Europe’s biggest asset manager has called on its peers in financial sector to better serve clients by stepping up efforts to bring greater clarity on the use of standards and regulations that govern responsible and sustainable investing.
Paris-based Amundi, which has some 2.000 billion in assets under management, warned that a slower transition risks bringing “huge” environmental, financial and economic costs. Amund said this year will be “year of acceleration” for responsible investment, not only in Europe and China, but also in the U.S., where the Inflation Reduction Act has marked a breakthrough for green technology incentives.
In 2024, Amundi expects that asset managers will make their products more transparent and make it clearer how their company’s overall commitments align with the specific goals of each product. Regulators, it said, will be crucial in ensuring this transparency and in preventing divisions in discussions by establishing a common set of standards for everyone to follow.
Critical
“The coming years will be critical,” said Elodie Laugel, Amundi’s Chief Responsible Investment Officer at Amund, in a statement to mark the presentation of a paper on responsible investment. “A slower transition would certainly bring huge environmental, financial, economic costs that need to be carefully identified.”
Amundi’s report was published on the same day that Morningstar released calculations showing that global net inflows towards ESG and sustainable funds have reversed for the first time ever. Morningstar said that funds paid back 2.5 billion dollars to investors in the fourth quarter, as especially US-based investors withdrew funds. Europe however continued to see inflows for sustainable funds.
‘Stay the course!’
Amundi remains, however, upbeat on the prospects for responsible investment strategies.
“Despite challenging market conditions, responsible investment flows keep increasing in the long run,” said chief investment officer Vincent Mortier (photo). “Favourable trends should continue to support its future development as 67% of global asset owners are convinced of the materiality of ESG factors. In addition, we expect thematic and impact strategies to dominate the market in 2024 and onwards.”
“We see great opportunities if the world enters into a steady and orderly transition scenario,” Elodie Laugel, Chief Responsible Investment Officer. ”Investors should stay the course! Consistency and clarity around the investment value proposition will be key components of their success.”
Amundi’s report, ‘Responsible Investment Views 2024’, has identified six markers that point to structural trends from which investors may benefit.
- Green technology and clean energy will benefit from the US Inflation Reduction Act and the EU Green Deal Industrial Plan;
- Net zero investment frameworks will support a gradual reallocation of capital and mitigate the energy market volatility;
- Blended finance, involving collaboration between private and public entities, will play a critical role to close the climate financing gap with emerging countries;
- Improved data on biodiversity and nature related actions will lead to more fund allocations towards environmental measures;
- More capital is expected to flow in to support sustainable and inclusive growth as a result of the EU Sustainable Finance Action Plan;
- More and more investors are recognising ESG as material.
The current backlash against ESG investing, especially in Republican circles in the U.S., “is a sign that the industry is maturing,” Amundi said. “Firstly, it shows that real change is at work. Secondly, it calls for a need for clarity in value propositions and corporate commitments. Investors’ expectations must be met on these two fronts.”