The BNP Paribas ESG Global Survey 2017 looks at the relationship between asset owners and asset managers, and how the obstacles to ESG are shifting around the world.

What's next for asset owners and managers? ESG integration is the incorporation of ESG factors into financial analysis and investment decision-making in order to enhance investment returns and mitigate risk. Asset managers and asset owners plan to double their investment in ESG driven strategies over the next two years however, asset managers are concerned about the cost of incorporating ESG factors.

Our ESG Global Survey 2017 is based on a global survey of 461 asset owners and managers conducted during February to April 2017. It looks into the relationship between asset owners and asset managers, how the obstacles to ESG are shifting, and at the different patterns of activity that are emerging around the world.

According to the report, 79% of respondents incorporate ESG, either in how they invest, as asset owners, or in terms of the products they market, as asset managers. Of those asset owners that incorporate ESG, the survey found nearly half have 25% or less invested in specific ESG strategies but plan to increase this to 50% or more over the next two years. Similarly, of those asset managers that incorporate ESG, 40% currently market 25% or less of their funds as either ESG or responsible investing funds. However, this figure is set to climb significantly over the next two years, with more than half (54%) planning to market 50% or more of their funds as ESG products in two years.

Challenges: the capability gap

The main challenges: obtaining and analysing ESG data will require new tools, resources and skills for both asset managers and owners.

The survey found that 55% of respondents (64% of asset owners and 47% of asset managers) are concerned that a lack of robust data could act as a barrier to greater adoption of ESG today, though this drops to 15% (22% of asset owners and 8% of asset managers) in two years' time.

A lack of advanced analytics is also a significant concern for both respondents, with almost a quarter (23%) citing this as a future barrier, suggesting the need to invest in technology and specialists. While the industry expects to capture data effectively within two years, the ability to draw conclusions from the data will remain a challenge. That is where smart data and ESG specialists will step in.

Asset managers: cost and product concerns

Building new resources will require investment and asset managers are worried costs will mount. Asked about their views on barriers to deeper integration of ESG across their investment portfolios, 31% of asset managers cited costs as their biggest challenge over the next two years. It was also the single most important future barrier cited by all respondents.

28% of asset managers are also concerned they do not have the ability to meet asset owners' product needs with regards to ESG. The same number foresees this being of concern in two years' time.

Alternative asset classes becoming increasingly 'ESG aware'

The study also identified a planned shift in ESG allocation over the next two years, into alternative assets. Asset managers and owners expect their investment in ESG alternative assets, including hedge funds, infrastructure, real estate and private equity and debt, to increase by 20% in two years. Conversely, ESG allocation towards public equities in developed markets – which represent almost half of ESG allocation now – is expected to fall by 26% over the same period.

Across the investment industry and around the world, there is clear recognition that ESG factors are of vital importance – to governments, regulators, and institutional investors – and ultimately to asset managers as they seek to satisfy their fiduciary duties and meet investor demand.

Every entrepreneur will tell you that financial markets are unpredictable, entailing inherent risks. We provide tailored solutions to protect your business as you navigate these volatile markets.

Whether you’re a small or large business, operating domestically or internationally, one thing is certain: if you enter a market and do your utmost to grow your business, sooner or later there inevitably will come a time when you expose yourself to risks. Frédéric Raxhon, Head of FI Midcap Sales, BNP Paribas Fortis Transaction Banking, is our go-to expert. Here, he explains how BNP Paribas Fortis helps customers manage this uncertainty.

Raxhon knows how market volatility can impact the daily operations of small, medium and large enterprises. Thanks to his experience of working as a banker in corporate finance, shares and derivatives, and advising holding and listed companies, he understands how the market works like no other.

