May 02, 2017
BNP Paribas Cardif has invested in green bonds issued by the French state and the World Bank twice since the beginning of the year.
A responsible and profitable choice.
“Green bonds1are issued by a company, an international organisation, a state or a local government body: in exchange for money raised on the markets, the issuer undertakes to finance high environmental added value projects involving sustainable energies, waste recovery and biodiversity enhancement”, points out Hamid Amoura, the portfolio manager in charge of developing socially responsible investment2(SRI) at BNP Paribas Cardif.
These bonds must also show financial performance for the investor. “before investing in a product like this, we look at its yield potential and SRI criteria. Once we’ve invested, we monitor the bond’s performance and we make sure our money actually finances responsible projects”, says the manager.
In early 2017, BNP Paribas Cardif invested in two types of green bonds.
Investing to meet the climate change challenge
The first investment involves green bonds issued by the French state in January 2017. Following in the footsteps of Poland, the first European state to issue green bonds, France raised €7B on the markets. The insurer responded to the offering with a significant investment carried by the company’s French and Italian entities. The sum raised by the French state will serve to finance projects in the fields of energy transition and biodiversity, as Ségolène Royal and Michel Sapin, the two ministers overseeing the operation pointed out.
From green bonds to sustainable bonds
In March, it was the World Bank’s turn to issue ethical bonds. “We’re talking sustainable bonds, since the projects involved reach beyond the environmental domain, specifies Hamid Amoura. The World Bank’s sustainable bonds finance projects involving all 17 UNO sustainable development goals or SDGs. These goals address climate change as well as the fight against poverty and inequality, promoting education, etc.”
The bond issue amounts to €163B and BNP Paribas Cardif is a key investor alongside its Italian subsidiary in line with the “SDGs Everyone” initiative. Note that BNP Paribas’ Corporate and Institutional Banking division helped the World Bank to implement this fund raiser: “Like it did in 2014 with the World Bank’s first issue and again in 2015 with Tera Neva, the Group participated in an advisory capacity: so BNP Paribas is present at both ends of the operation, both as a coordinator and an investor.”
Supporting green finance
The relatively recent “green” financial products sector is currently skyrocketing. “BNP Paribas Cardif had already outlined its SRI policy 10 years ago. Today, we are delighted with the responsible dynamics emerging in the financial sector, underlines Hamid Amoura. We also feel we are investing in a sector with a future, and therefore a profitable one: green growth is driving world growth and we’re naturally supporting this movement”, concludes the manager. In late 2015, BNP Paribas Cardif invested €400M in green bonds, and over €4B in SRI.
1Bond: A transferable security representing a portion of the long-term debt of a state, a local government body or a company. Interest is paid in exchange for the loan provided by the investor.
2 SRI : socially responsible investment : The principles of sustainable development applied to financial investment.