WHY NOW – THE WORLD AROUND US

Inequality: The stark truth and how Amundi targets the root causes

Some Stark Facts^[1]:

• The world’s richest 1% have more than twice as much wealth as 6.9 billion people
• Almost half of humanity is living on less than $5.50 a day
• The super-rich avoid as much as 30% of their tax liability

Since the 1980s, inequality has become more and more of a problem, growing to the extreme levels we can see today. The gap between rich and poor – and even the not-so-poor – is creating real social problems, and Covid-19 has only made this more evident.

He notes that the two are linked: ‘‘We know that a transition to a lower-carbon economy will have social impacts. Unless we also address the backdrop of inequality, there will be widespread discontent. The gilets jaunes (yellow vests) movement in France, which was sparked by rising fuel taxes enforced as part of a green initiative, is a good example – and it could be just the start,’ he says. ‘Inequality is a global phenomenon and its effects could be felt even more starkly in the developing world.’^[2]

The UN’s 2020 World Social Report^[3] endorses this view, citing climate change as one of a number of megatrends – others include international migration, urbanisation, and technological innovation – that will make inequality worse in future unless they are addressed.

Research and resources

One of the most direct ways an asset manager can address the problem is to use its muscle as a shareholder. This can take different forms: most obvious is voting at company AGMs. But Amundi’s approach goes a lot further, Barbéris says.

‘Our voting policy places a strong emphasis on corporate responsibility and governance, but that is not the end of things for us,’ he says.

Amundi is pro-active in engaging with the management of companies it invests in – and even those it doesn’t. ‘We engage in a dialogue with companies where we feel there is room for improvement and try to steer them down the paths they need to take toward concrete action,’ he says.

‘For example, one of the first ways to address inequality is by ensuring that companies pay a living wage to their employees. But in a globalized world there are a lot of factors you need to grasp to truly understand the question – knowledge of supply chains and compliance with national and international labour standards, among others. It’s an area where Amundi’s sizeable resources and “early mover advantage” as a responsible investor are important,’ he says.

“We have been running a dialogue with companies on the living wage over the past two years, to encourage them to develop comprehensive policies to ensure a minimum base level of benefits for all employees globally and ensure every employee is treated with the same respect”.

Share of income earned by the top 1 per cent, 1990 and 2015^[4]