Responding to the climate challenge requires decarbonizing all financial flows, the key word being “all”. While it has not yet found a solution nor acquired the necessary tools to decarbonize its ETFs, Amundi, a Crédit Agricole subsidiary, is pursuing an aggressive strategy aimed at increasing its passive management. On January 1 2022, assets under management not covered by Amundi’s coal policy rose by 84% with its takeover of Lyxor, which is heavily involved in this type of management. In the report Amundi: Our investigation into Europe’s biggest investor, we took stock of this threat and identified possible solutions. Amundi reacted by responding to our concerns in various articles, going so far as to state its complete disagreement with the substance of the demands made. We are responding in turn.

Amundi highlights its ESG funds to respond to criticism of its passive management. It says the Lyxor takeover is not problematic for the climate because Lyxor’s ESG ETFs will apply Amundi’s coal policy and because Amundi will have 40% ESG ETFs in 2025:

• Amundi is trying to make us say what we do not say. Jean-Jacques Barbéris, their head of ESG, shifts the debate by highlighting the fact that Amundi applies an ESG filter to a larger share of its passively managed funds than Lyxor did. By doing so, the director intends to make Amundi’s takeover of Lyxor seem like progress. However, J.J. Barbéris is not unaware that 60% of the funds coming from Lyxor will escape this ESG approach and that our report highlights the inconsistency of pursuing a growth strategy in passive management without having a plan to increase this rate to 100%.
• Amundi excludes coal companies from all of its “actively” managed funds and from passively managed ESG funds. But the vast majority of Amundi’s passively managed assets are not currently covered by any coal-related restrictions (roughly 60% of assets are not “ESG”).
• Committing to increase the number of ESG funds that apply coal exclusions does not guarantee that “non-ESG” assets will decrease in absolute amount or that no new investments will be made in coal developers.
• Amundi manages €80 billion of “responsible investment” assets out of the €282 billion it currently manages passively. This means that €202 billion can still be invested in coal developers. And by 2025, it will be more than €252 billion.

Amundi highlights its good voting practices and defends gradual engagement activities to support companies that are making progress. The example of Glencore, a company excluded from its active funds but still present in the passive ones, is given by Amundi:

• Jean-Jacques Barbéris says “We believe that the fact that a company like Glencore is presenting a climate strategy is a step in the right direction […] in particular because the group has presented plans to close mines and not to sell them; this is essential for a successful transition. The group has also made commitments to reduce Scopes 1, 2 and 3 emissions, which is not the case for other players in the sector.”
• However, he is aware that if Glencore indeed intends to close some mines in the coming years, this is because these mines are reaching the end of their lifetime, with depleted reserves. Glencore intends to apply the same approach to its other mines (1), which means operating until 2050, well after the exit dates of 2030 for OECD countries and 2040 for others required by science and by Amundi’s own policy. Glencore is in fact pursuing an expansion strategy, has recently bought BHP and Anglo-American’s shares in their controversial Colombian mine (2), and plans to increase its coal production by 45 million tons/year through 9 projects (3).
• As for its emission reduction targets, Glencore has no short-term target and its medium-term target is not aligned with 1.5°C (4). Only the use of a biased methodology shows that Glencore will eventually be aligned in the long term (5).
• Finally, J.J. Barbéris points out that Amundi did vote against one of the board members, but fails to mention its support for the reappointment of 6 other members and cannot ignore the weakness of this negative vote compared to the vote in favor of the adoption of a climate plan (6) that leaves room to the expansion of coal.

Amundi says it does not want to stop supporting energy companies in their transition. It highlights its policy to engage the sector as well as its policy on unconventional fossil fuels:

• As Amundi acknowledges, its own coal policy has been developed by “taking into account the scenarios designed by the IEA’s Sustainable Development Scenario, Climate Analytics Report and Science-Based Targets”. In line with this, it decided to exclude in 2020 any company developing or planning to develop new thermal coal capacities. Amundi must now recognize what the most recent scenarios say and align with its own commitment to achieve carbon neutrality by 2050 following a 1.5°C trajectory. These scenarios stipulate the requirement to no longer support the expansion of oil and gas production.
• Beyond the coal measures, the IEA’s NZE scenario calls for no new oil and gas production projects to be developed (except those that have obtained their FID by the end of 2021) and for the vast majority of LNG projects to be abandoned. Forecasts for decarbonization of electricity also make it very risky to support new gas-fired power plant projects. Yet Amundi does not make stopping expansion a criterion of its recently announced unconventional oil and gas policy, which allows investments in companies responsible for 75% of all oil and gas production expansion plans. Its very vague engagement strategy does not disclose the requests made to companies in the sector or the deadlines for implementing them.
• Amundi is thus faced with an embarrassing contradiction: it wants to support companies so that they have “the necessary capex to lead the transition” but does not put in place the necessary tools to stop the allocation of capex to fossil fuel expansion.

Notes :

1. Glencore’s climate plan states, “as long as there is demand for coal, and it is economic to do so, we will continue to operate our mines until they reach the end of their life.”
2. https://www.lefigaro.fr/flash-eco/glencore-rachete-les-parts-de-bhp-et-anglo-american-dans-une-mine-de-charbon-en-colombie-20210628
3. Source: Global Coal Exit List (coalexit.org)
4. Source: CA100+ Net Zero Company Benchmark sub-criteria 3.3
5. https://reclaimfinance.org/site/en/2021/12/06/the-tpi-benchmark-misleading-approach-dangerous-conclusion/
6. Amundi voted in favor of the proposal n°14 submitted by Glencore’s management in 2021 (“Approve Company’s Climate Action Transition Plan”).