019: BNPP AM launched its Global
Sustainability Strategy, underpinning thepillars of its sustainability strategy acrossall of the company’s activities.

With a focus on Asia ex-Japan bonds, thefund capitalises on a geographic region thatis experiencing strong growth in the issuanceof sustainable-labelled bonds. The fundcontributes to the promotion of sustainable
Asian cities to meet the challenges of increased
urbanisation, impacts of physical climatechange and inclusive growth.
The launch of this fund is part of the expansionof BNPP AM’s range of sustainable thematic
solutions. The actively-managed, thematic
approach showcases BNPP AM’s strong
credentials in sustainability and capabilities
within emerging market fixed income to deliver
long term sustainable returns to investors.

Sustainable Development Goal 15: Preserve and restore
terrestrial ecosystems, ensuring that they are usedsustainably, sustainably manage forests, combat desertification,
halt and reverse the process of land degradationand end biodiversity loss.

*

As at 31 December 2022, BNPP AM has 161
funds with European SRI labels, representing
assets under management of EUR 121.9 billion.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

It also complements BNPP AM’s active
management offering, including a fund investingin companies globally committed to restoringand preserving natural capital.

• 89 •SOLIDARITY INVESTMENTS:
TWO NEW PARTNERS TO DEVELOPTHE CIRCULAR ECONOMY
Through its solidarity funds, which invest in
associations and companies with a strong social
impact and help them develop, BNPP AM has
participated in the fundraising of Moulinot
Compost & Biogaz, a specialist in the collection
and recycling of food waste in France, and Phenix,
a French anti-waste and solidarity start-up.
BNPP AM manages 13 solidarity funds withassets under management of EUR 2,7 billion,of which EUR 166 million is invested in
35 organisations covering areas such as accessto employment and housing, equal opportunities,
access to health and maintaining independence.

€2,7BN

13

€166M

35

solidarity funds
AUM

in social business
investments

solidarity
funds

solidarity
partners

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR CORPORATESOCIALRESPONSIBILITY
APPROACH

BACK TOTHE 6 PILLARS

Walking the talk is critical to achieving excellence. As asustainable asset manager, our corporate practices anddisclosures should match or exceed the standards we expectfrom the entities in which we invest. To achieve this, wehave a four-pronged approach to integrating sustainability
into our operations and as an employer: decreasing ouroperational CO2 emissions, reducing our waste to landfill,achieving a more gender-balanced and diverse workforce,and focusing our community initiatives on youth inclusion.
BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 90 •

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR CORPORATE SOCIALRESPONSIBILITY APPROACH

REDUCING THE ENVIRONMENTAL
IMPACT OF OUR OPERATIONS

1.85 tCO2e

New target forgreenhouse gas emissions:

ZERO

C

OM

NET

MITMENTS

per employee by 2025
We have committed to aligning our investment portfolios to a trajectory in line with the objectives of the Paris
Agreement, and we plan to do the same with our operational emissions. This commitment has also been included
as one of the 10 commitments we have made in our Net Zero Roadmap.
Our building energy use, business travel and paper use were down significantly in 2020 and 2021 due to thepandemic, and we have continued some of our new habits into 2022, helping to keep our emissions in line.
The BNP Paribas Group has established a new target for greenhouse gas emissions of 1.85 tCO2e per employee
by 2025. We will use three approaches to achieve this goal, in order of priority:• Increase the efficiency of ouroperations: nearly all our officespaces are in green certified
buildings. In 2022, we relocatedour head office to a buildingthat is rated B for greenhousegas emissions, versus our priorbuilding that was rated C.

• Buy green or low-carbon

electricity: the majority of ouremployees work from officesthat are powered by green
or low-carbon electricity.

• Offset any residual emissions:

we have been offsetting any
remaining emissions associatedwith our office space and businesstravel since 2017.

