- Outlines why investors should prioritise addressing inequality and details how inequality is material, presenting both systemic and company-level risks;
- Defines a framework for identifying and assessing corporate actions that can impact inequality; and
- Presents BNPP AM’s ‘areas of focus’ for strengthening equality across our investments, stewardship, and our own operations.
BNP Paribas Asset Management (“BNPP AM”) publishes its “Equality Roadmap”, a clear pathway to addressing inequality across our investments, stewardship, and operations. BNPP AM’s Global Sustainability Strategy outlines three preconditions for a sustainable economy: a successful Energy transition, healthy Ecosystems, and greater Equality in our societies, or BNPP AM’s ‘3Es’. The Equality Roadmap – the third in the ‘3Es’ series following its Biodiversity Roadmap (2021) and Net Zero Roadmap (2022) – defines our holistic view of inequality, linking it to both social and environmental risks.
Inequality presents a systemic risk that has a significant impact on diversified portfolio returns and company level risks that matter for financial and economic performance. Accordingly, BNPP AM has developed a new framework to assess how key corporate actions can impact inequality outcomes for a company’s workers (both its own workforce and those in the value chain), communities, consumers and other stakeholders.
Investors have historically addressed inequality in a piecemeal fashion, taking on working conditions in supplier factories, board diversity, or corporate non-discrimination policies, for example. Our conviction is that inequality underpins and reinforces many of today’s social issues that are financially material.
Sindhu Janakiram, ESG Analyst and Equality Lead at BNP Paribas Asset Management:
“Unlike climate change, there is no Paris Agreement for inequality. In this roadmap, we explain how inequality underpins and reinforces social risks, and how it threatens stability, growth, and long-term investment. As an asset manager, we seek to deliver sustainable long-term returns. By ‘sustainable’, we mean both returns that can be sustained over the long term and returns that are in balance with society and the environment. These two meanings of sustainable are inseparable – we cannot deliver long-term returns without helping to achieve the energy transition, healthy ecosystems, and greater equality in our societies.”
BNPP AM’s FRAMEWORK FOR IDENTIFYING CORPORATE ACTIONS THAT IMPACT INEQUALITY
BNPP AM’s roadmap introduces a framework to evaluate the impact of corporate actions on inequality for workers, communities, shareholders, consumers & end-users, and others. It can help investors shape behaviours that promote equality and social inclusion. With this framework, BNPP AM can assess how companies operate, how their governance works, and how ‘social’ their products and services are. BNPP AM can then promote best practices and identify areas for improvement.
BNPP AM’s focus is on minimising systemic risk and identifying idiosyncratic risks for stakeholders, but also recognising opportunities for investment.
To facilitate adoption, stakeholder groups are identified in line with the European Sustainability Reporting Standards (ESRS) of the Corporate Sustainability Reporting Directive (CSRD).
Please see attached PDF for framework infographic.
10 FOCUS AREAS FOR TACKLING FINANCIALLY MATERIAL INEQUALITY ISSUES AS INVESTORS
In line with our Global Sustainability Strategy, BNPP AM has defined 10 Focus Areas to strengthen equality across its investments, stewardship, and operations:
INVESTMENTS
- Strengthen assessments of Just Transition and gender equality performance.
- Conduct deep dives covering norms-based frameworks and their evolving applications; enhance approach on adherence to these frameworks in BNPP AM’s investment process.
- Integrate new social data to enhance BNPP AM’s existing social performance assessments in investment and engagement processes; incorporate enhanced social indicators into BNPP AM’s proprietary ESG Scoring Model.
- Improve existing equality- and social-themed investment strategies by strengthening underlying social indicators and models; increase BNPP AM’s social and equality-themed investment strategies.
STEWARDSHIP
- Support shareholder proposals designed to reduce corporate contributions to inequality and/or strengthen equality practices. Explore submitting shareholder proposals on inequality-related topics, where warranted.
- Expand engagements on equality priorities tailored according to regional contexts, both directly with issuers as well as through ongoing collaborative initiatives; explore joining new relevant initiatives.
- Seek new opportunities to influence institutions and policies to drive opportunities that will improve inequality outcomes, such as through the development of social taxonomies, disclosure frameworks, and related industry initiatives.
- Continue addressing inequality drivers through BNPP AM’s proxy votes on issues such as board composition and executive compensation. Explore expanding voting policy to address other aspects of inequality.
OPERATIONS
- Continue building a more gender equal workplace by achieving BNPP AM’s gender representation targets for women in senior management positions, on internal boards, and in our leadership talent pipeline; leverage strategies for recruiting women into our investment teams.
- Strengthen BNPP AM’s programmes that aim to support young people who face systemic barriers to equal opportunity entry and achieve success in the workforce.
Jane Ambachtsheer, Global Head of Sustainability at BNP Paribas Asset Management :
“Our conviction is that inequality risk can manifest systematically in the market and idiosyncratically for individual companies, presenting risks and opportunities for investors. While inequality presents both systemic risks to diversified portfolios and company-level risks to our investees, addressing inequality represents an opportunity to reverse wage stagnation, strengthen gender equality, and improve our collective capacity for meaningful climate action.”
The full version of BNPP AM’s Roadmap is available here.
A 4-pager version of BNPP AM’s Roadmap is available here.
More information about BNP Paribas initiatives on Diversity & Inclusion is available here.
To know more about social and economic inclusion, please read here.
