Here’s How BNP Paribas Became the World’s Best Bank for ESG Data and Technology

Environmental Social and Governance [ESG] has become quite the buzzword in financial circles of late and brands the world over have been clamoring to make the most of technologies and investment opportunities which are focused on pushing responsibility in these areas.

The effects of manmade climate change are being felt through ever more extreme weather events. Meanwhile, social justice related events – such as the death of George Floyd in police custody which sparked the global protests and unrest of last year – are all contributing towards ESG issues becoming more of a priority for financial brands and investors.

According to Reuters, a record $649 billion was invested into ESG-focused funds worldwide through in 2021, up from the $542 billion and $285 billion which flowed into those same funds during 2020 and 2019, respectively, with ESG funds now accounting for 10% of all worldwide fund assets.

BNP Paribas

As one of the world’s most well-known financial brands, BNP Paribas has been working hard to establish new standards for ESG financial data and believes it has cracked the issue at long last – a fact which would seem to be supported by the French bank recently being named World’s Best Bank for ESG Data and Technology 2021 in the latest edition of the Euromoney Awards for Excellence.

"Planet Earth is on red alert, recent studies show," said BNP Paribas in a blog post. "To fight climate change, companies are at different stages of their transition to net-zero. Regulations are being put in place in various jurisdictions, also at different paces. Sustainable finance is a key lever in decarbonizing the economy and ESG data is a gold mine to best understand where clients, partners, suppliers and prospects stand in their net-zero journey."

The issue with ESG data historically has been there wasn’t enough of it. However, now that is no longer the case, the problem becomes that there is too much and a lack of standardization which makes varying streams challenged to compare and therefore less dependable or meaningful when it comes to establishing the ESG credentials of investment opportunities.

BNP Paribas believes solutions for this challenge are now beginning to emerge, thanks to the processing and analytical power of artificial intelligence technology. Once ESG data is collected, it can be stored on a platform which is able to easily parse each piece of data and make it available for individual viewing. Artificial intelligence algorithms can then go to work matching collected data from different channels with a single given client.

"Ultimate goal: to display all ESG data available on a client or a prospect with a simple search on a dedicated platform," continued BNP Paribas. "Such platforms are key to building a complete database to share information between different entities accessing and using the platform. This allows a mutualization of information and favors collaboration to provide one-bank advice and services for clients, and it helps determine if the bank has enough data on the client or if there is a need to buy data from an external provider."

ESG AI

Data accessibility is only one piece of the puzzle, however, and investment relationship managers also need a way to process that data and use it to develop a complete picture of the client and establish their ESG credentials.

Thanks to AI, this becomes possible with a few clicks and relationship managers and risk analysts can process information more rapidly and with a greater degree of accuracy than would have previously been possible. Relevant information can be highlighted and an ESG score for each client can be generated, all of which can be used to inform and support any ESG investment related decision-making process.

According to BNP Paribas, it is also possible that this centralized platform approach to the sourcing and managing of ESG data will become even more relevant when it comes to meeting new regulatory requirements, such as EU taxonomy, in which reporting plays a key role.

"Analyzing and processing ESG data is still very new, and the context continues to evolve," concludes the company. "There is a strong need to be agile and be able to adapt to this moving context. Along with growing regulations, open source offers a good solution to create standards so that companies share the same language when talking about sustainability. Going further, we can imagine that artificial intelligence can be one of the keys to build the sustainable finance of tomorrow."

Final Thoughts

ESG data is going to continue to become ever more relevant when it comes to assessing the value of investment opportunities. As environmental, social, and governance related issues continue to dominate headlines, the value of making investments in areas which directly impact these concerns is going to increase in sympathy.

You can hear BNP Paribas Managing Director and Chief Data Officer for CIB North America, Jean-Christophe Lionti, speak at FIMA 2022, taking place in June at the Westin Copley Place, Boston, MA.

Download the agenda today for more information and insights.