Sustainability has been a paradigm shift for both individuals and corporations, “we are part of the investment value chain, and what we bring to that has two dimensions. Firstly, what we do as a company. Secondly, how we support clients in their ESG transition and the shift of their investment portfolios into low carbon.” Jean-Florent also stresses that sustainability is not just about lowering emissions.
“Biodiversity loss is another major topic that needs to be addressed, as it will be further detailed under the EU taxonomy. From 2024 the technical screening criteria will define to what extent an economic activity is or is not detrimental to biodiversity, climate crisis and biodiversity loss being interconnected.” Jean-Florent believes that the importance of biodiversity is perhaps currently underestimated, but he is convinced its impact will be recognised under pressure of regulation and end-investors’ demand. “The EU is again leading the way on this, especially compared to APAC and the US.”
Trusted partner
Part of BNP Paribas’ GTS (Growth, Technology and Sustainability) strategic plan for 2025, as referred to by Securities Services Luxembourg’s managing director, Robert van Kerkhoff in , is an effort to integrate ESG criteria in all core decision-making processes. «We aim to be a trusted partner for our clients», Jean-Florent explains. «By integrating ESG into every layer of Securities Services in order to manage risk, and to make sure that we take informed decisions around sustainability. We also want to be a transition accelerator for clients and play the role of strategic connector.»
This latter goal is enhanced by the introduction of “Manaos” open ESG platform, a fully owned subsidiary of BNP Paribas, a marketplace similar to an app store, that allows clients to find and connect easily with many of the most prominent ESG data and analytics providers. “So, they can also obtain a look-through analysis of the ESG performance of their products and the underlying portfolios. By doing so, they enhance their ESG control framework and mitigate the risk of greenwashing”, as Jean-Florent explains.
We want to be a transition accelerator for our clients, and also play the role of strategic connector.
This underlines what Jean-Florent calls the “interconnectedness” of the role Securities Services plays in highlighting sustainability throughout the investment value chain. “We have to take into account the paradigm shift triggered by the ESG regulatory framework as part of the EU Green Deal.” Indeed, Jean-Florent explains, clients are now realising that ESG risk is transversal across all their products and is not limited to just Article 8 or Article 9 funds under the EU’s SFDR regulation. They recognise that the climate crisis and biodiversity loss are a financially material risk to investment portfolios. “No financial product is out of scope.”
In addition to “Manaos”, Securities Services’ recently launched, with Luxembourg as one of the pilot locations, a new ESG component of their automated post-trade investment compliance solution, which enables clients to incorporate ESG criteria into their portfolio monitoring. “This helps to reassure our clients that ESG claims in their fund prospectus are being accurately reflected in their portfolios. This screening helps our clients to walk their ESG talk”, emphasises Jean-Florent. [read the article: ].
Client driven change
The paradigm shift that Jean-Florent talks about has not just happened because of regulation, it is also client driven. “Some of our clients are signatories to the Net Zero Asset Managers initiative or the Net Zero Asset Owners Alliance, and an increasing number are showing a commitment to reach Net Zero by 2050. They have put in place some intermediary milestones; some of them are targeting 2025, which is tomorrow.” This extends to asset owners calling upon asset managers to find solutions, to basically decarbonise investment portfolios in a way that is consistent with achieving Net Zero GHG emissions. Also to increase investment in the range of climate solutions products aligned on environmental objectives of the EU taxonomy.
The integrated banking model of BNP Paribas is a key enabler of our transition as a sustainable asset servicer.
To stay ahead of the curve in the fast-changing ESG landscape, Securities Services has a full team dedicated to sustainable finance primarily based in Paris, with team members around the world – including Jean-Florent who is based in Luxembourg. “We closely watch what’s going on in the market, but also work to be ahead of regulatory change and help our clients understand the impact of what is a constantly moving target. Indeed, being a part of a big group and being able to collaborate with other entities provides an opportunity to deploy solutions throughout the global market”, says Jean-Florent. “The integrated banking model of BNP Paribas is a key enabler of our transition as a sustainable asset servicer.”
Another significant factor in achieving this goal is the ESG upskilling of staff, offering them what Jean-Florent calls a “full training path” that includes links with acclaimed higher education institutions such as the Cambridge Institute for Sustainability Leadership. Furthermore, a collaborative and very pragmatic approach through workshops such as the Climate Fresk, is key to raising awareness amongst employees. “Our managers have a duty to motivate staff to attend these workshops. We are fortunate that our staff are motivated to make the necessary changes towards a more sustainable future.”