Leaders Study Program, Paris 2019

1. INVESTORS’ VIEW: HOW IS CORPORATE
SUSTAINABILITY TAKEN INTO ACCOUNT?
FOR PROFESSIONAL INVESTORS
BERENICE LASFARGUES
PARIS, OCTOBER 2019

2. 2
Contents
WHY DO INVESTORS TAKE CORPORATE SUSTAINABILITY INTO ACCOUNT? P.3
THE GLOBAL SUSTAINABILITY STRATEGY: A BLUEPRINT TO MAINSTREAM ESG
AT BNPP AM
P.6
ESG CORPORATE RESEARCH P.9
FOCUS ON REAL ESTATE P.15
CONCLUSION P.19
APPENDICES P.21
INTRODUCTION

3. WHY DO INVESTORS TAKE
CORPORATE SUSTAINABILITY
INTO ACCOUNT?
1

4. 4
For Wholesale Investors Only
BNPP AM’s sustainable investment philosophy
SUSTAINABILITY AT BNP PARIBAS ASSET MANAGEMENT
Sustainability is a long-
term driver of risks and
returns
Integrating ESG(1)
helps us gain a
deeper and richer
understanding of the
risks that we face
And make better-
informed investment
decisions for our
clients.
Sustainability is
imperfectly
understood, under-
researched and
mispriced.
Lack of common
standards and data
issues create
multiple market
inefficiencies.
Competitive advantage to
exploit mispricing
Early mover, with a
deep understanding
of sustainability
issues
And a strong
commitment to
systematically
integrate material
ESG factors.
Timeframe and
engagement
Long-term investment
horizon,
allowing us to
positively influence
ESG practices in
companies we invest
in through
active engagement.
(1) ESG: Environmental Social and Governance
Source: BNP Paribas Asset Management - As of April 2019
Belief about mispricing

5. 5
BNPP AM’s sustainable investment beliefs
SUSTAINABILITY AT BNP PARIBAS ASSET MANAGEMENT
In 2018, we enhanced our investment philosophy with the development of a more detailed set of
investment beliefs focused on sustainability.
Stewardship is
an opportunity
and an
obligation
We are long-
term, forward
looking
investors
Our fiduciary
duty is aligned
with sustainable
investment
Sustainable
economic
future relies on
sustainable
investment
practices
Walking the
talk is critical
to achieving
excellence
ESG(1)
integration
helps us
achieve better
risk-adjusted
returns
Our sustainable investment beliefs further underpin our conviction about embedding ESG
criteria into the core of our investment approach.
(1) ESG: Environmental Social and Governance
Source: BNP Paribas Asset Management - As of April 2019

6. THE GLOBAL SUSTAINABILITY
STRATEGY: A BLUEPRINT TO
MAINSTREAM ESG AT BNPP AM
2

7. 7
Our Sustainable Investment Approach
THE GLOBAL SUSTAINABILITY STRATEGY
1. ESG Integration
across all
investments
2.Stewardship
(Voting,
engagement)
4. Forward Looking
Perspective:
The ‘3 Es’ 3. Responsible
business conduct
expectations &
product-based
exclusions
4 pillars of
SUSTAINABLE INVESTMENT
AUM: 427 billion euros
Of which AUM: 42 billion euros in
Enhanced ESG
(Multi factor, Best in Class, ESG index etc…)
Thematic
(Water, Climate, Environment, sustainable food, Human
development etc..)
Impact
(Green bonds, Social investment etc..)
ESG: Environmental Social and Governance

8. 8
4. Focus on the future – the Three E’s
THE GLOBAL SUSTAINABILITY STRATEGY
INDICATORS WE WILL TRACK, MONITOR, AND PUBLICLY REPORT ON
(1) Sustainable Development Scenario
(2) Kilowatt-hour
(3) International Energy Agency
(4) Asset Under Management
Source: BNP Paribas Asset Management - As of April 2019
CO2 Emissions
per portfolio
Green Share in % of
AUM(4)
Or total green Investment
Forest footprint
Water footprint
% of Women on boards
Primary Energy Mix
& Electricity Energy
Mix vs. IEA SDS (1)
Carbon intensity
(gCO2/kWh(2) vs.
carbon intensity
IEA(3) SDS
Measure and report
Target

