BNP: The Ins and Outs of ESG Investing

Between 2007 and 2012, in the face of one of the most severe financial crises the world had ever seen, the investment framework known as ESG (environmental, social and governance) boomed. As investors scoured the globe in search of reliable returns, investments guided by ESG principles saw their value rise from around US$5trn to US$32trn, according to Business for Social Responsibility, a nonprofit organization.

Jacky Prudhomme, an 18-year veteran of responsible investment, and today head of ESG integration at BNP Paribas Investment Partners, answers to 8 questions on what ESG investment means in practice:

1. How do you define SRI (Sustainable Responsible Investment) versus ESG?
2. Do you believe a portfolio’s long-term performance can be enhanced by including ESG considerations in the security-selection process? 
3. Isn’t it the case that ESG is better suited to some investment styles than others? For instance, might it not be less appropriate for use with alternative investments?
4. How would you outline the steps required for fund management teams to incorporate ESG into their investment processes?
5. How have some of the investment teams at BNP Paribas Investment Partners integrated ESG factors into their investment process?
6. Which sectors, regions and asset classes has ESG had the biggest impact on?
7. What are some of the challenges you have faced in implementing ESG practices?
8. In a low-growth, low-yield environment, is it difficult to get portfolio managers engaged with ESG principles?

Please click here to read the interview of Jacky Prudhomme.