Raxhon: "We are keenly aware that price uncertainty, in the form of volatility on the financial markets, can have a serious impact on the operations and profitability of businesses. That’s why we constantly monitor the markets and their volatility: if prices fluctuate sharply, our customers run the risk of buying high and selling low. The past few years are a good example of what can happen, with a sudden rise in interest rates, an energy crisis with very volatile prices, and a sharp rise in inflation. We will continue to see volatility in these markets, due to geopolitical tensions and ongoing wars. However, elections can also cause volatility, as they often cause a change in economic policy. President-elect Donald Trump has already said that he will hike tariffs on goods coming from outside the U.S., which will have an impact on global growth and inflation. The transition to a more sustainable society because of the energy transition, however positive this may be, is also a source of uncertainty. Companies will be required to make significant investments, and it is not yet clear which technologies will prevail.

All of these factors show that companies need guidance in the form of a tailor-made solution to ensure that volatile markets minimise the impact on their operations so that they can focus on their core business."

Solution-oriented

The solution to this volatility comes from a partner who is a market leader when it comes to safeguarding national and international business.

Raxhon: "At BNP Paribas Fortis, this often means managing the risks of companies that have a number of straightforward wishes: they want to conduct business on a daily basis without unnecessary complications; buy at a stable price where possible; pay wages in a stable environment; sell to customers with a profitable, stable margin, and so on. If they experience market uncertainty in their business operations, we are there to advise them and suggest solutions in different scenarios. This can range from companies that want stability when buying or selling goods in another currency, to controlling fluctuating interest rates on current or future loans, or even creating a stable financial environment in which they can steadily pay their wages. We also hedge raw materials: companies that require large quantities of energy, metal, or wheat, for example – just a few of the commodities that are subject to price fluctuations –  can rely on our expertise to turn their uncertainty into certainty. When companies are calculating their budgets for the coming years at the end of the year, assumptions about budgets and costs are a factor that future markets do not take into account. This, in turn, could lead to inconsistencies in business operations during the next financial year. We regularly suggest solutions for this, which inject trust into the entire process. We help entrepreneurs make their business more resilient to market fluctuations. Because at BNP Paribas Fortis, we are always focused on finding solutions, in any given scenario."

International intelligence

Belgian companies are increasingly expanding their horizons, which is why an international perspective is so crucial.

Raxhon: "Everything is intricately connected in the economic space. The energy crisis, for example, was not a national crisis. In Belgium, electricity prices were directly impacted by the drop in nuclear power production in France in 2022. The American elections have a direct impact on international business, with anxiety gripping investors and the markets. And I can give you many more examples.

Moreover, we expect this interdependence and volatility to continue for quite some time: there are a large number of economic and global trends that are feeding this uncertainty. And that is why it is so important that we keep up with developments in this uncertain global environment. At BNP Paribas Fortis, we rely on a global network of experts who are always on the lookout for the latest updates. Whatever happens and wherever it happens, there are always people from our bank on the ground who monitor the situation and provide us with real-time advice on how best to inform our customers. This network has proven its worth time and again, both for us and our customers."

A subscription to build customer loyalty, reinvent yourself in times of crisis and buy better: Emna Everard saw that as exactly the right way to launch and maintain her Brussels-based start-up.

Born into a family of dietitians, Emna Everard knows what it means to eat healthily. "At the age of 12, I was already deciphering packaging labels. My dream was to open a supermarket one day where you could shop with your eyes closed", she recalls.

And because Everard has entrepreneurship in her bones, that’s exactly what she did. In 2016, just before the end of her university studies, she launched the “healthiest online supermarket on the market”: Kazidomi. Her standards are high, both in terms of composition and taste. Kazidomi selects products carefully, enabling its customers to buy healthy, mainly organic, plant-based products with complete confidence.

The loyalty programme

Six months after its launch, Kazidomi’s growth is accelerating thanks to the launch of its loyalty programme. A 59 euro subscription offering 20–50% discounts on all food, cosmetics or care products available online. Profitability and savings guaranteed.

This was followed by a first fundraising of €50,000 in 2017. Kazidomi is growing, expanding the size of its stock and developing its marketing. Everard hired her first two employees. Sales grew rapidly and literally exploded during the COVID-19 pandemic. "Consumers suddenly had time to think about their health and well-being and were doing most of their shopping online," she adds.