9. ESG CORPORATE RESEARCH
3

10. 10
Our ESG scoring methodology: A 3-step process
ESG RESEARCH
Quant data
1
Qualitative
assessment
2
ESG company
ranking
3
■ Quantitative scoring of
companies from 0 to 100
(100 = highest) based on:
• Common ESG indicators
across sectors (min 40%)
• Sector specific indicators
(up to 60%)
■ In-depth analysis on key
material ESG issues (climate
change, etc.)
■ Exchange with companies &
controversies follow up
■ Reflected in +/-30% qualitative
overlay to ESG score
■ Final ESG score
■ Benchmarking of companies
against peers
■ Ranking by decile from 1 to 10
(1 = highest)
(1) ESG: Environmental Social and Governance
Source: BNP Paribas Asset Management - As of April 2019

11. 11
Examples of Final ESG Score and Decile Ranking
COMPANY
FINAL
GOVERNANCE
SCORE
(Max 100)
FINAL SOCIAL
SCORE
(Max 100)
FINAL
ENVIRONMENT
SCORE
(Max 100)
QUANT ESG
SCORE
DECILE Quant
(1 - Best / 10 -
Worst)
QUALITATIVE
OVERLAY
(+/- 30%)
FINAL ESG
SCORE
BNPP UN GC
& Sector policy
compliant
(Yes / No)
Watchlist
controversies
compliant
(Yes / No)
FINAL ESG
DECILE
(1 - Best / 10 -
Worst)
Company A 77 82 70 76,8 1 0% 77 Yes Yes 1
Company B 79 82 68 76,6 2 0% 77 Yes Yes 2
Company C 81 56 50 61,6 7 0% 62 Yes Yes 3
Company D 79 68 79 74,6 3 -20% 60 Yes Yes 4
Company E 52 67 56 59,5 8 0% 59 Yes Yes 5
Company F 67 66 42 59,0 9 0% 59 Yes Yes 7
Company G 79 56 60 64,2 5 -10% 58 Yes Yes 8
Company H 83 59 52 64,2 6 -20% 51 Yes Yes 9
Company I 74 50 41 54,5 10 -10% 49 Yes Yes 10
AVERAGE SCORE 75 65 57 66 61
The resulting score (0-100) is converted into a decile ranking from 1 to 10 (1 = best)
ESG RESEARCH
(1) ESG: Environmental Social and Governance
Source: BNP Paribas Asset Management - As of April 2019

12. 12
ESG Research Sources
ESG RESEARCH
Our ESG research findings are:
 Independent
 Based on various sources, not limited to ESG data suppliers
 Completed by regular direct contact with issuers
 Sustainalytics
 UNGC Indicators, controversies
 Trucost/S&P/Carbone 4
 CO2 data
 ISS
 Governance research
 Beyond Ratings
 Sovereign debt
 Vigeo Eiris
 UNGC, controversies
 ESG and mainstream brokers
 Direct contacts with issuers and
key stakeholders
 Academics
 Institutionals
 Civil society research
 Issuer official publications
 Eurostat
 OECD
 United Nations
 World Bank
 International Energy Agency
 World Health Organization
EXTERNAL SPECIALISED
PROVIDERS
IN-DEPTH
QUALITATIVE RESEARCH
INTERNATIONAL INSTITUTIONS
(1) ESG: Environmental Social and Governance
Source: BNP Paribas Asset Management - As of April 2019

13. 13
For Wholesale Investors Only
Coverage Of The ESG Research
ESG RESEARCH
4 200 ESG
issuer
analyses
11 500
companies
with UN
Global
compact
screen
 MSCI ALL COUNTRIES
 Separated in five regions to calculate the
decile ranking
 Europe (MSCI Europe)
 North America (MSCI North America)
 Asia Ex-Japan
 Japan
 MSCI EM
EQUITIES FIXED INCOME
 Global coverage. Developed and
Emerging
 Sovereigns and Agencies
Source: BNP Paribas Asset Management - As of August 2019
Current coverage Target coverage
16 000 companies
with ESG Score

