June 30, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

In response to growing client demand, BNP Paribas Asset Management (BNPP AM) has announced the launch of BNP Paribas Ecosystem Restoration, a thematic fund designed to give investors exposure to companies restoring and preserving natural capital and global ecosystems. 

BNPP AM has AUM of EUR 26 billion in sustainable thematic fund, making it one of the leaders of its kind in Europe. This vehicle is a further facet of BNPP AM’s biodiversity roadmap announced in May which includes research efforts to accelerate the development of biodiversity measurement indicators and the establishment of a common framework. It also follows upon the heels of a recently established partnership with CDP and Iceberg Data Lab and I Care & Consult to promote transparent, high-quality, and standardized corporate biodiversity reporting.

Managed by Edward Lees and Ulrik Fugmann, who co-head BNPP AM’s Environmental Strategies Group, and also head the recently soft-closed BNP Paribas Energy Transition fund and the long/short BNP Paribas Environmental Absolute Return Thematic (EARTH) fund, the BNP Paribas Ecosystem Restoration fund will compliment these existing funds by offering a wide range of environmental investment solutions.

Thematic investing has historically had more of an environmental focus as opposed to natural capital, according to BNPP AM, which goes on to note that despite this fact, natural capital is globally recognized as a key element of addressing climate change.

This green market represents an investment opportunity with a market capitalization of $5 trillion, or around 5 percent of the total listed global equity market. And even posting annualized growth of 8 percent since 2009, the scale of the green economy is falling short of being consistent with a two degree global warming scenario, as per the Paris Agreement. 

“Half the world’s GDP is dependent on natural capital and our consumption of it is taking place 1.75 times as fast as the earth can regenerate it, while global population growth and rising incomes are leading to increased demand, which adds up to an urgent need to restore damaged ecosystems,” said Edward Lees, co-manager, BNP Paribas Ecosystem Restoration. “The  financial sector has a critical role to play in creating a positive environmental impact and we are proud to have launched BNP Paribas Ecosystem Restoration to support the work of the UN and others in doing this.”

The fund invests in listed global equities offering environmental solutions through their products, processes, or services within three main themes:

-Terrestrial systems – sustainable agriculture, alternative proteins, forestry, and plantations. 

-Aquatic systems – water pollution control, water treatment, efficient irrigation, flood control solutions, sustainable packaging, and aquaculture.

-Urban systems – green building, recycling, waste management, environmental services, and alternative modes of transportation. 

“BNP Paribas Asset Management has been at the forefront of sustainable investment for two decades and the launch of BNP Paribas Ecosystem Restoration complements our existing funds that invest in environmental change and the energy transition,” said Ulrik Fugmann, co-manager, BNP Paribas Ecosystem Restoration. “The restoration of aquatic, terrestrial and urban ecosystems offers significant investment opportunities, and by supporting and engaging with those companies providing solutions to protect our natural capital, we aim to meet investor requirements for financial returns combined with a positive environmental impact.”

Its high-conviction portfolio of 40 to 60 holdings will be selected from 1,000 global companies focused on ecosystem restoration within these three themes. Holdings will be diversified by geography, size, and sector, and will be managed with an active approach integrating ESG criteria to target only the best-in-class companies to build a portfolio that contributes to achieving six of the UN Sustainable Development Goals.

Lees told CityWire that the portfolio will consist of between 50 to 60 percent pure-play companies, noting, “A lot of the pure plays tend to be smaller companies, and you don’t want to have a portfolio that completely consists of them from the risk standpoint.”

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan@globalaginvesting.com.