Baroda BNP Paribas ESG Best-in-class strategy Fund-Reg (G)

The Scheme will invest minimum 80% of its net assets in companies in India, that have better performance based on ESG factors than their sector peers. As per SEBI Guidelines, the Scheme shall invest at least 65% of its AUM in companies which are reporting on comprehensive Business Responsibility and Sustainability Reporting (BRSR) and are also providing assurance on BRSR core disclosures. The balance AUM of the Scheme can be invested in companies having BRSR disclosures. The Scheme may also invest a small portion of its corpus in debt, money market instruments and InvITs to manage its liquidity requirements. The Scheme will implement an active strategy to have a diversified portfolio focusing on investments in companies having leading performance on ESG factors. ESG assessment will be based on ESG ratings from a SEBI Registered third-party ESG ratings provider, and internal proprietary ESG analysis. Based on this ESG assessment, companies in each sector group will be ranked into deciles. The Scheme would consider investing in companies ranked from first to fifth decile in its sector group from the investment universe. The Scheme will avoid investing in companies that fail to meet fundamental obligations in the areas of human and labour rights, protecting the environment and ensuring anti-corruption safeguards. Companies involved in alcohol, tobacco, gambling, and high adverse environmental impact would be excluded. This is to enhance scheme`s risk management and avoid reputational, regulatory and stranded asset risk. After using ESG filter of top 5 decile in each sector group to define the potential investment universe, the following are the broad parameters/factors that shall be considered while building the portfolio of companies. a) business and economic fundamentals driven by in-depth research b) Reputation of the management and track record c) long term growth prospects d) The financial strength of the companies, as indicated by well recognised financial parameters employing strong stock selection valuation parameters e) any other factor affecting a company`s business prospects We may, from time to time, review and modify the Scheme`s investment strategy if such changes are in the best interests of the unitholders and if market conditions warrant it.