BNP Paribas targets mainland investors with socially responsible investment fund

PUBLISHED : Tuesday, 08 May, 2018, 4:07pm
UPDATED : Tuesday, 03 July, 2018, 5:31pm

BNP Paribas Asset Management joins a growing bandwagon of asset managers offering environmentally and socially responsible investment options, saying that it soon plans to launch a fund targeting mainland investors.

BNP did not provide a size for this fund as they had just received a qualified domestic limited partner (QDLP) licence and were awaiting allocation of quotas from the Chinese authorities, a spokesman said on Tuesday.

QDLP qualification allows foreign asset managers to raise funds from Chinese investors to buy overseas assets such as shares and real estate investment trusts.  

“In line with the enhanced focus from mainland investors towards sustainable investing … BNP Paribas AM is the first global fund manager with a QDLP quota to offer a fund geared towards ESG [environmental, social and governance] investments” it said in a statement on Tuesday. 

ESG-themed investment is a nascent but fast growing market globally, as more investors grasp the idea that engaging in sustainable investment does not negatively affect returns.

Asia, excluding Japan, saw US$52.1 billion of funds managed with sustainable investment strategies in 2016, up 16 per cent from 2014, according to the most recent report from the Global Sustainable Investment Alliance.

But the figure is a fraction of the US$12 trillion managed sustainably in Europe, US$8.7 trillion in the US and US$473.6 billion in Japan.

HSBC Global Asset Management, which managed US$469 billion of assets at the end of last year, last week launched two low-carbon funds targeting Hong Kong’s retail investors.

The fund manager already has three British-managed equity and bond funds under the themes of “climate change” and “lower carbon” available to investors in Hong Kong and Singapore.

Other asset management firms, such as Swiss-based Pictet Asset Management and Lombard Odier, have also been helping high net worth individuals on ESG investing.

BNP’s product will be launched by BNP Paribas Overseas Investment Fund Management (Shanghai).   

Beijing resumed granting licences to around a dozen global asset managers earlier this year, who were awarded quotas to raise money from mainland investors under the QDLP scheme for the first time since 2015. 

The scheme was halted when Beijing tightened capital controls after continuous fund outflows drew down the nation’s foreign exchange reserves. 

The State Administration of Foreign Exchange, China’s foreign exchange regulator, late last month said it would increase the quotas of the Shanghai-based QDLP scheme to US$5 billion.