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BOND EUROPE CLIMATE

CARBON OFFSET PLAN

More than a responsible investment in credit,
a real social and environmental impact.

Our Solution

Combining carbon footprint reduction with liquidity and a tangible impact on social and environmental issues.

LIQUID PORTFOLIO OF BONDS WITH HIGH ESG STANDARDS

LIQUID PORTFOLIO OF BONDS WITH HIGH ESG STANDARDS

The Plan provides exposure to a basket of European investment grade corporate bonds with high ESG standards in line with Febelfin Towards Sustainability initiative and UN Global compact principles and with strict financial criteria on liquidity, risk control and yield.

CARBON REDUCTION AND OFFSETTING

CARBON REDUCTION AND OFFSETTING

Bonds are also screened based on their issuers carbon emissions and energy transition strategy, following a scoring method provided by Moody’s ESG Solutions.

The remaining carbon footprint of the portfolio is offset every quarter through the purchase of Verified Emission Reductions certificates, issued by the Project Kasigau Corridor REDD+ in Kenya.

SOCIAL AND ENVIRONMENTAL IMPACT

SOCIAL AND ENVIRONMENTAL IMPACT

The Project protects threatened forests, the wildlife that live in them and provides communities with a sustainable and transformative development path. REDD+, Reducing Emissions from Deforestation and Degradation, is a climate change mitigation strategy introduced by the United Nations. The plus sign relates to additional benefits for the local community and biodiversity.

Combatting climate change together

From Kyoto to Paris, the major agreements over the last 30 years.

1992

United Nations framework convention on climate change (UNFCCC)

The UNFCCC is the first international climate agreement within the UN framework. It seeks to reach a better understanding of climate change, proposing solutions for cooperation between countries so as to limit the effects of climate change. To date, it has been ratified by 195 countries and recognises three main principles: the precautionary principle, the principle of common but differentiated responsibilities and the principle of the right to development.

1997

Kyoto Protocol Application 2005-2020

In the mid-1990s, the signatories of the UNFCCC became aware of the need to take more stringent measures to reduce greenhouse gas emissions (GHG). In 1997, they adopted the Kyoto Protocol which sets the target for the 38 most industrialised countries in the world to reduce their overall emissions of 6 GHG by 5% compared with the levels observed in 1990. Three flexible mechanisms were put into effect to help countries achieve this: Emissions Trading (ET), Joint Implementation (JI) and the Clean Development Mechanism (CDM).

2015

Paris Conference on climate change (COP 21) Application 2020-2030

In December 2015, 195 countries adopted the very first legally binding universal agreement on climate change, which will come into effect in 2020. The Paris Agreement lays the foundations for an international action plan aiming to limit the planet’s temperature increase to 2 degrees Celsius compared with pre-industrial levels. A key point of the COP 21 was discussion surrounding the lack of climate financing in order to achieve the 2°C objective.

2016

17 Sustainable Development Goals (SDGs)

Adopted unanimously in September 2015 at a historic United Nations Summit, the SDGs came into effect in January 2016 for a time horizon of 2030. The SDGs initiative aims to involve all countries and civil society as well as covering all aspects of sustainable development: economic growth, social inclusion and environmental protection. The flagship objectives are to put an end to all forms of poverty, to combat inequalities and to tackle climate change.

For more information visit United Nations Climate Change

How it works

Eligible Bonds: a pool of liquid Bonds with extra financial data representative of the European Investment Grade bond market

LIQUID ESG

ESG Filters

Controversial activities : excluding bonds which the issuer has a  significant involvement in controversial activities such as Alcohol, Civilian Firearms/Military, Gambling, Nuclear Power, Pornography or Tobacco;

BNP Paribas Asset Management ESG Score: excluding the ones with a BNP Paribas Asset Management ESG decile of 9 or 10 (10 being the worst decile);

Moody’s ESG Solutions ESG Score: selecting the ones with a Moody’s ESG Solutions ESG score among the top 75% and above 30/100.

Liquidity

A succession of a dozen of criteria such as amount outstanding, minimum tradable amount, credit rating, time-to-maturity, coupon type, maturity type are applied in order to discard the bonds which are not liquid enough.

