Industry Updates

Amundi’s Lyxor acquisition casts doubt on ESG credentials

Climate campaigners raise concerns over the Amundi’s support for oil and gas developers

Theo Andrew

smoke stacks with smoke coming out of them

Amundi’s claim to be a sustainable finance leader has been called into question after it emerged its purchase of Lyxor is set to dramatically increase its coal holdings, a Reclaim Finance report has warned.

The report, titled Amundi: an investigation into Europe’s biggest investor, found “weaknesses” in the French asset manager's engagement policy with coal companies while backing companies targeting oil and gas expansion.

The findings cast doubt over the integrity of several climate initiatives Amundi engages in such as the Net Zero Asset Managers’ initiative while at the same time setting itself a target of reaching net-zero by 2050 and cutting its CO2 emissions in half by 2030.

Amundi completed its €825m acquisition of Frech rival Lyxor last month, making it the second-largest ETF issuer in Europe and is seen as a key purchase and highlights its broader shift away from active management towards passives in Europe.

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However, the report noted that assets not covered by its exclusionary coal policy will rise by 84% following the purchase.

Across its active business, Europe’s largest asset manager has several exclusion measures including companies that generate over 25% of their revenue from thermal coal mining extraction.

While Amundi applies a coal sector exclusion policy to its ESG ETFs, it said its non-ESG products “cannot apply systematic sector exclusions” due to its fiduciary duty, but that it could vote “against” management for corporates should they not meet its screening criteria.

Despite this, the report also found “weaknesses” in Amundi’s engagement strategy.

It said it voted at the annual general meetings of 13 coal developers last year, voting in favour of 78% of the resolutions proposed by the companies’ management.

This includes mining giant Glencore, despite its commitment to continue its coal operations beyond 2050.

Furthermore, the report found Amundi held more than €14bn worth of shares and bonds in the six European oil and gas majors, as of this month.

The findings come shortly after Amundi’s CEO Valérie Baudson made a series of ambitious pledges across its passive and active business as part of the firm’s ESG Plan 2025.

The firm is targeting a 50% AUM growth by 2025 from its wider passive platform which currently houses €282bn. It also wants 40% of its ETF range to be made up of its ESG ETFs by the deadline, up from 23% currently.

Last November, Amundi president Yves Perrier was appointed by the French government to head the financial sector’s climate commission while the group is also involved in several European Union lobbying groups such as the European Fund and Asset Management Association (EFAMA).

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

“Amundi might be a poster boy for the French financial sector on climate but its record is nothing to be proud of.

“Committing to net-zero while actively supporting oil, gas and coal developers is like buying more cigarettes while promising to give up smoking. It’s time for Amundi to live up to its word and start leading by example on climate.”

A spokesperson for Amundi said: “The exclusion Amundi was applying yesterday will apply to all the ESG ETFs post-Lyxor. We will apply our exclusion policy to the assets we are acquiring from Lyxor. Therefore, we are extending our sustainability policy to even more assets than before.

“This is already what we do with our ESG ETF range, and it is what we committed to doing in the new ESG 2025 plan – where we set out the objective to have minimum 40% ETF range in ESG by 2025.”

It added its “robust” voting policy was one of the five best asset management companies, according to Share Action.

In a bid to strengthen its policies, Amundi said the firm will be linking ESG performance objectives with the remuneration of 200 senior executives as well as all portfolio managers and sales representatives.

It added it will work with 1000 additional companies to define their strategies for reducing greenhouse gas emissions, voting at their annual general meetings and aligning remuneration packages with the strategies.

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