14. FOCUS ON REAL ESTATE
4

15. 15
The sector review: A cornerstone of ESG research
FOCUS ON REAL ESTATE
“Cybersecurity’” “Fossil fuel” “Sea food sourcing”
*GICS: Global Industry Classification Standard
OUTLINING RISKS AND OPPORTUNITIES WITHIN EACH SECTOR DURING ANNUAL SECTOR REVIEWS.
ESG ANALYSTS TARGET ISSUES/TRENDS IN EACH GICS* SECTORS (SEE EXAMPLES BELOW)
Source: BNP Paribas Asset Management - As of April 2019

16. 16
A global perspective
• BUILDINGS AND CONSTRUCTION, INCLUDING MANUFACTURING OF MATERIALS, ACCOUNT FOR 40%
OF THE GLOBAL FINAL ENERGY CONSUMPTION.
• BUILDINGS ARE RESPONSIBLE FOR 50% OF THE GLOBAL ELECTRICITY DEMAND.
UNEP (2016), Towards zero-emission efficient and resilient buildings.

17. 17
A global perspective
 WHEN INDIRECT BUILDING EMISSIONS FROM POWER GENERATION ARE INCLUDED, BUILDINGS AND
CONSTRUCTION REPRESENT NEARLY 30% OF ENERGY-RELATED CO2 EMISSIONS.
 73% OF INDIRECT EMISSIONS TAKE INTO ACCOUNT EMISSIONS IN ELECTRICITY GENERATION FOR
BUILDING CONSUMPTION AND COMMERCIAL HEAT.
Building CO2 emission share
UNEP (2016), Towards zero-emission efficient and resilient buildings.

18. 18
Real estate sector review – Overview of ESG issues
FOCUS ON REAL ESTATE
Labor standards
across value chain.
Risks: Fines, litigation and
reputational costs by not
controlling standards of
subcontractors & suppliers
Real Estate
E
G
S
Environmental
license to operate
Challenge: Regulators impose minimum energy
standards impacting company capacity to let or
sell property. UK energy act 2011.
Energy & GHG reduction targets
Challenge: EUR - Energy Efficiency Directive
2012 (EED) ~30% reduction from buildings by
2020 & Near zero energy buildings by 2017/19
.
Sustainable certification
Challenge: Voluntary certification becomes the
norm or standard for new assets.
Some cases, premium pricing for assets with
sustainable certification
Tenant engagement
Challenge : better cooperation
between tenants and
landlords, better sustainability
performance of buildings
(better energy saving ) REAL ESTATE
Compensation policy
Risk: Failure to control risk appetite.
Reputational impact. Shareholders & public
opinion concern .
ESG Matrix
Diversified
REIT
Industrial
REIT
Retail REIT
Operating
Company
E 50%
S 20%
G 30%

19. CONCLUSION
5

20. 20
For Wholesale Investors Only
We are a “future maker” not a “future taker”
CONCLUSION
As the world changes around us, we will maintain an unwavering focus on achieving
long-term sustainable returns for our clients. We believe integrating sustainable practices
allows us to enhance and preserve value for clients
We have set a target to be sustainable across our investment strategies by 2020
Create value for clients through ESG integration and
stewardship in our investment processes
Protect future performance by using our influence with companies and
governments to advocate for a low-carbon, inclusive economy
Overarching
objective

21. APPENDICES
6

22. SUSTAINABILITY AT BNP PARIBAS
ASSET MANAGEMENT
A

23. 23
Our philosophy
SUSTAINABILITY AT BNP PARIBAS ASSET MANAGEMENT
WE FOCUS ON
ACHIEVING LONG-
TERM SUSTAINABLE
INVESTMENT
RETURNS FOR OUR
CLIENTS
SUSTAINABILITY
IS AT
THE HEART OF
OUR
STRATEGY
Source: BNP Paribas Asset Management - As of April 2019

24. 24
A long term commitment toward sustainability since 2002
SUSTAINABILITY AT BNP PARIBAS ASSET MANAGEMENT
Launch of our first socially
responsible investment (SRI)
fund and joined the institutional
investors group on climate
change (IIGCC)
2002
2006
Founding signatory to the UN
Principle for Responsible
Investments (PRI)
2012
2015
2018
Implementation of the United
Nations Global Compact
Principles and sector
policies of BNP Paribas
Group
Signatory to Montreal
Carbon Pledge to align our
portfolios with the Paris
agreement
Exclusion of tobacco
from our investment
funds
New Coal Policy &
Launch of our Global
Sustainability Strategy
2019
Principles for Responsible Investment
Socially Responsible Investment
Institutional Investors Group on Climate ChangeSource: BNP Paribas Asset Management - As of April 2019

