BNP Paribas Investment Partners’ Jacky Prudhomme explains the practicalities of ESG, in the second of a series of guest articles

Jacky Prudhomme is head of ESG integration at BNP Paribas Investment Partners. To hear more of his views on how trustee boards can integrate ESG considerations into their portfolios, dial into Engaged Investor’s webinar, in association with BNP Paribas Investment Partners.

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How would you outline the steps required for trustee boards to incorporate ESG into their investment processes? 

Two strategies must be applied.

The first strategy is to reduce your reputational risk by identifying companies deeply involved in serious ESG controversies using screenings like the UN Global compact principles (respect of human rights, of labour rights, protection of the environment and fight against corruption) or sector policies targeting lagging companies in terms of ESG in sensitive sectors (like palm oil, mining, extractive industry…).

Then there are two alternatives: either you exclude these companies from your investment universe, or you decide to engage actively with these companies.

The second strategy is to enhance your risk management and to capture extra revenue growth from sustainability-advantaged products and services by incorporating ESG research in your investment decision process.

It’s now demonstrated that investing in companies with solid ESG performance is more profitable than investing in companies with bad ESG performance.

Jacky Prudhomme is head of ESG integration at BNP Paribas Investment Partners.