Industry Updates

Amundi ups sustainable investment thresholds on 46 ESG ETFs amid SFDR confusion

No changes were made to the indices or investment objectives of any of the ETFs

Jamie Gordon

ESG impact seed funding

Amundi has increased the minimum sustainable investments on 46 ESG and climate ETFs as the EU’s Sustainable Finance Disclosure Regulation (SFDR) requirements continue to evolve.

The changes, effective 31 August, saw strategies such as the $124m Amundi CAC 40 ESG UCITS ETF (C40) go from a 1% to 35% sustainable investment threshold while the $77m Amundi Index MSCI Europe SRI PAB UCITS ETF (EUSRI) increased from 10% to 40%.

All 46 ETFs now have minimum sustainable investments of 5%.

The firm noted there would be no changes to any of the products’ underlying indices, investment objectives or investment policies despite the shifts in minimum sustainable investment.

Amundi said in a statement: “Some progress has been made and following our discussions with a number of industry stakeholders…we decided to update these ETFs’ minimum sustainable investment commitment levels.” 

Last November, the firm downgraded roughly 100 ETFs – including 29 Paris-Aligned Benchmark (PAB) and Climate Transition Benchmark (CTB) ETFs – from ‘dark green’ Article 9 to ‘light green’ Article 8 under SFDR. 

Amundi said the move “in no way calls into question” the sustainability characteristics of its funds noting that it was a “deliberately cautious approach” to “protect investors and distributors from a significant risk of confusion”.

This “conservative approach” was adopted before the implementation of SFDR ‘level two’ in January, which outlined a minimum threshold of 100% sustainable investment for funds to be categorised Article 9. 

In April, the European Commission clarified PABs and CTBs are deemed to provide ‘sustainable investments’

“Under Article 9 of SFDR, products tracking PAB or CTB, often based on portfolios of shares or bonds of companies, are deemed to make sustainable investments,” the regulator said. 

The decision created the potential for the PAB and CTB-tracking ETFs offered by Amundi and other asset managers to be reclassified Article 9.  

Hortense Bioy, global director of sustainability research at Morningstar, said at the time such a mass reclassification would leave investors “completely confused”. 

Some 18 of the ETFs included in Amundi’s minimum sustainable investment upgrade at the end of last month are labelled PAB or CTB strategies.

The French asset manager’s recent decision could be just the latest step in issuers looking to reshuffle their range between SFDR classifications after BlackRock reclassified the iShares $ Development Bank Bonds UCITS ETF (DDBB) Article 9 last week.

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