25. 25
Our commitment: become fully sustainable by 2020
SUSTAINABILITY AT BNP PARIBAS ASSET MANAGEMENT
We believe this is both in the financial interest of our clients, and of the economy at large.
Our commitment incorporates two key components:
Firm- wide
approach
Our full range of investment strategies will
be sustainable
Comprehensive research and integration of
ESG(1) factors, responsible business
conduct and product-based exclusions,
stewardship, and reporting will be
implemented for all of our investment
strategies
Firm- wide targets
Aligning our investment portfolios and
engagement activity with a sustainable future
Our Sustainable Investment Roadmap (2019-
2022) sets out a formal process in place to
achieve our sustainable investment ambition.
(1) ESG: Environmental Social and Governance
Source: BNP Paribas Asset Management - As of April 2019

26. THE FOUR PILLARS OF BNPP
AM’S SUSTAINABLE INVESTMENT
APPROACH
B

27. 27
At the core of all our investment processes, analysts and portfolio managers integrate a consideration of relevant ESG
factors into their company, asset and sovereign evaluation and investment decision-making processes.”
Sustainable investing integrates ESG(1) criteria into each stage of the investment process
Investment
philosophy
Research
and idea
generation
VotingEngagement
Portfolio
construction
Risk
management
Disclosure
and reporting
Some
common
principles for
ESG
integration
apply across
all asset
classes, while
others are
asset class or
strategy-
specific
PHILOSOPHY
We will not
invest in a
public entity
without an
ESG score, or
performing
qualitative
ESG analysis
in the absence
of a
quantitative
ESG rating
RESEARCH
We will not
invest in a
private entity
without
performing
ESG due
diligence
STEWARDSHIP & ENGAGEMENT
We will not
invest in a
weakly rated
entity without
actively
engaging
particularly
on the key
issues
identified
We may
disinvest
from weakly
rated
entities
which do not
respond to
engagement
Holdings of
weakly-rated
public entities
will need to
be justified
by additional
documented
qualitative
analysis
integrating
ESG factors
KPIs(2) & REPORTING
We aim to
hold portfolios
with more
positive ESG
characteristics
than their
respective
(invested)
benchmarks.
We aim to
hold
portfolios
with a lower
carbon
footprint than
their
respective
(invested)
benchmarks.
1. ESG Integration
THE GLOBAL SUSTAINABILITY STRATEGY
(1) ESG: Environmental Social and Governance (2) KPI: Key performance indicator
Source: BNP Paribas Asset Management - As of April 2019

28. 28
For Wholesale Investors Only
2. Stewardship: is central to our strategy
THE GLOBAL SUSTAINABILITY STRATEGY
Public Policy
Actively engage with
regulators, helping
to shape the
markets in which we
invest and the rules
that guide and
govern company
behavior
Engagement
(voting, governance and
quality of management)
Our key priority is to
promote good
governance
practices.
The Three E’s
Energy Transition,
Environmental
Sustainability and
Equality serve as
the focus for our
global sustainability
engagement efforts
Responsible Business
Conduct
Committed to engage
or exclude companies
that appear on our
watch list for serious
controversies,
including those
deemed to be in
violation of the Global
Compact Principles.
Source: BNP Paribas Asset Management - As of April 2019

29. 29
Collaborative initiatives
THE GLOBAL SUSTAINABILITY STRATEGY
EXAMPLE OF COLLABORATIVE INITIATIVES
CLIMATE ACTION 100+
 Engagement with the 100 largest GHG(1) emitters worldwide
REAL ESTATE AND BUILDING SECTOR
 Energy Efficiency – financing the transition
to a low-carbon economy
 CO2 and energy consumption reporting
ENERGY SECTOR
 Carbon Asset Risk
 Methane Risk
 Oil exploration in Arctic
Trademark, copyright, and other intellectual property rights are and remain the property of their respective owners.
(1) GHG: Green house gas
Source: BNP Paribas Asset Management - As of April 2019

