Investment Week: Amundi ETF on ESG engagement priorities and emerging trends
Investment Week spoke to Amundi ETF ahead of its sponsorship of the Women in Investment Awards 2023 about what the group is doing to lead the ESG transformation across the business, engagement priorities and emerging trends for investors.
Caroline Le Meaux, Global Head of ESG research, engagement and voting at Amundi, discussed how the group can use its influence to engage with companies to bring about change. She highlighted Amundi has developed a lot of active dialogue with companies, including engaging with over 2,100 issuers last year on a number of key areas.
We have a strong engagement campaign around climate, but we also engage around everything related to natural capital preservation, including biodiversity loss, water-related matters and pollution.
"We have strong engagement on what we call ‘social cohesion' that covers human rights and everything directly and indirectly related to employees. For example, you will find a strong engagement campaign on the living wage. Another pillar of our engagement is everything related to the impact of a company on societal topics, like cyber security, digital rights, or even fiscal responsibility."
In addition, Le Meaux said the group has strong engagement activities focused on the quality of company governance and around the AGM season, when the group likes to alert a company when it is thinking of voting against them. "We will have this dialogue because what we really like is for the company to improve so we don't need to vote against them," Le Meaux explained.
Diversity & Inclusion
In terms of engaging on Diversity & Inclusion, Le Meaux said the team has different ways of approaching this area. "Firstly, we look at the board level. We vote and have criteria for developed markets where we want a third of board members to be women. The exception is Japan, where we are so far from there that we are less demanding. We have engagement with companies that are behind and have asked them to improve, especially in Japan.
"Globally, we also engage to look at how many women are in top positions compared to the level of women inside the workforce. Apart from gender diversity, we have a lot of discussions about inclusion, including for disabled people in the workforce."
In terms of measuring progress on the group's engagement initiatives, Le Meaux said improvements can be quite slow but it has developed its own tool to track this at company level and identify milestones. This can help the team decide when its engagements need to be escalated, including through voting, filing a resolution, asking a question at a General Meeting or even lowering its internal ESG score
Meeting client needs
Frederic Hoogveld, Head of investment specialists and market strategy at Amundi ETF, then explained how Amundi ETF works with clients to meet their changing needs on ESG and sustainability.
"My clients are typically asset owners, distributors, and asset managers that are looking for index solutions for ESG," he said. "We need to understand our clients' needs very precisely because there is not one solution that fits all needs and each investor will have different objectives in terms of responsible investment."
He said another key element of the discussion with clients is looking at what can be done today but also considering new solutions.
"The ESG and climate investing space has been evolving very quickly over the past few years and continues to evolve as new data sets come on the market notably because of new regulations. We are thinking ahead to develop responsible investment solutions," he said.
In terms of emerging trends in the ESG and responsible investing space that continue to develop, Hoogveld said biodiversity loss mitigation is an important trend from a portfolio management perspective.
He also sees another trend emerging: "We have received increasing client interest on EU taxonomy and how it can help investors direct flows towards sustainable activities according to the European Commission definitions."
Finally, in terms of key areas for future engagement, Le Meaux highlighted biodiversity and the strong development of the social pillar.
"I would say human rights, so we have increased our engagement a lot around forced labour, and cyber risk or digital rights, so areas where a new dynamic of the economy might pose a risk."