BNP Paribas Funds to exclude new Oil and Gas Bonds
BNP Paribas Asset Management has announced that it will no longer be investing in new bonds issued in November by companies engaged in oil and natural gas exploration and production.
According to the document, French asset managers said their policy was to help oil and gas companies transition to sustainable sources of energy, while screening those companies that are not adapting fast enough.
The company will no longer purchase new bonds from oil and gas companies including diversified ones, but will continue to make investments in their debt and equity subject to certain rules. The new ban is not clear on whether it will also cover the new shares issued by these companies.
Morningstar Direct reports that BNP Paribas Asset Management's open-ended and exchange traded funds have $1.8 billion in equity exposure to oil companies, including TotalEnergies, which is held by 49 of the funds.
The fund manager stated that oil and gas companies who are eligible for investment will be regularly reviewed to ensure they have "realistic climate commitments" as well as "credible transition plans". Companies not meeting the criteria may be encouraged to adopt more sustainable and lower-carbon business models.
In an email, the firm explained that the move aligns the fund manager’s policies with those of the BNP Paribas Group as a whole which has not participated in the bond issuance of companies engaged in exploration and production activities since 2023.
Several European financial firms are pulling back from lending to oil and gas firms in response to more sustainability-focused investment rules, investor pressure and internal pledges to reduce carbon emissions.
Reclaim Finance, a pressure group that advocates for the rights of investors, welcomed the French firm's move. It said it was the first asset manager to take such steps in the world.
Lara Cuvelier is the group's campaigner for sustainable investments. She said that bonds are one of the main modes of financing used by companies in the fossil-fuel sector.
BNP Paribas Asset Management had already placed some restrictions on investments in oil and natural gas companies that operated in the Amazon and the Arctic, as well as in unconventional oil and natural gas resources such as shale and oil sands. (Reporting and editing by Christina Fincher, Jonathan Oatis and Virginia Furness)
(source: Reuters)
