Industry Updates

BNP Paribas AM overhauls €9bn ETF range to ESG indices and Paris-aligned benchmarks

Over €16bn AUM now classified as Article 8 or 9 under SFDR

Theo Andrew

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BNP Paribas Asset Management (BNPP AM) has undergone a major overhaul of its ETF range shifting €9bn assets to ESG indices or the Paris Aligned Benchmark (PAB) with further plans to switch the whole range in 2022, ETF Stream can reveal. 

Effective 1 December, seven ETFs in the €8bn MSCI SRI S-Series 5% Capped range will be classified as Article 9 under the Sustainable Finance Disclosure Regulation (SFDR) after integrating PAB characteristics.

In addition, 11 more ETFs across its MSCI ex-controversial weapons and smart beta ranges – with a combined assets under management (AUM) of €1bn – will adopt ESG criteria and be classified as Article 8.

The move means the French asset manager has 83% of its ETF product range – representing over €16bn of AUM – classified as either Article 8 or 9 under SFDR.

As a result of the changes, the MSCI SRI S-Series 5% Capped range will aim to reduce the carbon intensity of the seven indices by an initial 50% followed by an annual decrease of 7%, in line with the 1.5°C trajectory of the Paris Agreement.

Meanwhile, the five-strong ex-controversial weapons range switch to tracking MSCI ESG Filtered Minimum Tracking Error indices and will start selecting higher scoring ESG companies while excluding controversial sectors including tobacco, coal and controversial weapons.

The six remaining smart beta ETFs will also adopt ESG criteria, similar to the ex-controversial weapons range, aligning them with the BNP Paribas Easy ESG Growth Europe UCITS ETF (EGRO) launched earlier this year.

In addition, the BNP Paribas Easy ECPI Global ESG Blue Economy UCITS ETF (BLUE) and the BNP Paribas Easy ECPI Circular Economy Leaders UCITS ETF (REUSE) have switched from Article 8 to Article 9 funds under SFDR.

Speaking to ETF Stream, Isabelle Bourcier (pictured), head of quantitative and index management at BNPP AM, said it hoped to have 100% of its range classified as either Article 8 or 9 by early 2022.

“It is a priority for BNPP AM to have the full product range to be full ESG and this will happen sometime in 2022,” she said.

“The challenges are understanding and adapting to regulation and being prepared for level two of SFDR, but the objective for BNPP AM is to manage index funds only based on ESG indices.”

Bourcier added the inclusion of PAB as a “decisive step and major axis of our development”.

“Our offering within ESG index solutions now covers all equity and bond markets, a range of geographic areas and multiple ESG thematic investments, allowing us to offer new solutions to investors committed to a responsible approach."

BNPP AM said it informed shareholders of the change on 1 November.

The changes come amid an ESG switching index frenzy as ETF issuers look to green up their portfolios due to increasing regulation and client demand.

In October, BlackRock shifted a $9bn six-strong ETF range to track MSCI climate indices that are aligned to the Paris Agreement’s 1.5°C trajectory.

In August, DWS added an ESG filter to nine of its Europe sector ETFs along with swapping index providers from STOXX to MSCI. They became the first ESG ETFs in Europe to engage in securities lending.

MSCI SRI S-Series 5% Capped PAB range:

Revamped MSCI ex-controversial weapon range:

Revamped smart beta range:

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