30. 30
Responsible Ownership
THE GLOBAL SUSTAINABILITY STRATEGY
2018 PROXY VOTING SEASON
Source: BNP Paribas Asset Management, 31/12/2018
1 464 AGMs(1) voted mostly in Europe and North America
17 953 management resolutions voted
We voted in favour of 78% of resolutions
Inline with our focus on climate change, there were 16 abstentions for accounts’ approval and
board election of companies that lacked transparency concerning their CO2 emissions and 2°C
strategy.
(1)AGM: Annual General Meeting
Source: BNP Paribas Asset Management - As of April 2019

31. 31
3. Responsible Business Conduct
THE GLOBAL SUSTAINABILITY STRATEGY
Implementation of policies
for sensitive sectors
A universal benchmark
for assessing companies
Sector Policies
General BNPP Standards
United Nations
Global Compact & OECD(1) MNEs
Guidelines
Based on
10 principles covering:
Human rights
Labour
Environment
Anti-corruption
Including the UN
Global Compact Watchlist
Strict Exclusion
Controversial weapons
Coal
Tobacco
Asbestos
Sector with minimum
requirements
Palm oil and Wood Pulp
Nuclear
Mining
Oil sands, Tar sands
Agriculture
Focus on Coal Policy
Power Generation
From 1st January 2020
• Exclusion of companies with
10% or more of revenues from thermal coal
• Or representing >1% of global production
Thermal Coal Mining
• Excluding all electricity providers with carbon
intensity >491gCO2/KWh(2) (global average
Carbon intensity)
• Reduce gradually the threshold until we reach
the IEA annual electricity generation target for
2025 – 327gCO2/KWh
(1) Organization for Economic Co-operation and Development
(2) kilowattheure
Source: BNP Paribas Asset Management - As of April 2019

32. 32
4. Focus on the future – the Three E’s
THE GLOBAL SUSTAINABILITY STRATEGY
INDICATORS WE WILL TRACK, MONITOR, AND PUBLICLY REPORT ON
(1) Sustainable Development Scenario
(2) Kilowatt-hour
(3) International Energy Agency
(4) Asset Under Management
Source: BNP Paribas Asset Management - As of April 2019
CO2 Emissions
per portfolio
Green Share in % of
AUM(4)
Or total green Investment
Forest footprint
Water footprint
% of Women on boards
Primary Energy Mix
& Electricity Energy
Mix vs. IEA SDS (1)
Carbon intensity
(gCO2/kWh(2) vs.
carbon intensity
IEA(3) SDS
Measure and report
Target

33. A TEAM TO ACHIEVE OUR
AMBITION: BNPP AM’S
SUSTAINABILITY CENTRE
C

34. 34
A well-resourced Sustainability Centre team
A TEAM TO ACHIEVE OUR AMBITION: THE SUSTAINABILITY CENTRE
A strong ESG team with
diverse backgrounds
 Consulting
 Advocacy & Policy
 NGOs
 Intergovernmental
Organizations
 Mainstream Investments
 Sell-side Analysis
 Sales & Marketing
 Industry experience
8 languages spoken
French, English, German, Italian,
Mandarin, Dutch, Spanish, Hungarian
14 new hires
In 2018 & 2019
10+ years
270+ years
Average & cumulative
professional experience
24 ESG experts
Within the Sustainability Centre
Source: BNP Paribas Asset Management - As of April 2019

35. 35
The role of the Sustainability Centre
A TEAM TO ACHIEVE OUR AMBITION: THE SUSTAINABILITY CENTRE
ESG Research &
Integration
Support
Stewardship &
External
engagements
Marketing,
Communication
& Reporting
ESG Business
& Product
Development
Social Business Corporate
Social
Responsibility
Policy
development &
Implementation
Global
Sustainability
Strategy,
Responsible
Business
Conduct
Stewardship
policy
ESG research
Implementation
of ESG in
investment
processes
Internal training
for all staff
Active
ownership -
engagement
and voting
Determine
appropriate
external
memberships
Maintain fluent
communication
with investment
teams on all
ESG issues
Manage ESG
champions
network
Assist sales
teams in
developing
business and
managing client
relationship
ESG and
financial
analysis for
Solidarity funds
Walking the talk
is critical to
achieving
excellence
Source: BNP Paribas Asset Management - As of April 2019