Our goal for 2023 is to focus on reducing the energy consumption of our head office in France, whereapproximately 30% of our employees are located, to help meet the French government’s initiative to reduce energy
consumption in light of the war in Ukraine.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 91 •MISSION ZERO WASTE
Recognising the relationship between greenhousegas emissions and resource management, one of
our long-term environmental goals is to eliminate
waste to landfill.
To help bring our employees on board, we hosted
a number of zero-waste workshops in conjunction
with the Surfrider Foundation, where employees
learned how to make their own soap and cleaningproducts.
At the same time, some of our employees andtheir family members participated in a cleanupof the Ciliwung River in Jakarta, Indonesia.
In total, the team collected 350 kilogrammesof plastic and other waste.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR CORPORATE SOCIALRESPONSIBILITY APPROACH
GREENIT@AM
The digital sector accounts for four percent of global greenhouse gas emissions, more than the civil aviation sector, and it
is expected to double by 2025. With the increasing digitalisation of our activities, IT has taken an important place in our daily
lives at the cost of ever-increasing energy demand. As well, beyond IT’s role in contributing to climate change, the production
and disposal of digital equipment is associated with harmful impacts on the environment that we can no longer ignore.
We currently have a number of initiatives in place to reduce the environmental impact of our IT operation, including:• Closing old data centres anddata rooms and streamlining theminto state-of-the-art facilities
with improved cooling technologies
that reduce the use of primaryresources by up to 50%.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• Engaging and working with our top

25 IT suppliers to communicate
our environmental goals and update
contracts accordingly. We purchased
some new IT equipment whenrelocating our head office andwe made sure that this equipment
was more energy efficient.

 Energy consumption
Millions of kWh
9.3

10• 92 • Greenhouse gas emissions
tCO2e per employee

11.4
8
6

• Rolling out partnerships such as

BNP Paribas 3StepIT, to ensure betterreuse and recycling of our old IT
equipment. In 2022, 3StepIT repurposed
506 pieces of equipment on our behalf
and recycled another 9 pieces
at certified facilities.

 Distance traveled
Millions of Km

0.92020 2021 2022

2020 2021 2022

1.2

0.8

1.3

2020 2021 2022

Our goal for 2023 is to roll out a more holistic and structured approachto deploying our sustainable IT initiatives. This will not only include physicalequipment and cloud operations, but also how we develop applications.

OVERVIEW

COLLECTIVE INSIGHTSOUR APPROACH

OUR PROGRESSOUR CORPORATE SOCIALRESPONSIBILITY APPROACH

A CULTURE OF DIVERSITY, EQUITY AND INCLUSION
We believe that Diversity, Equity and Inclusion is a powerful lever to unlock potential and is a differentiating factor to be an outstanding
asset manager. We strive for a work ethic based on the principles of opportunity and translate this belief into concrete policies
and initiatives because we strongly believe that it is central to our success and to driving change both internally and externally.

WOMEN IN THE ASSET MANAGEMENT INDUSTRY
We are operating in a highly competitivemarket and the demand for talent –specifically mid-level and senior womenin fund management positions – is highand increasing.
In an industry which remains maledominated, we compare well to ourcompetitors. Yet we can still do morewhich is why we continue to challenge
ourselves with ambitious targets
and initiatives:• All members of our Executive

 e pay particular attention to genderW
pay gaps and conduct detailed studies
on this topic every year.

• We offer leadership development
programmes tailored to womento support their career growth,
stretch themselves and develop
their competencies and abilities
so that they can reach seniorleadership roles in our company.

These include:	‘Authentic leading women’Committee have a Diversity, Equity
	‘AMbition to lead’ for emerging
and Inclusion ambition formalised
female talentsin their yearly objectives.
	‘Women Leaders’ for senior leaders• We monitor the number of women
we hire, and in 2022, we recruited 279 	‘AMazing leaders’ for senior
managers and experts.
employees, of whom 38% were women.
• We made significant efforts toincrease the number of women in
our Investments division and in 2022,of the 54 people we hired into ourInvestments division, 35% were women.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT

These programmes are complemented
by external seminar opportunities andonline content via our award-winning inhouse learning platform.

 Women in senior
management positions

	‘Recruiting without discrimination’training is mandatory for managers
in France.
	‘Inclusive leadership’ training
in the UK in 2021, and customisedin 2022 for a roll-out in APAC.