How did you reinvent yourself?

The post-crisis period was a turning point. "Kazidomi had to reinvent itself. We wanted to have financial stability and avoid any dependence on external resources," continues Everard. Together with her teams, she looked at their cost structure, operational efficiency and marketing. After these reflections, the aim was no longer growth at any price, but the company's long-term viability and financial health, thanks to an intelligent reorganisation.

Two acquisitions would subsequently enable Kazidomi to boost its growth, creating significant synergies: "Smart Fooding" in August 2022 and "Bébé au Naturel" a few months later, a business specialising in healthy products for babies and their parents. "With Bébé au Naturel, we doubled the volume of orders sent out," adds Everard. "This has allowed us to get a better rate from our carriers and reduce costs."

A responsive and attentive bank

As the Brussels start-up’s bank, BNP Paribas Fortis granted it three loans for its launch, between 2016 and 2019. This support came naturally, with Kazidomi’s commitments in terms of Environmental, Social and Governance (ESG) objectives perfectly aligned with the bank’s strategy. "We joined the BNP Paribas Fortis Innovation Hub programme and our relationship manager – who knew the start-up environment extremely well – was immediately enthusiastic and very attentive. He believed in our project, followed it closely, advised us to participate in a series of events to meet other players whose background and profile would be of interest for us," explains the Entrepreneur of the Year 2019.

But the support didn't stop there. "In December 2022, it was thanks to BNP Paribas Fortis, among other things, that we were able to acquire “Bébé au Naturel”. Start-ups like Kazidomi need a high level of responsiveness from their bank. When there is a company to buy, or another opportunity, things have to move fast. Analysis of the file, provision of funds: BNP Paribas Fortis has always been responsive and enthusiastic and has supported us in 99% of our requests," says the CEO enthusiastically.

Kazidomi is ready to change the world. Discover even more inspiring entrepreneurial stories.

Cosucra is investing in the decarbonisation of its production processes. Their focus is on using fibre and plant-based protein from chicory and peas for a healthy and less polluting diet.

Belgium’s Hainaut-based Cosucra has been operating since 1852. The company is quite small with 365 employees, but its activities have evolved over time. From the 1980s onwards, sugar beet processing gave way to chicory and yellow peas. Also, sugar was replaced by inulin and pea protein.

"Many families lack the time to put a fresh meal on the table every day. With our products, the industry can offer them easy, quick and nutritious meals," says Eric Bosly, CEO of Cosucra. "Nutritionists stress the importance of fibre and plant proteins for health, and such a diet has a positive impact on our carbon footprint."

New investors

To take their decarbonisation a step further, in 2023, the company launched a seven-year investment plan worth EUR 150 million. “We are keenly aware of the climate crisis, so we wanted to make this transition fast,” says Bosly. “That's why we brought three investors on board who share our values and are willing to commit in the longer term.”

Long-term relationship

Cosucra and BNP Paribas Fortis have a long-standing partnership. "The bank has supported us in expanding to Denmark and the United States. It's of great value to have the same contact person for setting up the financial structure of subsidiaries, opening accounts abroad, etc. We also meet regularly, which means we can count on the expertise of teams specialised in the food industry. Their macro vision complements that of our local account managers who know our business well."

Same market conditions

Cosucra’s efforts will result in a 55% reduction in CO2 emissions within three years. Yet, decarbonisation is just one of Bosly’s bold ambitions. "We are pushing for the same market conditions as animal proteins. Why, for example, is 20 per cent VAT levied on pea-based milk while for cow’s milk, this figure is under 6 per cent? Plant-based products are also more expensive because you can't achieve economies of scale due to the lower quantities required. If you consider all the “negative external effects” of animal products on human health and the environment, our sector deserves support until we reach a certain scale."