Risk Control

A long-only portfolio comprised of bonds whose weight is between 0% and 1.5%, resulting on a minimum of 67 bonds

Diversification rule with a maximum exposure of 5% per issuer;

Use of control mechanism on the tracking error

Promising yield

The bonds eligible for inclusion in the portfolio are in the top 75% of the European Investment Grade Market in terms of yield-to-maturity

Performance objectives in line with the Benchmark

A controlled tracking error aiming at delivering a return in line with the European investment grade bond market

Leading Energy Transition

Following a scoring methodology by Moody’s ESG Solutions, only bonds which issuers have the most robust and ambitious energy transition strategy can be included in the portfolio in order to contribute positively to the overall Energy Transition score of the portfolio

Carbon Reduction

The carbon footprint of the final portfolio is reduced by at least 50% compared to the European Investment Grade Market.

Carbon Offset

BNP Paribas Asset Management France determines the amount of VER certificates necessary for offsetting the remaining carbon footprint of the portfolio (Scope 1 + Scope 2) every quarter:

  • Scope 1 concerns the direct emissions of companies (e.g. fuel consumption)
  • Scope 2 concerns indirect emissions due to the business’s activity (e.g. electricity supplier’s fuel consumption)
  • Scope 3 concerns indirect emissions due to the use of products sold (e.g. fuel consumption by the client’s electricity supplier due to use of the product). With the available data, the CO2 emissions relating to Scope 3 are difficult to access and incomplete. Scope 3 is therefore not taken into account.

VERs from the Kasigau Corridor REDD+ project will be purchased and immediately cancelled so as to materialise the offsetting and be properly recognised.

Voluntary Carbon Market

VER certificates, also known as “voluntary carbon credits”, are bought in the voluntary carbon market, which coexist with regulated trade and exchange systems within the Kyoto protocol and other regional agreements. VER certificates tend to be cheaper than the carbon credits sold in the regulated market, subject to higher demand by large energy installations.

CARBON FOOTPRINT REDUCTION & OFFSET

IMPACT

When Carbon Offseting brings Social and Environmental Impact

The proceeds of the VER certificates are allocated to the project Kasigau Corridor REDD+ in Kenya, supporting local community, wildlife and forestry conservation. Investors benefit, through their financial contribution in a highly positive social and environmental impact project, from an enhanced brand value and reputation, which will ultimately attract the increasingly climate conscious consumer base.

Rebalancing

This investment process is repeated on a quarterly basis so as to update both bonds portfolio and the amount of VER certificates to be purchased.
Rebalancing dates: beginning of March, June, September and December.

The impact of your investment

Benefits of the Kasigau Corridor REDD+ Project.

A positive climate impact

  • Protection of more than 500,000 acres of Kenyan forests under threat, securing the whole migration corridor between the Tsavo East and Tsavo West national parks.
  • The project will make it possible to offset over 1 million tonnes of CO2 per annum for the next 30 years.

Wildlife protection

  • Protection of over 300 wildlife species, including more than 2,000 endangered African elephants and other endangered species such as cheetah and grevy’s zebra.

Social co-benefits

  • Creation of more than 300 jobs, the majority of which are filled directly by local community, with 30% of the workforce being female.
  • Development of eco-tourism, agroforestry and jobs linked to parkland conservation.

A fair share of the funds generated by the VER certificates

  • A third of the income is paid back to the 4,500 landowners involved in the Project.
  • The project’s expenditures are then paid, including the salaries of over 300 local employees.
  • The remaining proceeds are split between Wildlife Works and funding local community projects, such as education scholarships and access to water initiatives.
Contributions to the United Nations’ Sustainable Development Goals

Wildlife Works

A REDD+ Project Developer and Manager.

1997

Creation of Wildlife Works

1998

Launch of the first project in a wildlife sanctuary in Rukinga, covering 80,000 acres of forest

2010

Expansion of the wildlife sanctuary to protect 500,000 acres in the Kasigau Corridor

2011

Kasigau Corridor world’s first REDD+ project to be verified under the Verified Carbon Standard (VCS) and the Climate, Community and Biodiversity Standards (CCB standards)

2016

The International Finance Corporation, from the World Bank group, selected the Project as underlying for the first “Forests Bond” ever issued

2017

Kasigau Corridor REDD+ project Winner of Best Offsetting Project by Environmental Finance

2019

The protection area now protects over 500,000 acres of forest, preserving the habitat of over 300 species and providing direct benefits for over 120,000 people

Partnership with BNP Paribas

Check the full article here and visit About Global Markets for more information on our Global Markets Sustainable offer.

For more information visit www.wildlifeworks.com

Wildlife Works counts among its main shareholders Allianz and The Kering Group, who also offsets its unavoidable emissions through the Kasigau Corridor REDD+ project.

BOND EUROPE CLIMATE CARBON OFFSET PLAN

BUILDING BRIDGES BETWEEN CREDIT INVESTMENT AND IMPACT TRIGGERING
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