• We put in place various initiatives

to support women when they returnfrom parental leave.

• 93 • Women in talent programme(leadership pipeline)50%• We instigated mandatory training forall staff on unconscious bias in 2021
and pushed it further in 2022. We haveother strongly recommended trainings
for managers on a regional basis: Women on
internal boards

33%

35%

44%

44%

40%

38%

2025

2020 2021 2022

50%
41%

42%

44%

27%

2020 2021 2022

target2025

target2020 2021 2022

2025

targetCOLLECTIVE INSIGHTSOVERVIEWof new hires
into ourInvestments
division in 2022
were women

H

IG

HLIGH

DIVERSITY IS THE MIX, INCLUSION
IS MAKING THE MIX WORKHELPING YOUNG PEOPLE
GET THEIR START IN THE UK

Our people have always come from different
backgrounds and cultures: we are basedin 34 countries, representing 75 nationalities
as of 31 December 2022. Their countlessperspectives and experiences make us stronger
and fuel our shared commitment to a better
future.

In 2022, for the second year, we partneredwith Headstart Action, offering work
placements to five young people to enhancetheir employability.

We have launched a number of initiatives
not only to foster Diversity, Equity andInclusion in our workplace, but to enhancethe opportunities for young people entering
the asset management industry.

*

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTHLIGHOUR PROGRESS

T

35%

IG

T

H

OUR CORPORATE SOCIALRESPONSIBILITY APPROACH

OUR APPROACH

We also participated in #10000BlackInterns,
a UK-based initiative to address the chronic
under-representation of black talent
in the industry.
We participated in the CFA UK Women in
Investments programme and offered fourinternships to young women in London. We havealso become an active member of the Diversity
Project, a widely recognised industry initiative
which will further enable us to drive change.

Lesbian, Gay, Bisexual, Transgender, Queer or questioning, Intersex, Asexual, and more.

• 94 •We have set up a number of BNPParibas Group’s employee networks
within BNPP AM, such as:• CulturALL, new in 2022, aims tocreate an equitable and inclusive
environment where all ethnoculturally diverse employees can
excel by fighting discrimination,
ensuring greater representation
throughout the organisation, andstrengthening communications
around diversity of origins.
• Ability, a community dedicatedto employees who are affectedby disabilities, disablingor chronic illnesses.
• Afrinity, to promote ethnocultural
diversity at all levels of thecompany.

• PRIDE, a professional network
made up of employees who are
directly or indirectly concerned,
or simply allied, with LGBTQIA+*.
• Mixcity, a network for womenand men who wish to advanceprofessional equality.
• LatAmigos, a network to promote
ethnocultural diversity, open
to all employees interested
in Latin American countries.
In addition to this, we continued
to educate and enhance awarenesson issues of Diversity, Equity andInclusion through conferences ona variety of topics, including gender,
multiculturalism, LGBTQIA+, womenand men’s health, neurodiversityand disability.

COLLECTIVE INSIGHTSOUR APPROACHOUR CORPORATE SOCIALRESPONSIBILITY APPROACH

H

David Vaillant
Global Head of Finance, Strategy and Participations

IG

HLIGH

HLIGH

MENTORS SUPPORT YOUNGPEOPLE IN ACHIEVEMENTFINANCIAL INDUSTRY COLLECTIVE
OUTREACH (FINCO)

FRANCE

MALAYSIA

We embarked on an ambitious journeyto harness our employees’ knowledge
and turn them into mentors for young people.

We participate in the FINCO mentoring
programme for underprivileged, upper
secondary school students in Malaysia.
It involves a series of workshops to provide
career guidance to help young individuals
achieve their aspirations. Given that physicalevents were restricted due to the pandemic,
the workshop was coordinated via a groupchat within a mobile app.

• I t was the first full year of our partnershipwith Chemins d’avenirs, an organisationthat facilitates young people’s insertion
in rural France. We currently have
8 employees acting as mentors.

•W e hosted a mentoring fair to encourage

our employees to become mentors either
through Chemins d’avenirs or throughother partnerships the Group has set up.

