Frédéric Janbon is an ESG evangelist. The chief executive of BNP Paribas Asset Management is resolute in his views that environmental, social and governance issues can and do play a big role in driving investment returns.
His conviction in sustainable investing is such that he has led a reorganisation of the €553bn asset manager around one objective: “To deliver long-term sustainable returns to our clients.”
“We have put sustainable investing at the very heart of our strategy,” says Mr Janbon.
It is a lofty goal and one that the fund unit of the French bank has received high praise for, including from ShareAction, the responsible investment organisation, which ranked it among the best asset managers in the world for ESG in a report this year.
Yet the challenges of sustainable investing — which aims to look beyond traditional financial metrics to issues from labour rights to climate change — is laid bare when we speak, just two days after fast-fashion retailer Boohoo was engulfed in a supply chain scandal.
The retailer’s share price dropped more than a fifth in one day alone, following a Sunday Times investigation that accused Boohoo of poor working conditions in its supply chain. Like many other asset managers that have been vocal about ESG, BNP Paribas AM ranked among Boohoo’s top 25 shareholders.
Speaking by video call from his London home, Mr Janbon is loquacious and serious, but also quick to joke. When asked about the Boohoo shareholding, he does not shy away from the question — a topic many peers have been reluctant to comment on in recent weeks.
Instead, he says, as the news broke, BNP Paribas AM immediately sought to speak to the retailer “to get their side of the story, and to get to know more to what extent they are exposed to these kind of issues”.
BNP Paribas Asset Management
Assets under management €408bn
Employees 3,187 (as at 31 December 2019)
Ownership BNP Paribas S.A.
The 57-year-old says the asset manager has always been an “active owner” of Boohoo, including voting against a pay resolution at the company’s annual meeting. But he admits BNP Paribas AM will have to take an even tougher approach in future.
“The fact that news came out recently forces us to be even more inquisitive with the management of this company about their practices,” he says.
There is also another lesson from the Boohoo story: the need for better information from companies on ESG issues, he says. He points out that there is no consistency in the level of data provided by companies on ESG issues, and even when companies disclose information in a standardised form, it is not audited by a third party.
“We are very much of the view that ESG or sustainable investing will be a major force in asset management over the course of the next decade. But for it to be more precise, for it to be a good driver of performance and a good way to limit the risk for the investments of our clients, it is critical that authorities at large do actually compel companies to disclose audited, standardised and precise information on these non-financial disclosures.”
Mr Janbon has held the top job at BNP Paribas’s fund arm since 2015, taking on the role after almost three decades at the bank. He joined Paribas, which later merged with Banque Nationale de Paris to form BNP Paribas, as a trader in 1988, working his way up the ranks including holding roles as global head of fixed income at BNP Paribas’s investment banking arm and as a special adviser to the group management.
Under his watch, the asset management business has had an overhaul, dumping the BNP Paribas Investment Partners name, integrating its various divisions, focusing on sustainability and rolling out new technology systems, including BlackRock’s Aladdin platform. As part of the reorganisation, the company has doubled down on five “core competencies”: high-conviction strategies, emerging markets, multi-asset solutions, private debt and liquidity solutions.
“We are fit for growth. We have fundamentally transformed this company both in terms of organisation, in terms of structure and in terms of systems,” he says.
Still, the coronavirus pandemic has delayed some of its plans. The company was due to cut its workforce by 10 per cent in France, as well as making “small adjustments” to staff numbers elsewhere in the world this year as part of the integration of its various arms and overhaul of its systems, “which effectively generates economies of scale”.
The move has been delayed partly because in France the plan was based on voluntary departures, and partly because Mr Janbon was uncomfortable making people redundant during a pandemic.
Frédéric Janbon’s CV
Born 3 March 1963 Montpellier
Total pay Not disclosed
1984-87 MSc in Engineering, AgroParis Tech
1988-91 Options & Swap Trader, Paribas
1991-93 Head of interest rates derivatives trading Europe ex-France, Paribas
1994-95 Head of interest rates derivatives trading and sales, France, Paribas
1995-96 Head of interest rates derivatives trading and sales, Japan, Paribas
1996—01 Global head of interest rates derivatives trading, global head of fixed income derivatives, BNP Paribas CIB
2001—05 Global head of interest rates group, BNP Paribas CIB
Dec 2005 — Nov 2014 Global head of fixed income, BNP Paribas CIB
Dec 2014 — Oct 2015 Special adviser to group management, BNP Paribas
Oct 2015-present Chief executive officer, BNP Paribas Asset Management
“We care for our staff. In some cases when the plan is not voluntary, the discussion we need to have with our staff members are not easy discussions and I thought it was not good to do that by Zoom.”
Despite this, while acknowledging the risks of a slow recovery, Mr Janbon believes BNP Paribas AM could fare well from the pandemic.
“This crisis, even though it is a disaster for the whole world, it is a great opportunity for us to go faster because it is playing to our strengths; playing to our technology strength, our ESG and sustainable strength and it is very much playing to our integrated model.”
As part of this push for growth, the chief executive is already on the hunt for companies to buy, ideally seeking those that are specialists in the five areas it has deemed its core competencies or else groups that could increase distribution channels for its products.
There are ongoing discussions with potential targets, he says. But when pushed for names, he laughs: “Now I’m going to pretend the line is very bad to not answer this question.”
For now, Mr Janbon is also looking forward to life after lockdown. He “adapted fairly well” to working from home and enjoyed spending more time with his children, aged between 17 and 23, but is itching to see more colleagues in person. He returned to his workplace for a day recently, a strange experience with only three others in their London building. “I had to wear a mask, I washed my hands god knows how many times. It was all very, very quiet,” he says.
While others have forecasted the death of the office as we know it, Mr Janbon is not convinced that coronavirus will drive such a dramatic shift, arguing that while working from home brings about benefits for some, there are drawbacks, “such as not having the sense of togetherness”.
There are lessons to take from the crisis, he adds. “We learnt quite a few things about the way we work. Meetings started on time, decisions were taken a lot faster, we focused on what was essential.”
Then the ESG evangelist points to one final lesson: how companies cared for their staff during this unrivalled period. “We noticed that in fact it would be an important investment driver,” he says.