BNP Paribas Asset Management (BNPP AM) is set to remove the ESG designation from dozens of exchange-traded funds (ETFs) and adopt Paris-Aligned Benchmark (PAB) exclusion criteria, following new guidance from the European Securities and Markets Authority (ESMA) on fund naming.
The asset manager will exclude companies involved in international norm violations, tobacco production, controversial weapons, and sectors with high negative climate impact. The changes affect a broad range of euro- and USD-denominated ESG bond ETFs, including those focused on aggregate, corporate, and high-yield bonds across various maturities.
Among the impacted funds is the $1.6 billion BNP Paribas Easy MSCI World SRI PAB UCITS ETF (EWRD), as well as several regional and global MSCI SRI PAB ETFs. The firm will also rebrand several corporate bond ETFs, replacing the term ‘sustainable’ with ‘ESG enhanced’. The BNP Paribas Easy Sustainable Europe UCITS ETF (BJL6) is among those affected.
Additionally, the ‘ESG’ label will be dropped entirely from BNPP AM’s Europe factor range. The firm had already removed the ESG tag from its S&P 500 ESG ETF earlier this year.
The moves come in response to ESMA’s updated guidelines, which state that funds using ‘ESG’ or ‘sustainable’ in their name must allocate at least 80% of investments to environmental or social objectives and must avoid fossil fuel holdings, in line with PAB exclusions.
