WHY NOW – THE WORLD AROUND US

From climate change to living wage: What’s on responsible investors’ radar?

Imagine walking around New Delhi and realising that you can see mountains on the horizon despite it being one of the most polluted cities in the world. Or maybe you find yourself in a Parisian suburb and see a deer crossing the road. How has this been possible?

With such a diminished impact of human activities on the environment during the pandemic, many urban and natural landscapes have revived and shown us how simple actions could benefit entire ecosystems and wildlife communities.

The emergency of climate change is not a new phenomenon but the pandemic has accelerated the attention to this and other problematic issues in our societies. As of April this year, annual warming gas emissions were anticipated to fall by 5.5% in 2020, according to Carbon Brief.[1] Still, this figure falls below expectations on what is really needed for the planet to breathe fresher air.

The tragic impacts of the crisis risk slowing down policies and public investments toward the climate cause as well as social issues. Even more than before the crisis, investors have a major role to play alongside governments in directing capital towards projects tackling climate and social issues.

For example, Amundi, the European leading asset manager[2] with €1.5tn[3] in assets globally, sees three possible scenarios on climate change actions following the crisis: a good, a bad and a ‘status quo’.

In the good scenario, governments and companies will step up their efforts on sustainability; in the bad one, the commitment to climate change will be surpassed by other issues leading to a worsening of emissions levels, while the status quo scenario would mean that only a limited number of companies would transition to more sustainable models.

Not only climate change

Climate change won’t lose its top spot when it comes to responsible investing, but we believe the pandemic has elevated the debate and raised awareness of issues such as inequality within workers’ rights and supply chains. Therefore, investors are more engaged in their conversations with businesses to push for changes. 

‘Not forgetting the climate aspect or even the biodiversity aspects because they are linked together, but I really think that the social pillar is going to become more important [following the pandemic],’ Caroline Le Meaux, head of ESG research, voting and engagement at Amundi says.

As of May, jobless claims in the US alone reached 36 million, as the pandemic hit hospitality, travel, and other sectors across the country[4]. Companies around the world have laid off staff as economies slumped and supply chains in many developed and developing countries have been dramatically damaged. This has led large investors to rethink workers’ rights and assess how companies need to work in the future to protect their stakeholders.

We encourage companies to develop comprehensive companywide policies to ensure a minimum base level of benefits for all employees globally to address inequalities and ensure every employee is treated with the same respect

CAROLINE LE MEAUX,
Head of ESG Research, Voting and
Engagement at Amundi

Engagement includes encouraging company-wide policies to guarantee a minimum base level of benefits and address inequalities across employees globally. For Amundi, the engagement on inequality includes access to medicine, access to healthy food, workers’ rights and living wages. These areas are directly in line with a number of Sustainable Development Goals[5] set by the United Nations of no poverty, zero hunger, good health and well-being and decent work and economic growth.

Issues like inequality and addressing the living wage might be different from country to country but they are global problems, Amundi says.

It is clear from our engagement this year that addressing living wage concerns is vastly unaddressed. Thus, we at Amundi encourage companies to develop comprehensive companywide policies to ensure a minimum base level of benefits for all employees globally to address inequalities and ensure every employee is treated with the same respect.

Living wage VS minimum wage
Minimum wage is the amount set by a government, while living wage is determined by average cost of living in a specific country.
For example, in the US the minimum wage is $7.25 an hour but it has[6] not been linked to the consumer price index, otherwise it would be $10.15.

2017 hours at minimum wage needed to afford rent
In no state can a minimum wage worker afford a ONE-BEDROOM rental home at the average Fair Market Rent, working a standard 40-hour work week, without paying more than 30% of their income.

Sources:
[1] https://www.carbonbrief.org/analysis-coronavirus-set-to-cause-largest-ever-annual-fall-in-co2-emissions
[2] Source IPE "Top 500 asset managers” published in June 2020 and based on AUM as of December 2019
[3] Amundi figures as of July 30, 2020
[4] https://www.theguardian.com/business/2020/may/14/unemployment-us-data-coronavirus
[5] For more information see https://sdgs.un.org/goals
[6] Amundi 2019 Engagement Report

IMPORTANT INFORMATION
Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 30 September 2020. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. All investors should seek professional advice prior to any investment decision, in order to determine the risks associated with the investment and its suitability.

Date of first use: 9 October 2020

Doc ID: #1357095

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