Fund helps with funding for climate change mitigation
BNP Paribas Asset Management has launched Parvest Green Bond, which invests in green bonds, a category of fixed income used to finance projects designed to mitigate or address climate change issues. Green bonds have enjoyed tremendous investor appetite that has led the market to grow 25-fold over the last five years1.
The size of the green bond market – almost USD 258 billion2 – allows the fund managers to build a well-diversified investment portfolio including bonds from government, agency and corporate issuers for investors interested in spreading out the investment risk of their portfolios and ready to accept low to medium market risk.
All issuers must respect sustainable development criteria covering social responsibility, environmental responsibility and corporate governance (ESG criteria).
Given that between now and 2030, USD 4 trillion a year is estimated to be required to support the energy transition towards a low-carbon economy, we regard green bonds as a promising vehicle to tap global capital markets for the necessary financing.
A GREEN BOND IN MORE DETAIL
Green bonds are like ordinary fixed-income bonds, offering similar returns for similar maturities compared to other bonds from the same issuer. The only difference is that the proceeds of green bonds are used for ‘green issues’, in other words, to help finance climate change projects in industries ranging from waste management to agriculture and forestry, and from construction to energy.
Importantly, to qualify as a green bond, the issuer must monitor and report on eligible ‘green investments’ and their environmental impact. Applying such stringent criteria means we can assure investors that the advantageous climate impact of the financing is real.
WHAT SETS PARVEST GREEN BOND APART
‘Screening for green’ involves a proprietary integrated engagement approach so that both fund managers and investors can be sure the green bond investments will legitimately contribute to tackling climate change. This involves two steps:
MANAGED BY A SPECIALIST TEAM
The Parvest Green Bond team benefits from the 15-year expertise of a dedicated sustainability research team covering the issues around sustainable and responsible investing (SRI) and investments based on the application of environmental, social and governance-driven (ESG) selection criteria.
The integrated approach also involves an experienced fixed-income investment team already managing close to EUR 500 million of green bonds3. A portion of this amount is managed by the Parvest Green Bond team.
Key people responsible for this fund
A minimum of two-thirds of the total assets of the fund must be invested in global green bonds as defined by our Sustainability Centre research team.
The benchmark of the fund is the Bloomberg Barclays MSCI Global Green Bond index (euro hedged).
Details and documentation on https://www.bnpparibas-am.lu/intermediary-fund-selector/fundsheet/bo/parvest-green-bond-i-c-lu1620157534/
Parvest Green Bond is a sub-fund of the Parvest UCITS sicav registered under Luxembourg law. Investments in the fund are subject to market fluctuations and the risks inherent in investments in securities. The value of the investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay, the funds described being at risk of capital loss.
BNP Paribas Asset Management France, “the investment management company,” is a simplified joint stock company with its registered office at 1 boulevard Haussmann 75009 Paris, France, RCS Paris 319 378 832, registered with the “Autorité des marchés financiers” under number GP 96002.
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