Investing in recent years has been supported by ever-growing amounts of data, yet one area stands clear when it comes to making informed decisions on where wealthy individuals put their money – sustainable investing. For investors who wish to make a positive impact on society and the environment, Eleonore Bedel, global head of Sustainable Investment at BNP Paribas Wealth Management has a simple message: helping clients to make an informed choice that reflects their convictions is itself the conviction behind everything she and her colleagues do.
“Our responsibility is to make sure that all the financial and non-financial information a client needs is on the table and the client can make a decision in keeping with his or her goals. Whatever expectations our client may have, we will find the right solution,” she says.
Before that, however, comes helping the client to decide what is most important to him or her. As Bedel explains, “The most important thing for us is to understand what clients expect. Many clients haven’t necessarily prioritised their convictions before they come to speak to us and may need time to think about what they want.”
BNP Paribas Wealth Management has created an array of solutions that clients can consider, to see with which they most clearly identify. For instance, they may decide to invest in themes that link economic activity with the United Nation’s Sustainable Development Goals, or they may wish to select multi-asset investments in companies with the best ESG practices.
The Wealth Management team has also created a digital tool, myImpact, which helps clients to define their impact profile, and then relationship managers can determine the best solutions aligned with the clients’ values.
Changing perceptions and championing choice
BNP Paribas Wealth Management’s most recent study of global entrepreneurs showed that 58% of respondents believed that sustainable investing required some kind of trade off in performance terms. Bedel rejects the idea that there is necessarily a tension between the two. As she points out, “We assess both the quality of the asset managers and the ability of any financial instrument to deliver the level of risk, return and impact that suit the client’s convictions.”
Moreover, each client will have a different outlook and objective; the skill lies in understanding their requirements and selecting the appropriate assets in which to invest. “Many clients don’t wish to sacrifice the return on their investments, and the impact of their investments is secondary,” explains Bedel. “Others want a high impact regardless of the return. Others have the financial security to take a high-risk approach and will do so in order to create the impact they are looking for.”
With the choices you make as an investor, you can have a really positive effect with your wealth
The indications are that although it is a relatively new area, interest in impact investment is growing rapidly. BNP Paribas Wealth Management’s research on entrepreneurs suggests that 70% of investors worldwide are more willing to invest sustainably than 18 months ago, and almost 50% have invested some of their wealth sustainably. Among younger entrepreneurs, the trend is even more noticeable. Three quarters of ‘Millennipreneurs’, aged under 35, are more interested in sustainable investment now than at the start of 2018.
With nearly 15 years’ experience in recommending positive impact investments, BNP Paribas Wealth Management has developed its proprietary Clover rating system, which shows each fund’s sustainability level. The methodology assesses the sustainability of both the fund and the asset management company that runs the fund. Clients decide which Clover level they are comfortable with. “We aren’t just offering clients something that is sustainable, but we can explain why it is sustainable,” Bedel adds.
Many of BNP Paribas Wealth Management’s clients have been moved by events far away, such as forests burning or other natural disasters, and sometimes by what is happening closer to home. They want to have a positive impact in the way they consume and recognise their responsibilities, but they haven’t necessarily yet made the link with impact investing. By investing, they can create a powerful accelerator effect.
As Bedel explains, “Once you arrive at a certain level of wealth, with the choices you make as an investor, you can have a really positive effect with your wealth. Even if you have the right car, the right kind of heating and lifestyle, as an investor choosing, for instance, to invest in low carbon companies, you can have a far greater impact.”