Basics of Sustainable Investing
Global CEO and Co-CIO
ODDO BHF Asset Management
Our societies are facing two major challenges: integrating technological transformations that gain new momentum by artificial intelligence, and addressing the potential limitations brought on by the climate emergency and by the need to reduce inequalities – all the while aspiring to building a more sustainable and responsible model of development.
The importance of climate change, some of whose well-known consequences are rising sea levels, weather disruptions and population displacement, is accepted by a consensus of scientists, politicians and ordinary citizens. The World Meteorological Organization wrote on December 3rd, 2019 that “the year 2019 concludes a decade of exceptional global heat, retreating ice and record sea levels driven by greenhouse gases from human activities.”
There is no doubt that the combined impacts of technological transformations and the climate emergency will transform our public and private organisational models, our modes of consumption, social lives, biodiversity, habitat, and our very identities.
The investment world must make an active contribution to this shift, as it is both a necessity and an opportunity. We are convinced that integrating environmental, social and governance criteria into our investment decisions will make a positive contribution to this change. Public authorities are right to join in. The European Commission, for example, is working on the definition of a system of classification or “taxonomy” of economic activities deemed “environmentally sustainable” for investors, to better steer financial flows.
While the “environment” dimension is currently drawing most attention, let’s not overlook the “social” and “governance” components. From gender policy and diversity to human rights to the alignment of interests between shareholders/bondholders, managers and employees, sustainable investment strives to understand and assess all the extra-financial aspects of the issuers in which we invest.
We believe our role is also to provide the information to all our clients and employees that is necessary for properly understanding responsible investment.
Through our “Basics of sustainable investing” document, we aim mainly to guide those investors who are beginning to take greater interest in this issue and want to acquire some basic notions on sustainable investment.
ODDO BHF Asset Management has been a sustainable investment player since 2010, when it signed the Principles for Responsible Investment (PRI*). Our main strategies now integrate ESG criteria, and seven of our open-ended funds have even been awarded the SRI** label and two the FNG*** label. In early 2019, we laid out an ambitious roadmap leading up to 2021, organised around four vectors: ESG coverage, ESG integration, climate strategy and training.
* PRI: The Principles for Responsible Investment (PRI) were launched by the United Nations in 2005 to encourage investors to take sustainable investment principles into account in their investment processes. ** SRI (“ISR”) label: Created and supported by the French Finance Ministry, the SRI label aims to shed light on socially responsible investments (SRI) for investors in France and Europe. The SRI label, which is awarded after a rigorous process conducted by independent bodies, constitutes a unique benchmark for investors wishing to take part in a more sustainable economy. *** FNG: The FNG label is issued by the German Sustainable Investment Forum (Forum Nachhaltige Geldanlagen). It guarantees the SRI quality of funds distributed in Germany. It was launched in 2015 following a three-year development process involving the main stakeholders. FNG certification is subject to renewal each year.
UN-PRI rating: Our A+ rating for "strategy & governance" and "equity" maintained.
ODDO BHF Asset Management is extending the integration of ESG criteria to its ODDO BHF European Convertibles Moderate fund.
A new paradigm? - Monthly Investment Brief July 2019