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BNP Paribas broadens low carbon range with third ETF launch

·Business Reporter, Yahoo Finance UK
·2 min read
The BNP Paribas logo is seen at a branch in Paris, France, February 4, 2020. REUTERS/Benoit Tessier
The BNP Paribas logo is seen at a branch in Paris, France. Photo: Benoit Tessier/Reuters

BNP Paribas has announced the launch of its third low carbon exchange traded fund (ETF).

The tracker fund, called BNP Paribas Easy Low Carbon 100 Eurozone PAB UCITS ETF, is valued at almost €1bn (£850m, $1.15bn).

It meets European standards for Paris Aligned Benchmark (PAB) indices and offers investors a solution to reduce the carbon footprint of their portfolios.

The new PEA eligible ETF has been continuously listed since 12 October on Euronext Paris and Deutsche Börse Xetra. It replicates the Euronext Low Carbon 100 Eurozone PAB NTR index, administered by Euronext.

The index selects 100 of the top eurozone firms in terms of reducing carbon emissions, while excluding those involved in certain business sectors, and with the worst environmental, social and governance (ESG) scores.

Watch: ESG Investing and Energy Transition

Those that actively participate in the quality of their carbon performance, and the positive climate impact of their business, represent at least 5% of the index, BNP said on Tuesday.

These green companies are selected by a committee of experts that oversees the composition and development of the index.

The move aligns with the goals of the Paris Agreement to limit global warming to 1.5 degrees by 2050.

Under the PAB targets, companies will aim to reduce carbon intensity by 50%, and an annual decarbonisation target of at least 7%.

Read more: UK must mandate top firms to plan for net zero, warns WWF

“We are convinced that to be sustainable, the economy must move towards a low carbon model favouring the energy transition,” Isabelle Bourcier, head of quantitative and index management at BNPP AM, said.

“To meet the expectations of professional and retail investors, BNP Paribas Asset Management is extending its range with the launch of this third ETF, thereby reaffirming its leadership in index solutions focused on ESG themes.”

It comes as the European Union (EU) raised €12bn (£10bn, $13.9bn) in its first ever green bond on Tuesday, in what is its first step to becoming a leader in the fast-growing green debt market.

The 15-year green bond, due 4 February 2037, received more than €135bn of demand, Reuters said, citing a lead manager.

This was the highest level of demand for a green bond on record in the government debt market, beating the £10bn ($13.6bn) the UK raised with a £100bn order book in September.

The issue now puts the EU on track to seize the crown as the largest green bond issuer in the coming years.

Watch: Major economies must ‘step up’ with climate plans before Cop26 – Alok Sharma