36. 36
For Wholesale Investors Only
A dedicated governance for sustainability
A TEAM TO ACHIEVE OUR AMBITION: THE SUSTAINABILITY CENTRE
• Global Head of Products & Strategic
Marketing
• Global Head of Client Group
• Chief Marketing Officer
• Head of Brand and Communication
Communications and Marketing
Global Head of
Sustainability
Sustainability
Centre
• Chief Investments Officer
• Head of Macro Research,
Investment Process and Risk
• Head of Investments
Investment teams
Sustainability Committee
Chaired by CEO
Validates the Global Sustainability Strategy
& all the associated policies
Aligned with
CREATION OF A SUSTAINABILITY COMMITTEE, WITHIN THE
INVESTMENT COMMITTEE
Source: BNP Paribas Asset Management - As of April 2019
*Products and Strategic Marketing

37. 37
For Wholesale Investors Only
How investment teams work with the Sustainability Centre
A TEAM TO ACHIEVE OUR AMBITION: THE SUSTAINABILITY CENTRE
ANALYSIS
 A thorough assessment of the
dedicated ESG team’s output
 In-depth research is
undertaken by an
experienced team.
 ESG output supplemented
with Investment teams’
analysis.
 Thorough analysis enables
Investment teams to properly
incorporate ESG scores in the
investment decision-making
process, enabling
engagement with companies
on specific issues.
INVESTMENT TEAMSDEDICATED ESGTEAM
 A large and well-resourced
team
 The Sustainability teams’
research findings are:
 Independent
 Based on various sources
not limited to ESG data
suppliers
 Supplemented by regular
direct contact with issuers
 A monthly update of up to
12,000 ratings which
provides an assessment of
our investment universe
SUSTAINABILITY CENTRE
INTERACTION BETWEEN THE TWO TEAMS
Investment teams base their assessment on the dedicated ESG teams’ output, including their
sector reviews, as well as a monthly update of up to 12,000 ratings
 Regular interaction (sector reviews, deep dives)
 Periodic interaction (review of ESG profile of company)
 Coordination of engagement
 Review of proposed proxy voting decisions

38. ADDITIONAL ESG RESEARCH
SLIDES
D

39. 39
Our ESG scoring methodology: A 3-step process
ESG RESEARCH
Quant data
1
Qualitative
assessment
2
ESG company
ranking
3
■ Quantitative scoring of
companies from 0 to 100
(100 = highest) based on:
• Common ESG indicators
across sectors (min 40%)
• Sector specific indicators
(up to 60%)
■ In-depth analysis on key
material ESG issues (climate
change, etc.)
■ Exchange with companies &
controversies follow up
■ Reflected in +/-30% qualitative
overlay to ESG score
■ Final ESG score
■ Benchmarking of companies
against peers
■ Ranking by decile from 1 to 10
(1 = highest)
(1) ESG: Environmental Social and Governance
Source: BNP Paribas Asset Management - As of April 2019

40. 40
1. Quantitative Scoring
ESG RESEARCH
ENVIRONMENT
 Reducing emissions of greenhouse gases; promoting energy
efficiency; prevention of industrial accidents; management of water
resources; treatment of waste.
SOCIAL
 Respect by the company and its subcontractors for human rights
and workers' rights and human resources management (e.g.
workers' health and safety, career monitoring, remuneration
modes).
GOVERNANCE
 Board independence and competence; managers' remuneration;
internal audit mechanisms
EXAMPLES OF COMMON INDICATORS
ENERGY SECTOR
 Asset integrity; human rights; operational risk management; climate
change strategy; corruption.
BANKING SECTOR
 Executive pay; internal control efficiency; service and product offer
(assess whether there is a strong environmental and social added-
value); management of any restructuring.
EXAMPLE OF SPECIFIC INDICATORS PER SECTOR
QUANTITATIVE
SCREENING
ESG data to which we apply
two sets of in-house
developed indicators
COMMON INDICATORS
ACROSS SECTORS
totalling at least 40% of the
final rating
SPECIFIC INDICATORS
PER SECTOR
defined by the ESG analysts
These indicators aim to reflect how a
company manages the different ESG
risks it faces
Source: BNP Paribas Asset Management - As of April 2019