Change of mindset

The entrepreneur also laments how the retail sector uses meat as a decoy product, lowering its margins to offer consumers an attractive price. "In times of inflation, that price difference is all the more detrimental to us. This is why a change of mindset is essential. Nutritionists say that a weekly serving of just 200 to 250 grammes of meat is enough to get the nutritional benefits with no negative impact. But at the moment, most Belgians consume 200 grammes of meat per day."

Bosly also cites competition from imported agricultural products as an obstacle.

Cosucra is ready to change the world. Discover even more inspiring entrepreneurial stories.

"The European Green Deal aims to reduce inputs by half, leading to the ban of many herbicides, among other things. Farmers should be supported in this transition. And a company like Cosucra, which buys chicory and peas within a 200-kilometre radius, is not on an equal footing with strong Chinese competition."

Since 1796, Brepols has been producing diaries that allow you to better plan your time. The team is fully committed to people, the planet and prosperity.

"From Turnhout to a branch in Paris, our 110 employees create tools that help our customers manage their time better. And that benefits their work-life balance," says Finance Director Philippe Pissens. "Quality, craftsmanship and creativity are at the heart of our products. Brepols’ diaries, calendars and notebooks are not disposable products - they easily last a year. We also make business leather goods under the Maverick brand and and we have launched a brand-new collection of high-quality notebooks under the brand name "de KEMPEN". In addition, we distribute the famous Moleskine notebooks. Finally, there are our bookbinding activities," he says. Brepols’ main markets are the Benelux and France.

Financially on track

Since starting out in 1796, Brepols has seen many trends and developments come and go. The last few years have been marked by growth. This is thanks to the Financial Director, who came on board in 2000. With turnover of EUR 17.4 million in 2021, EUR 19.6 million in 2022 and EUR 20.8 million last year, the company is clearly on the right financial track. "These figures are not just a result of price increases. We are a strong company with a solvency of 70 per cent, which means that we only finance 30 per cent with external funds," he explains.

More than planting trees

"Since 2009, we have only used Forest Stewardship Council (FSC)-labelled paper. For every tree cut down, a new one replaces it. But there's always room for improvement. In 2022, we launched a project group comprising staff across the company. We call it P3, because we focus on people, the planet and prosperity."

The project group analysed the company’s strengths and weaknesses, with the employers’ organisation Voka acting as a sounding board. “We certainly didn't want to make the mistake of greenwashing,” says Pissens. Specifically, Brepols developed 18 action points, which means it already covers nine of the 17 Sustainable Development Goals. In addition to a charter, there is a code of conduct that suppliers must sign and respect. Other initiatives include focusing on local production, limiting residual waste, reducing energy consumption and developing a HR policy that takes diversity and inclusion into account. “The aim of this project group is to create internal and external support and communicate clearly with all our stakeholders.”

Fluid organisation

"Honesty and transparency towards our employees are top priority," Pissens continues. "We have intensive consultations with them, both formal and informal. We deliberately opt for a fluid organisational model, between the hierarchy and the self-managing teams, and there has been a high level of participation. This is crucial as a quarter of our employees will be retiring in the next three years. In this context, we also purchased cobots, which makes the work less physically demanding for our staff."

Clear communication

Pissens emphasises the importance of clear communication to all stakeholders, including its financial partners, such as BNP Paribas Fortis. "The bank has become key to our business operations. We provide our relationship manager with detailed figures and keep her up to date with our sustainable ambitions. Our contacts at BNP Paribas Fortis not only provide us with information about financial products; they also give us tips, such as measuring our energy consumption and the possibilities for subsidies to install solar panels, for example. We have an effective two-way communication. Our collaboration has grown into a real partnership. In our business, paying attention to Environmental, Social, Governance (ESG) aspects is the benchmark in every consultation," Pissens concludes.

Quote

"The bank has become a key figure in our business operations”
Philippe Pissens, Finance Director Brepols

Brepols is ready to change the world. Discover even more great stories from entrepreneurs.