Global environment
Exposure to global environmental markets
The opportunity
Global secular trends, such as demographic change, rising living standards, urbanisation, increased pollution, and the accelerated depletion of finite natural resources, are placing considerable strain on the global environment.
However, as we transition to a more sustainable, inclusive economy, we expect broad demand for environmental solutions across a wide range of industries including, but not limited to, water, energy, transport, and sustainable food and agriculture. This may lead to potential long-term growth for well-positioned companies, while creating risks for those unable or unwilling to adapt.
Strategy highlights
Exposure to thematic growth opportunities
Our Global Environment Strategy invests primarily in the growing resource efficiency and environmental markets. Specifically, the strategy targets stocks with potentially attractive long-term growth prospects that provide concrete environmental and social solutions. Key themes include, but are not limited to, renewable energy, inclusive economy, water, and waste/resource recovery.
Positive environmental contribution¹
Selectively invested across regions2, sectors and end-markets, this multi-thematic strategy provides investors with broadly diversified exposure to global environmental markets. This allows the investment team to construct a balanced portfolio ‒ with high exposure to mid-to-large cap stocks ‒ that seeks to provide positive and quantifiable environmental contributions alongside financial returns.
High-conviction portfolio
The team maintains a high-conviction, concentrated global equity portfolio of carefully selected names, with a high active share. 3It combines a top-down macro and thematic approach4 with fundamental bottom-up analysis ‒ which integrates ESG5 factors ‒ to identify environmental stocks with strong earnings growth and valuation potential.
Sustainability
Global secular trends, such as demographic change, rising living standards, urbanisation, increased pollution, and the accelerated depletion of finite natural resources, are placing considerable strain on the global environment.
However, as we transition to a more sustainable, inclusive economy, we expect broad demand for environmental solutions across a wide range of industries including, but not limited to, water, energy, transport, and sustainable food and agriculture. This may lead to potential long-term growth for well-positioned companies, while creating risks for those unable or unwilling to adapt.
For illustrative purposes only. The use of the SDG logo, including the icons, does not imply the endorsement by the United Nations of BNP Paribas Asset Management, its products or services, or of its planned activities and does not constitute, explicitly or implicitly, a recommendation for an investment strategy. Trademark, copyright, and other intellectual property rights are and remain the property of their respective owners.
Team and expertise
The strategy is actively managed by our long-term partner Impax Asset Management. Industry veteran Hubert Aarts, specialising in industrials and consumer discretionary companies, David Winborne, specialising in energy efficiency and pollution control in environmental markets sub-sectors, and Siddharth Jha, specialising in North American industrials and the utilities sectors, are the strategy’s co-portfolio managers.
Impax Asset Management is an award-winning, long-standing investor in environmental markets, with offices across the globe. Their investment teams are supported by the firm’s Portfolio Management & Research Analysts team, with over 18 years average industry experience and extensive sector, regional and thematic expertise7, its Quantitative Research Group and Impax’s dedicated Sustainability Centre.
Thematic investing
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[1] Contribution measurement and reporting is undertaken to provide post-investment evidence of the intention to help accelerate the transition to a more sustainable economy. Sustainable investment is defined as an investment in an economic activity that contributes to an environmental or social objective, provided that it does not cause significant harm to any of those objectives and that the beneficiary companies apply good governance practices.
[2] The sub-fund may be exposed to emerging markets (maximum 30% of its assets) including China
[3] Active share: Active share measures the percentage of stock holdings in a given portfolio that differs from the stocks held in the reference benchmark index.
[4] Investments are made in companies which have ≥20% of their underlying revenue generated by sales of products or services in environmental markets. These internal guidelines are mentioned for your information only and are subject to change. Prospectus and KID are leading.
[5] ESG: Environmental, Social and Governance ESG analysis based on Impax’s proprietary ESG methodology.
[6] Impax’s investment process does not identify alignment with UN SDGs as a specific objective. Instead, the nature of Impax’s investment philosophy may result in meaningful revenue exposure to some UN SDGs. The UN SDGs encompass 17 goals. For further information, please visit the UN website.
[7] Years of experience calculated as of 31 December 2023 or as of most recent quarter end for Impax Asset Management employees who joined in 2024.
Important information
This material is issued by BNP PARIBAS ASSET MANAGEMENT Malaysia Sdn Bhd, an investment management company holding a Capital Markets Services Licence under the Capital Markets and Services Act 2007 of Malaysia, having its principal place of business at Vista Tower, Level 48D, The Intermark 348 Jalan Tun Razak 50400 Kuala Lumpur, Malaysia. This material has not been reviewed by the Securities Commission Malaysia.
This material is produced for information purposes only and does not constitute:
- an 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
- investment advice.
Opinions included in this material constitute the judgement of 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 order to 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 no assurance that the financial instrument(s) will achieve its/their investment objectives. Returns may be affected by, amongst other things, investment strategies or objectives of the financial instrument(s) and material market and economic conditions, including interest rates, market terms and general market conditions. The different strategies applied to financial instruments may have a significant effect on the results presented in this material. Past performance is not a guide to future performance and the value of the investments in financial instrument(s) may go down as well as up. Investors may not get back the amount they originally invested.
Past performance or achievement is not indicative of current or future performance. Performance is calculated net of fees unless otherwise stated.
Any views expressed here are those of the author as of the date of publication, based on available information, and subject to change without notice. This material does not constitute investment advice.
Investments are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay, the strategies described being in risk of capital loss. There is no guarantee that the performance objective will be achieved.
Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).
Environmental, social and governance (ESG) investment risk: The lack of common or harmonised definitions and labels integrating ESG and sustainability criteria at EU level may result in different approaches by managers when setting ESG objectives. This also means that it may be difficult to compare strategies integrating ESG and sustainability criteria to the extent that the selection and weightings applied to select investments may be based on metrics that may share the same name but have different underlying meanings. In evaluating a security based on the ESG and sustainability criteria, the Investment Manager may also use data sources provided by external ESG research providers. Given the evolving nature of ESG, these data sources may for the time being be incomplete, inaccurate or unavailable. Applying responsible business conduct standards in the investment process may lead to the exclusion of securities of certain issuers. Consequently, performance may at times be better or worse than the performance of relatable strategies that do not apply such standards.
This is not an exhaustive list of risks. For a complete description and definition of risks, please consult a client relationship manager or the global BNP Paribas Asset Management website: staging.bnpparibas-am.co.uk.