Product Panel: BNP Paribas AM’s blue economy ETF

World's first ETF to offer exposure to this market

Tom Eckett

a group of men in suits

BNP Paribas Asset Management is riding the wave of global sentiment with the launch of the world’s first blue economy ETF.

The BNP Paribas Easy ECPI Global ESG Blue Economy UCITS ETF (BLUE) offers exposure to 50 equally-weighted large cap stocks which are participating in the blue economy.

The index includes companies from five categories; coastal livelihood, energy and resources, fisheries and seafood, pollution reduction and maritime transport.

As Robert-Alexandre Poujade, ESG analyst in BNPP AM’s Sustainability Centre, said: “Whether for tourism employment or offshore wind, the ocean is also a formidable reservoir of biodiversity to be preserved at all costs to maintain our food security and our health, and to protect our coastal areas. It is also one of our best allies in the fight against climate change, capturing nearly 30% of the CO2 emissions that human activity emits."

What the panel says:

Rumi Mahmood, head of ETF research, Nutmeg

At 0.30%, BNP Paribas AM's blue economy ETF is priced on the higher end of sustainable global equity strategies, in light of recent fee cuts from UBS Asset Management and BlackRock in comparable global products.

It is however different to peers emphasising specifically on sustainable use of ocean resources.

Although innovative without doubt, what remains to be seen is how niche sustainable products can be integrated into portfolios and are consistent and aligned with wider portfolio-level sustainability goals.

Briegel Leitao, associate analyst, manager research, passive strategies, Morningstar

The launch of the world’s first sustainable oceans ETF is a welcome new thematic offering from BNPP AM. BLUE selects stocks based on their practical and sustainable use of ocean and marine resources and is a promising new offering for investors looking to expand their thematic ESG exposure.

Renewable energy firms such as off-shore wind farm specialist Iberdrola make up most of the portfolio, but other firms targeting sustainable fishery and marine operations also feature. The portfolio also benefits from an equally-weighted structure, which ensures that larger firms do not dominate the holdings.

The ETF stands apart from existing sustainable water funds which tend to focus on the challenges surrounding water-scarcity and sustainable access.

ETF issuers not focusing on ESG are set to lose out in a big way

At 0.30%, the fund is priced competitively against other thematic ETFs. BLUE complements the BNP Paribas Easy ECPI Circular Economy Leaders UCITS ETF (REUSE) launched last year which has grown to over $100m.

Nicolas Rabener, founder and CEO, Factor Research

BLUE provides exposure to 50 large-cap stocks related to water however neither the stock selection process nor the space are easy to evaluate. Therefore, as a thematic ETF, BLUE should be considered as a satellite position.