Amundi defends passive approach to ESG after ETF assets soar

Amundi has rejected climate campaigners’ criticism of its Lyxor acquisition, saying there is scope for including environmental, social and governance objectives in passive investing.

The French asset manager became the second-biggest provider of exchange traded funds in Europe at the end of last year, when it completed the €825mn acquisition of Lyxor.

However, campaigning 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 pledged limit would almost double.

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

This article was previously published by Ignites Europe, a title owned by the FT Group.

Lara Cuvelier, sustainable investment campaigner at Reclaim Finance, said Amundi needed to “fix its passive problem, stop supporting the expansion of fossil fuels and get tough with big polluters” if it wanted to be a climate leader.

“We recommend that Amundi close its loophole for passive investing,” she said. “A net zero commitment should go alongside a commitment to not working with clients with a lot of involvement in coal.”

Jean-Jacques Barberis, Amundi’s head of institutional client coverage and ESG, defended the group against the campaigner’s criticism, however.

“We don’t agree because we believe it’s possible to integrate ESG objectives within passive investing,” he said.

“We already do this with our ETFs, where we’ve committed to ensuring 40 per cent of our passive funds are ESG funds. It just depends on the index you use.”

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

Last month Barberis hit back at criticism of the pledge, after campaigners including Reclaim Finance said its targets were too vague.

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

In November, the French government appointed Amundi’s chair Yves Perrier to lead the efforts of French financial institutions in reaching alignment with the Paris climate goals.

But Cuvelier said Amundi should “lead by example” now its chair had been appointed to the role.

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

Reclaim Finance has previously criticised passive managers as a whole for failing to reduce exposure to coal.

*Ignites Europe is a news 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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