Amundi defends passive approach to ESG after soaring ETF assets

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Amundi dismissed criticism from climate activists over its acquisition of Lyxor, saying it was possible to include environmental, social and governance objectives in passive investing.

The French asset manager became the second-largest provider of listed index funds in Europe late last year, when it completed the acquisition of Lyxor for €825 million.

However, campaign group Reclaim Finance said the deal “has the potential to be a climate disaster” as it would mean coal investments not covered by Amundi’s promised limit would almost double.

Reclaim Finance predicted that Amundi’s passive investments will grow from €282 billion to €420 billion by 2025 as a result of the acquisition. Passive investments are “a key source of [Amundi’s] stakes in polluting companies,” the group said.

This article was previously published by Ignite Europea security held by the FT group.

Lara Cuvelier, sustainable investing campaigner at Reclaim Finance, said Amundi needed to “fix its passive problem, stop supporting fossil fuel expansion and get tough on big polluters” if it wants to be a climate leader .

“We recommend Amundi close its passive investing loophole,” she said. “A net zero commitment should go hand in hand with a commitment not to work with coal-heavy customers.”

Jean-Jacques Barberis, head of institutional and ESG client coverage at Amundi, however, defended the group against criticism from the activist.

“We disagree because we believe it is possible to integrate ESG objectives into passive investing,” he said.

“We already do this with our ETFs, where we have committed to ensuring that 40% of our passive funds are ESG funds. It just depends on the index you are using.

Barberis said the Lyxor ETFs would fall under a recent commitment by Amundi to exclude certain companies exposed to the oil and gas sectors from its portfolios by the end of 2022.

Last month retaliate to criticism of the pledge, after campaigners including Reclaim Finance said its aims were too vague.

Amundi joined the Net Zero Asset Managers initiative in July, setting itself the goal of reaching net zero by 2050 and halving its carbon dioxide emissions by 2030.

In November, the French government appointed Amundi Chairman Yves Perrier to lead the efforts of French financial institutions to align with the Paris climate goals.

But Cuvelier said Amundi should “lead by example” now that its chairman has been appointed to the role.

“Committing to net zero while actively supporting oil, gas and coal developers is like buying more cigarettes while pledging to quit smoking.”

Reclaim Finance has already critical passive managers as a whole for not reducing their exposure to coal.

*Ignites Europe is an information service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at igniteseurope.com.

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