Amundi wins Nordic institutional approval for its ESG initiatives
News came earlier this month that Amundi, one of Europe’s largest asset managers, had expanded its responsible investment offering with the launch of the Amundi MSCI Emerging ESG Leaders UCITS ETF with over EUR500 million from Ilmarinen, Finland’s largest pension insurance company.
Amundi also announced an investment of over EUR2.6 billion from PenSam, the Danish labour market pension fund. The investment in a separately managed account was to track the MSCI ACWI Climate Change Index and incorporate client specific customisations.
These two Nordic institutional initiatives come as a result of the pre-eminence of the Nordic institutions in the current drive for ESG adoption worldwide, says Fannie Wurtz, Head of the ETF, Indexing and Smart Beta Business Line, Amundi.
“Our recent collaborations with leading Nordic institutions are a perfect illustration of how ESG and climate considerations are now an integral part of their investment strategy,” she says.
“However, this trend is not limited to Northern Europe. We are seeing flows from a wide range of investors across Europe. At Amundi for example, we have been selected by a group of 12 French institutional investors to design and manage an innovative index euro equity fund that is aligned with the Paris Agreement objective.”
Wurtz says that the size and scale of Amundi’s business has attracted the new investments.
“Managing and innovating in ESG and climate index solutions is not new to us. We have been a pioneer in carbon-reduction index solutions since 2014 with the co-development of the low carbon leaders indices with MSCI and two large French & Nordics institutions. That major innovation has contributed to opening the dialogue within the financial industry, and the direction of travel is clear.
“The recent examples of cooperation’s also show our capacity to offer a full range of solutions from open-ended index funds and ETFs to fully bespoke index mandates.”
Wurtz adds that Amundi has a comprehensive voting and engagement policy covering both its active and passive portfolios. Amundi has been voting in its index management since the creation of its first index fund range in 2005 – and has a strong track record of voting in line with ESG principles.
There is a growing trend for institutions generally to use ETFs and indices to express their ESG commitments, Wurtz believes.
“We are seeing increasing adoption of index management for responsible investment solutions, and this trend is strengthening rapidly recently. It is happening for many reasons. Index management has shown that it is fully compatible with Responsible Investing.
“Beyond the cost efficiency and tracking error aspects that are critical to such institutions, ETF and index management also offer the benefit of a robust framework with systematic, transparent and research-based methodologies.
“We think at Amundi that index management will play an important role in the acceleration of ESG adoption.”
Wurtz describes ESG as a founding pillar of Amundi, while the ETF, Indexing & Smart Beta business line is a core growth driver for Amundi Group as a whole.
“We believe the two together have a lot to offer, and we are committed to making sustainable investing accessible to investors whatever their requirements are in terms of ESG integration and focus, and their accepted tracking error compared to their conventional benchmarks,” Wurtz says.
The Amundi MSCI Emerging ESG Leaders UCITS ETF tracks an index that provides exposure to companies with high ESG performance relative to their sector peers, comprising large- and mid-cap companies across 26 Emerging Markets (EM) countries. The index takes a “do no harm” approach, excluding companies involved in tobacco, alcohol, gambling, nuclear power, weapons and other controversial business involvement. The fund also benefits from Amundi’s commitment to active ownership, which has a strong track record of voting in line with ESG criteria.
Meanwhile, Ilmarinen has made sustainability an integral aspect of its overall company philosophy and investment strategy for more than a decade. The firm is responsible for providing pension insurance for approximately 1.2 million people and has around EUR50 billion investment assets, all of which integrate responsible investing principles.
Commenting on the investment, Juha Venäläinen, Senior Portfolio Manager, Ilmarinen, said: “We invest pension assets so that the return on them also secures the pensions of future generations. Emerging market exposure is a key component of our portfolio and we are delighted to offer our beneficiaries exposure to responsible investment opportunities in this space. Ilmarinen is an active owner and seeks to partner with asset managers who share this mission.”
Meanwhile, the EUR2.6billion investment from PenSam, the Danish labour market pension fund is in a separately managed account that will track the MSCI ACWI Climate Change Index and incorporate client specific customisations.
Earlier this year, PenSam announced the decision to measure its entire listed equity portfolio against a climate change index as part of its strategy to support the green transition and reduce its carbon impact.
Amundi writes that following an extensive search, it was selected based on the strength of its expertise in indexing combined with its commitment and track record within ESG and climate investing.
At the time of the announcement, Claus Jørgensen, CIO of PenSam, said: “PenSam is pleased to partner with Amundi on this global equity mandate. The partnership was a natural fit for PenSam as we see Amundi as a leader within ESG Indexing. The mandate will be key to achieving our key goals of strong returns, integration of climate objectives and low cost.”