41. 41
1. The Weight Matrix
ESG RESEARCH
Minimum
weight of
10%
Minimum
weight of
20%
Minimum
weight of
30%
ENVIRONMENT SOCIAL GOVERNANCE
9
indicators
minimum of 6%
out of 100%
11
indicators
minimum of 11%
out of 100%
20
indicators
minimum of 23%
out of 100%
ENVIRONMENT SOCIAL GOVERNANCE
WEIGHT MATRIX – MINIMUM WEIGHT OF COMMON
INDICATORS
WEIGHT MATRIX - MINIMUM WEIGHT PER PILLAR
Final
Quant
ESG
Score
Environmental
Score
Min 10%
Governance
Score
Min 30%
Social
Score
Min 20%
 The weight matrix will provide the overall
quantitative ESG score for each company from 0 to
100
 Minimum weights are given for each E/S/G pillar
and for common indicators
(1) ESG: Environmental Social and Governance Source: BNP Paribas Asset Management - As of April 2019

42. 42
2. Qualitative Overlay
ESG RESEARCH
WE THEN PERFORM A QUALITATIVE ANALYSIS THAT REFLECTS A MORE IN-
DEPTH STUDY ON KEY MATERIAL ESG ISSUES IDENTIFIED PER SECTOR
The objective is to take into
account
 ESG issues that have either
not been captured by an
indicator within the matrix, or
those that cannot be
quantified
 Controversies not included in
the weight matrix or not
sufficiently accounted for
This assessment is based on our
meetings with have with
companies and the results of our
engagement activity.
Overlay
A max. of a -30% penalty to a
+30% bonus can be added to
the resulting ESG score
Source: BNP Paribas Asset Management - As of April 2019

43. 43
2. A Controversy Assessment Tool
ESG RESEARCH
CONTROVERSY EVALUATION CRITERIA
CONTROVERSY
ASSESSMENT
Impact of the
Incident
Level of
Recurrence
Degree of
exceptionality
Level of
Responsibility
Company
response
Outstanding
Risks
Severity Level
Low
No common limited adequate/inadequate low category 1
Yes
common limited adequate/inadequate low category 2
uncommon
limited adequate low category 2
limited inadequate medium category 3
Medium
No
common limited adequate low category 2
uncommon limited inadequate medium category 3
Yes
common strong adequate medium category 3
uncommon strong inadequate high category 4
High Yes/No uncommon
strong adequate high category 4
strong inadequate high category 4 / 5
Very High Yes/No uncommon strong adequate/inadequate high category 5
 Companies facing a controversy pose a financial
risk to our funds
 For a rigorous follow up of controversies we have
implemented an on-going monitoring process that
focuses on severe controversies that may
influence our ESG rating
 Classification of all controversies from level 1
(least controversial) to 5 (worst)
 Analysis of the impact of the incident (severity and
number), level of recurrence, responsibility and
exceptionality, response and management from
the company
 A company is automatically penalised when facing
one or more controversies of level 3 or higher
(1) ESG: Environmental Social and Governance
Source: BNP Paribas Asset Management - As of April 2019

44. REAL ESTATE SECTOR REVIEWS
INSIGHTS
E

45. 45
A global perspective
BUSINESS AS USUAL SCENARIO – BAU:
 CURRENT DEMOGRAPHIC, ECONOMIC GROWTH AND
URBANIZATION TRENDS MEANS THAT BY 2050 THE
GLOBAL BUILDING FLOOR AREA WILL DOUBLE.
WHAT IS THE CHALLENGE?
 FAILING TO ADDRESS ENERGY CONSUMPTION AND
GREEN HOUSE GASES GHG EMISSIONS OR SETTING
LOW AMBITION ENERGY /GHG MITIGATION TARGETS
WILL LEAD TO LOCK-IN IN BUILDINGS WITH HIGHER
THAN NECESSARY ENERGY CONSUMPTION
PERFORMANCE.
 THIS MEANS THAT GHG FROM THE PROPERTY
SECTOR WILL INCREASE. LIMITING THE POTENTIAL
OF THE PROPERTY SECTOR TO THE ACHIEVEMENT
OF NATIONAL DETERMINED CONTRIBUTIONS – NDCS
 IN AN BAU-SCENARIO GHGS WILL INCREASE FROM 10
GTCO2(2015) TO 16GTCO2 (2050) CONSISTENT WITH A
6 DEGREES SCENARIO.
Building floor area growth to 2050 by region
IEA (2016), Energy Technology Perspectives 2016,
IEA/OECD, Paris.

