BBVA Asset Management published its first report on environmental activity, based on the recommendations of the Task Force on Climate Financial Disclosures (TCFD). It is the first Spanish asset manager to make this commitment to transparency. The report includes the environmental progress of the asset management area and incorporates information on the risks and opportunities associated with climate change.
BBVA Asset Management is the area that groups the asset management activities of the BBVA group, with business in Spain, Portugal, Luxembourg, Mexico, Colombia, Peru, Argentina and Turkey. The BBVA Group's asset manager has been committed to sustainable investment for years and has been a pioneer in the application of ESG (Environmental, Social and Corporate Governance) criteria since it launched its first socially responsible fund in 1999. Currently, with data as of December 31, 2022, it manages €7.02 billion euros globally in sustainable investment solutions spread across 33 vehicles, including mutual funds and pension plans.
The TCFD report, which has been made public for the first time by the fund manager, details all the measures it is adopting as part of its strategic commitment to sustainability. The BBVA Group first published this report in 2020 and updates it on an annual basis.
BBVA AM, like BBVA, is aware of the role of banking and financial players in this time of change through our activity, and we are determined to play a relevant role and help our clients in the transition to that sustainable future,” the report explains. “As our clients' asset managers, our duty is to take advantage of the investment opportunities generated and facilitate plans for companies and governments to make the right investments, as well as to assess the risks for those who do not have plans to adapt.”
BBVA Asset Management's TCFD report is structured in four sections: Governance Model, Strategy, Risk Management, and Metrics and Objectives.
The sustainability governance model at BBVA AM is structured around a Sustainability Governance Group, which establishes the strategic direction in this area, together with the plans for its execution, and is monitored by the BBVA Asset Management & Global Wealth management committee. BBVA AM's sustainability strategy is aligned with that of the group and its priorities and execution plans are established in conjunction with the BBVA Group's Global Sustainability area.
BBVA Asset Management's strategy in sustainable matters is built around four pillars: the integration of ESG criteria in portfolio management; an exclusion policy, which covers certain economic activities and issuers that fail to comply with certain international treaties; a policy of involvement through voting at the shareholders' meetings of portfolio companies, as well as dialogue with companies and adherence to international commitments and impact investments aligned with the United Nations Sustainable Development Goals (SDGs).
BBVA has expanded the scope of its ESG integration policy to more countries in its business
Over the past year, BBVA AM has worked on each of these pillars: it has expanded the scope of its ESG integration policy to more countries in its business; it has developed a new exclusions standard; it has published its initial emissions reduction targets under the Net Zero Asset Managers (NZAM) commitment; and it has developed its own definition of sustainable investment, as required by the European Sustainable Finance Disclosure Regulation (SFDR).
BBVA Asset Management's climate risk management is integrated into the general risk management and control processes. During 2022, the asset manager worked on the main metrics for monitoring these risks, which were calculated and automated in systems.
In terms of metrics and targets, BBVA AM published its initial decarbonization targets in 2022, as part of its adherence to the Net Zero Asset Managers commitment in 2021. These targets reach 22% of assets under management. Over the last year, the methodologies, and metrics to be used, the types of assets included and the intermediate targets to be achieved by 2030 have been defined.
“Sustainability is an essential part of the future of society and the planet, but we are also convinced that it represents a great opportunity for our clients,” says Jaime Lázaro, Global Head of BBVA Asset Management & Global Wealth. “By incorporating it into our investment processes, we improve the quality of the products we offer, identify new investment ideas, reduce risks, make more complete decisions, and generate more consistent results over the long term. At the same time, we contribute to a development that does not compromise future generations and allows them to meet their needs.”