BNP Paribas Asset Management (BNPP AM) announced today the launch of the BNP Paribas Social Bond fund, providing investors with exposure to bonds issued to finance projects with positive social impacts.
Social bond have been one of the fastest growing segments of the rapidly expanding sustainable finance market, with issuance in 2020 surging 7-fold over the prior year, and year-to-date volumes as of the end of Q3 already surpassing last year’s total, according to a recent report from Moody’s ESG. A significant portion of this growth has come from sovereign issuance, such as the EU SURE program, which aims to issue up to €100 billion of social bonds to counteract the negative economic and social impact of COVID-19.
According to BNPP AM, the new fund will invest in three main areas, with at least 75% in bonds labelled social or sustainable, promoting access to essential services such as water or health, affordable housing, employment, food security, socioeconomic progress or basic infrastructure, up to 25% in companies ranked as socially responsible by the firm’s rating model, and up to 10% in microcredit instruments that help provide small businesses and individuals in emerging markets with access to financial services.
Arnaud-Guilhem Lamy, Head of Euro Aggregate Bond Strategies at BNP Paribas Asset Management and manager of BNP Paribas Social Bond fund, said:
“The growing importance of bonds within thematic management, historically more geared towards equities, and the emergence of social considerations among investors are two major developments in our industry. The launch of BNP Paribas Social Bond fund reflects both of these, and enables capital to be directed towards activities with a positive social impact, such as unemployment benefit programmes or social housing. Our rigorous methodology brings real added value, by evaluating not only the quality of the issuer but also that of the projects being financed.”