•W e set ourselves a target of having
15 mentors by the end of 2023.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTIGT

Our goal is to help young people facing systemic barriers to success.
Concretely, that means helping them gain confidence through mentorships
and acquire the vital job experience they need through internships.
While our volunteer efforts are wide-ranging, we focus many of themon helping young people. Volunteering also helps each of us develop bothprofessional and personal skills while better connecting us withour colleagues and society.
It is a very tangible and meaningful way to have a positive impact
on the world around us. That’s why we encourage our employees
to volunteer at least one day a year during working hours
at a community organisation of their choice.

Supporting young people over time enables them to gain
the confidence and self-esteem they need to succeed in life
and we are very pleased to be able to guide them in this reflection.
We have long encouraged our employees to volunteer as
it is an enriching experience that enables them to broaden
their horizons and use their skills in new and unique ways.”T

HELPING YOUNGPEOPLE OVERCOMESYSTEMIC BARRIERSTO SUCCESSOUR PROGRESSHOVERVIEW• 95 •

HLIGH
H

HLIGH

IG

HLIGH

T

IG

OUR PROGRESSTBNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTIG

OUR APPROACHT

H

OUR CORPORATE SOCIALRESPONSIBILITY APPROACH

COLLECTIVE INSIGHTSHOVERVIEW

BEING A ROLE MODEL
THROUGH JINC

LITTLE ARTSACADEMY

FUTURE GENERATIONPROGRAMMETHE NETHERLANDSSINGAPORE

HONG KONG

BNP Paribas Group’s partnership with JINC
allows our employees in the Netherlands tolead mini-workshops with young people fromchallenging backgrounds and neighbourhoods.
These workshops give them a positive example
of what you can achieve through education andexpose them to people and environments theywouldn’t normally encounter in their daily
lives. The workshops are designed to be funfor both the children and our employees.

We have established a partnership with the
Little Arts Academy, which helps young people
from low-income families develop a rangeof skills through the arts.

We partnered with Lingnan University tocreate an 8-month programme to give students
insights into working for a global financial
institution. The students were provided
with workshops, mentoring and a 4-monthinternship in various departments such as
marketing, trading, sales and compliance.

In 2022, we participated in an initiative thatbrought 1,000 of these children to Universal
Studios Singapore. They enjoyed a day thatthey wouldn’t normally have an opportunity
to participate in.

• 96 •The goal of the programme was to enhancethe employability and competitivenessof these students by providing them with
job experience. We also ensured thatthey were equipped with the requisite skills
and knowledge for career development,
especially important in the post-COVID era.

COLLECTIVE INSIGHTSOVERVIEWOUR APPROACH

OUR PROGRESSMAPPING TO KEY STEWARDSHIP CODES
The purpose of this table is to help readers find the content related to key elements from varying stewardship codes in this document.
PRINCIPLE

UK

EFAMA

ICGN

HONG KONG

MALAYSIAJAPAN

PAGE NUMBERS
IN THIS REPORTPURPOSE, STRATEGYAND CULTURE

1

1

1,6

-

5

1,2

6-9, 20, 90-96

GOVERNANCE, RESOURCES
AND INCENTIVES

2

1

1,2,7

1

-

1,5,7

22-25

CONFLICTS OF INTEREST

3

1,5

1,5

7

4

2

26-27

PROMOTING WELLFUNCTIONING MARKETS

4

-

4,6

-

5

-

41, 56-59, 68-72, 77-85

REVIEW AND ASSURANCE

5

-

1,2,7

-

-

3,7

27

CLIENT AND BENEFICIARY
NEEDS

6

6

3,6,7

6

-

5,6

4, 5, 28-29

STEWARDSHIP, INVESTMENTAND ESG INTEGRATION

7

1

3,6

-

5

3

20, 31-89

MONITORING MANAGERS
AND SERVICE PROVIDERS

8

6

1,2,5

-

-

1,5

35-36

ENGAGEMENT

9

1,2

4

1,2

3,2

4

40-72

COLLABORATION

10

4

4

1,5

-

4

55-63, 65, 68-71, 84-85

ESCALATION

11

3

4

1,3

-

4

42, 44, 45, 47, 50, 52, 57, 64, 66

EXERCISING RIGHTSAND RESPONSIBILITIES

12

1,5,6

5,7

1,4

1,6

5,6

41-50, 52-55, 64, 66-68, 82

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORT• 97 •

OVERVIEWGLOSSARY

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTCOLLECTIVE INSIGHTSOUR APPROACH