46. 46
A global perspective
 BUILDING ENERGY INTENSITIES HAVE IMPROVED SINCE 1990 TO 2014 FROM 300KW/M2 TO 220 KW/M2
FOR NON RESIDENTIAL AND 200KW/M2 TO 140KW/M2 IN RESIDENTIAL PROPERTY.
 HOWEVER, THIS TRENDS IS NOT ENOUGH TO OFFSET STRONG GROWTH IN BUILDING FLOOR AREA.
GLOBAL BUILDING ENERGY CONSUMPTION AND RELATED GHG EMISSIONS CONTINUE TO RISE.
Global building sector energy consumption and intensity by sub-sector, 1990-2014
IEA (2016), Energy Technology Perspectives 2016, IEA/OECD, Paris.

47. 47
A global perspective
 IN 2050, IN A BUSINESS AS USUAL TRAJECTORY , THE PROPERTY SECTOR
ENERGY DEMAND IS EXPECTED TO INCREASE BY 50% COMPARED TO 2014 LEVEL,
AND TO REACH A TOTAL OF 180 EJ BUILDING ENERGY.
 IN A 2 DEGREES SCENARIO, THE BUILDINGS ENERGY CONSUMPTION SHOULD BE
STABILIZED AROUND 130 EJ BETWEEN 2030 – 50 BUT INTENSITIES SHOULD
DECREASE FASTER TO OFFSET STRONG GROW IN FLOOR AREA.
Global building sector final energy consumption and intensity to 2050 in
support of a 2 degrees trajectory
UNEP (2016), Towards zero-emission efficient and resilient buildings.
180
EJ

48. 48
A global perspective
 THE 2 DEGREES CHALLENGE IS TO MOVE FROM A BAU SCENARIO OF 16 GTCO2 TO 2 GTCO2 BY
2050
 TODAY, THE PROPERTY SECTOR SHARE IN CARBON EMISSIONS IS 30% ( FINAL ENERGY
CONSUMPTION). THEREFORE THERE IS NO BELOW 2 DEGREES SCENARIO WITHOUT SUPPORTING
LOW CARBON BUILDINGS & CONSTRUCTION
 A 2 DEGREES SCENARIO REQUIRES: (1) ENERGY SAVINGS ( DIRECT) TO CONTRIBUTE WITH 30% OF
THE TOTAL CO2 REDUCTION BY 2050. (2) DECARBONIZATION OF INDIRECT ENERGY
CONSUMPTION( MAINLY ELECTRICITY) WILL CONTRIBUTE WITH 70% OF CO2 REDUCTIONS.
Global building sector emissions saving potential to 2050
UNEP (2016), Towards zero-emission efficient and resilient buildings.

49. 49
A framework for action and engagement: TCFD** Task Force on Climate related Financial Disclosure.
 WHAT & WHEN? A FRAMEWORK LAUNCHED IN 2016 BY THE FINANCIAL STABILITY
BOARD – FSB (MARK CARNEY) AND CHAIRED BY MICHAEL BLOOMBERG.
 WHY? THE MARKET (COMPANIES/ INVESTORS/ LENDERS & UNDERWRITERS) NEEDS
BETTER DATA ON HOW CLIMATE CHANGE RISKS ( TRANSITION & PHYSICAL RISK ARE
ASSESSED) AND OPPORTUNITIES ARE PRICED AND MANAGED AND TRANSLATED INTO
FINANCIAL IMPACT.
TCFD(2017), Overview of Recommendations

50. 50
A framework for action and engagement: TCFD** Task Force on Climate related Financial Disclosure.
TWO KEY PRINCIPLES:
 MATERIALITY:
 FORWARD LOOKING: SCENARIO ANALYSIS
TCFD(2017), Overview of Recommendations
TCFD Recommendations: 4 key pillars

51. 51
A framework for action and engagement: TCFD** Task Force on Climate related Financial Disclosure.
TCFD(2017), Overview of Recommendations
Implementation pathway: 5 year time frame
TCFD(2017), Overview of Recommendations

52. 52
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