The BNP Paribas European Infra Debt Fund received the nod for the Infrastructure fund of the year award after one Environmental Finance Sustainable Investment Awards judge lauded its "straightforward" strategy focused on the "appealing and different" area of infrastructure debt.
BNP Paribas Asset Management infrastructure debt head Karen Azoulay – who manages the €474 million ($564 million) fund – told Environmental Finance that sustainable investment in infrastructure was particularly interesting because their sustainability benefits are "usually tangible and easily perceptible" to investors. For example, investment in fibre optic networks in rural areas provides a very direct social impact by bringing high-speed internet to underserved communities and renewable energy infrastructure offers a clear environmental benefit.
The fund uses independent data provider Iceberg Datalab to measure the environmental benefits of the portfolio – which is focused on impact infrastructure investments – including factors such as avoided emissions and alignment with the Paris Agreement goals. Based on this assessment, BNP Paribas said that the portfolio – which also impressed the judges with its level of diversification – has a 40% better impact of the environment than average infrastructure assets.
Azoulay said that the debt focus of the fund did result in some additional challenges for a sustainable investor, however. She said that as a debt investor there is often a limit to the data access they can secure for an asset. In contrast, equity investors – as owners of the asset – often receive more extensive data disclosure.
Nonetheless, Azoulay said the broader sustainability team at BNP Paribas has helped develop an ESG methodology dedicated to the strategy which allows the fund to secure an ESG score for each of its assets.
“We complement this assessment with a social and environmental impact analysis for each investment, produced by an independent expert,” she said. “It is quite rare to have such a specialised team available to work on these issues.”
Although the fund is already closed and the capital fully committed, it will continue to engage with project sponsors to ensure that the sustainability benefits they offer are delivered upon. In addition, BNP Paribas has already launched a second vintage infrastructure senior debt fund and a new junior debt fund which will be managed using the same ESG strategy going even a step further with quantified impact targets.