AIF: Accredited Investment Fiduciary
AIGCC: Asia Investor Group on Climate Change
ARE: Asia Research and Engagement
ATNI: Access to Nutrition Initiative
AUM: Assets under Management
BBFAW: Business Benchmark on Farm Animal
WelfareCISL: Cambridge’s Institute for Sustainable
Leadership
CSR: Corporate Social Responsibility
CSRD: Corporate Sustainability Reporting Directive
CTB: Climate Transition Benchmark
EET: European ESG Template
EFRAG: European Financial Reporting AdvisoryGroup
ESG: Environment, Social, Governance
ESRS: European Sustainability Reporting Standards
ETF: Exchange Traded Fund
EU: European Union
EUAs: European Union Allowances
EU-ETS: European Union Emission Trading System
FAIRR: Farm Animal Investment Risk and Return
Initiative
FAME: Financial & Asset Management Expertise
FAO: Food and Agriculture Organisation
GCG: Global Client Group
GHG: Greenhouse gases
GNI: Global Network Initiative
GRASFI: Global Research Alliance for Sustainable
Finance and Investment
GRI: Global Reporting Initiative• 98 •OUR PROGRESS

GSS: Global Sustainability Strategy
SRI: Socially Responsible Investment
3Es: Energy transition, Environmental
sustainability, Equality and inclusive growth
IAHR: Investor Alliance for Human Rights
IBRD: International Bank for Reconstruction
and Development
ICCR: Interfaith Center on Corporate Responsibility
IDD: Insurance Distribution Directive
IEA: International Energy Agency
IFRS: International Financial Reporting Standards
IIGCC: Institutional Investor Group on Climate
Change
IIHC: Investor Initiative on Hazardous Chemicals
IPCC: Intergovernmental Panel on Climate Change
IPR: Inevitable Policy Response
ISSB: International Sustainability Standards Board
JETP: Just Energy Transition Partnership
KPI: Key Performance Indicator
LGBTQIA+: Lesbian, Gay, Bisexual, Transgender,
Queer or questioning, Intersex, Asexual, and more
MAS: Monetary Authority of Singapore
MIF: Markets in Financial Instruments
MiFID: Markets in Financial Instruments Directive
NDCs: Nationally Determined Contributions
NEST: Network of Experts in Sustainability
Transition
NGO: Non Governmental Organisation
NZAM: Net Zero Asset Managers
NZCB: Net Zero Company Benchmark
NZDPU: Net-Zero Data Public Utility

PAB: Paris Aligned Benchmark
PAI: Principle Adverse Impact
PASI: Principal Adverse Sustainability Impacts
PRI: Principles for Responsible Investment
QRG: Quantitative Research Group
RBC: Responsible Business Conduct
SBTi: Science-Based Targets Initiative
SDGs: Sustainable Development Goals
SFDR: Sustainable Finance Disclosure Regulation
SRP: Sustainable Regulation Programme
TCFD: Task Force on Climate-related Financial
Disclosures
TFND: Task Force on Nature-related Financial
Disclosures
TPI: Transition Pathway Initiative
TSC: Technical Screening Criteria
UCITS: Undertakings for Collective Investmentsin Transferable Securities
UNCBD: United Nations Convention on Biological
Diversity
UNEP: United Nations Environment Programme
UNEA: United Nations Environment Assembly
UNFCCC: United Nations Framework Convention
on Climate Change
UNGC: United Nations Global Compact
UN PRI: United Nations Principles for Responsible
Investment
URD: Universal Registration Document
VaR: Value at Risk
WWF: World Wildlife FundOVERVIEWABOUT THISREPORT

