BNP AM

The sustainable investor for a changing world

Sandro Pierri CEO letter

We are approaching the end of another difficult year. Few of us who put laptops in our bags to work from home many months ago could have thought that Covid would still be with us now. It has been a period of tragedy for too many, of inconvenience for many more. But it has also been a time of opportunity.

For me, it has been an opportunity for reflection. I joined a company that was already a leader in sustainable investment, and my time as CEO over the past six months has convinced me that we need to do more. This year’s COP26 on climate change and the COP15 on biodiversity remind us that the challenges we face – climate, biodiversity, equality and inclusiveness – are inextricably intertwined and have no single, simple goal.

Extraordinary global environmental conditions have helped to drive very detailed regulation, notably the EU’s Sustainable Finance Disclosure Regulation (SFDR) and the framework developed by the Taskforce for Climate-Related Financial Disclosure (TCFD).

It is clear that there is an ever-stronger commitment from within the investment management community to ensure that we move towards a more inclusive, low carbon and environmentally friendly economy, and that this requires a collective effort by governments, investors, companies, their employees and society in general.

Solutions in an age of transformation

That is why I am proud that we have already launched an ecosystem restoration investment strategy, which is designed to give investors the opportunity to help restore our ‘natural capital’. However, we also need to make sure that we help clients mobilise their capital across our entire range of sustainable strategies, which can support businesses, communities and individuals in adapting to this age of transformation we find ourselves in.

Indeed, over the next 10 years the asset management industry will undergo a period of profound change, driven by a younger generation that demands more focus on sustainability and more impact for their savings.

We are seeing three major disruptive forces operating concurrently: the sustainability disruption requiring a fundamental re-wiring of economies, the ever-quickening pace of technological disruption and the demographic disruption caused by aging populations and the growth of the middle classes in what we currently see as emerging markets. These are highly interlinked and will have a significant impact on our clients’ investment approach as well as investment practice. We have already seen a shift to thematic investment as clients seek to address specific challenges, such as environmental issues, and the growing appetite for private assets to yield return in a low-interest rate world.

Team and tech approach

This age of transformation that we find ourselves in will inevitably add more complexity to our business. Digital transformation will continue to be a key driver as asset managers accelerate their digitalisation efforts, both to generate alpha and to achieve efficiency gains.

Our industry will undoubtedly continue to experience greater technological intervention, for example through robo-advisors to provide tailor-made and digital customer journeys, as well as enhanced portfolio construction, that will embed new technologies such as AI.

We, too, plan next year to further enhance our use of technology in our ‘team and tech’ approach to ensuring that we continue to offer you expert, timely and insightful advice and risk management in all your investments with us. As an example, we have already launched “MyMand@te” in France. This digital Discretionary Portfolio Management combines our algorithmic expertise with the insight of our distributors’ relationship managers to provide tailored expertise. In addition, we have improved our reporting, integrating ESG scores and indicators to help clients understand the environmental impact their investments can have.

Engagement to drive positive change

I believe that how we engage with the companies and markets we invest in on your behalf is key to building a better future. Asset managers are strongly positioned to influence the Boards and management of companies, to challenge their business models and ultimately hold them to account, voting against proposals when needed.

We are very active in initiatives like Climate Action 100+. But one of the biggest opportunities over the next 24 months will be collective investor engagement with policymakers, to really push them to implement changes clearly and consistently so that companies and investors can allocate capital appropriately.

Focus on shared goals

I hope that 2022 will bring some form of normality back to our lives. The unity and energy we have found during the pandemic shows that we can come together and adapt quickly and effectively when we need to.

My wish for next year is that we do not lose sight of that, and that our focus on our shared goals remains clear and strong: generating long-term sustainable investment returns for the assets you entrust us with.

For those of you who plan to take some leave, I wish you a wonderful festive season and look forward to connecting with you again next year.

With my best wishes for 2022.

Sincerely yours,
Sandro Pierri

BNPPAM

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