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTCOLLECTIVE INSIGHTSOUR APPROACH

This report is produced annually by our Brand
and Communications department and our
Sustainability Centre along with contributions
from various departments throughout theorganisation. The management teams of both
departments review the report and the boardof directors of BNP Paribas Asset Management
France (BNPP AM), which includes the CEOof BNPP AM, is responsible for approving it.
BNPP AM is the source for all data presented
in this document, presented as at 31/12/2022,
unless otherwise specifically indicated.
All strategies, policies and approaches describedin this report apply to BNPP AM entities
including BNP Paribas Asset Management UK(Limited). Certain Joint Ventures and AffiliatedEntities may not apply all policies or may
apply their own customised versions.

• 99 •OUR PROGRESS

The content of this report on BNP Paribas
Asset Management’s approach and corporate
philosophy is only for information purposesand does not constitute an offer to buy
or sell any services, products or investments.
These statements apply differently to each
BNP Paribas Asset Management product,
the characteristics of which, including thoserelating to sustainability, are described in thelegal documentation of the funds, available
on BNP Paribas Asset Management websites
according to your country of residence
and investor profile.

OVERVIEW

BNP PARIBAS ASSET MANAGEMENT France, ‘the investment
management company’, is a simplified joint stock company
with its registered office 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 onlyand does not constitute:
1. a
 n 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 therelevant financial instrument(s), or on the website (underheading ‘our funds’), where such action would be required,in particular, in the United States, to US persons (as suchterm is defined in Regulation S of the United States Securities
Act of 1933). Prior to any subscription in a country in whichsuch 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 Document (KID) and consult
the financial instrument(s’) most recent financial reports.

BNP PARIBAS ASSET MANAGEMENT 2022 SUSTAINABILITY REPORTCOLLECTIVE INSIGHTSOUR APPROACH

These documents are available in the language of thecountry in which the financial instrument(s) is authorised
for the distribution and/or in English as the case may be,on the following website, under the heading «our funds»:
https://www.bnpparibas-am.com/
Opinions included in this material constitute the judgementof 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 investing in the financial instrument(s) in orderto make an independent determination of the suitability
and consequences of an investment therein, if permitted.
Please note that different types of investments, if contained
within this material, involve varying degrees of risk
and there can be no assurance that any specific investment
may either be suitable, appropriate or profitable for
an investor’s investment portfolio.
Given the economic and market risks, there can be noassurance that the financial instrument(s) will achieve
its/their investment objectives. Returns may be affected by,amongst other things, investment strategies or objectives ofthe financial instrument(s) and material market and economic
conditions, including interest rates, market terms and generalmarket conditions. The different strategies applied to financial
instruments may have a significant effect on the resultspresented in this material. Past performance is not a guideto future performance and the value of the investments infinancial 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 thismaterial, do not take into account the commissions, costs
incurred on the issue and redemption and taxes.

• 100 •OUR PROGRESS

You can obtain this by clicking here
www.bnpparibas-am.fr/investisseurprofessionnel/synthese-des-droits-desinvestisseurs a summary of investor rights in
French. BNP PARIBAS ASSET MANAGEMENTFRANCE may decide to discontinue the marketingof the financial instruments, in the cases coveredby the applicable regulations.
‘The sustainable investor for a changing world’reflects the objective of BNP PARIBAS ASSETMANAGEMENT France to integrate sustainable
development into its activities, although not
all funds managed by BNP PARIBAS ASSETMANAGEMENT France fulfil the requirementof either Article 8, for a minimum proportionof sustainable investments, or those of Article 9
under the European Regulation 2019/2088 on
sustainability-related disclosures in the financial
services sector (SFDR). For more information,please see https://www.bnpparibas-am.com/en/
sustainability-bnpp-am/.

April 2023 – BNP Paribas Asset Management – Brand & Communication
Department - under promise / Design and conception:
Tel.: +33 (0)1 55 32 29 74 / All rights reserved / Illustrations: Boris Zaïon /Contributing author: Alexandre Brunet / Copyright: Cade Martin,
Thibault Stipal.