Addressing climatic changes solutions
The world is becoming ever more aware of the very real impact climate change and the associated legislation are likely to have on portfolio returns. At Amundi, we’ve developed a number of initiatives to provide our investors with opportunity to participate in the transition to a low carbon economy and/or to mitigate the associated financial risk.
Aligning portfolios with low carbon economy
The Portfolio Decarbonization Coalition (PDC - read more below) has largely exceeded its ambitions only a year after launch. At beginning of December 2015, the PDC totaled 25 members representing 9 countries with $600bn in reduced carbon investments vs $100bn announced at launch.
Major players, such as Allianz and ABP, have joined the PDC during the Climate conference in Paris.
With these two major European institutions, it reinforces the messages:
- The decarbonization of portfolios is becoming mainstream;
Decarbonizing today represents trillions and trillions tomorrow.
Amundi’s initiatives to address climatic changes
With key partners and institutional investors such as AP4, CDP (Central organisation for carbon data) and the United Nations Environment Programme’s financial initiative (UNEP FI), Amundi is involved in a multiparty initiative: the Portfolio Decarbonization Coalition 1.
In parallel, Amundi has developed innovative solutions.
Low Carbon index funds
Partnership with EDF
Each investor is different in terms of requirements and exclusion or selection criteria.
Therefore, we provide investors with tailored ESG and SRI funds that incite issuers to adopt better environmental behaviours, notably in terms of reduction of greenhouse gas issuance. We have identified the most-exposed sectors and we analyse the companies’ capability to monitor their direct and indirect impact on the environment.
Through open-end SRI funds, Amundi’s management also contributes to the limitation of energy consumption, the reduction of greenhouse gas issuance, the fight against commodity exhaustion and the protection of biodiversity.
Low Carbon index solutions
Amundi has developed a full range of index solutions designed for investors seeking to address the financial risk of carbon exposure.
1| Tailored approach
Amundi provides customised solutions aiming at reducing carbon exposure:
- by decarbonizing existing portfolios,
- or by replicating a Low Carbon index meeting the clients’ specific requirements.
2| Innovative index funds
The Low Carbon range comprises two open-ended index fund and an ETF, tracking the MSCI Low Carbon Leaders indexes. The index methodology aims at:
- reducing the carbon footprint efficiently relative to the parent index,
- with a low tracking error and a sectorial and geographical similar composition.
These solutions allow investors to benefit from a potential outperformance of the strategy index once carbon risk is priced while continuing to achieve market performance if not priced.
An association with EDF (Electricité De France, 1st French electricity company) to generate funds invested in renewable energies
Amundi and EDF Group seek to raise money to support the financing of projects within the frame of energy transition.
This association of two leaders in their respective fields benefits from:
- the capability of EDF, leader in low carbon energy, to identify the best investment opportunities in the business of renewable energies,
- the knowledge of Amundi, leader in asset management in Europe, in terms of structuration and capability to rally savings.
This partnership aims to offer alternative investments through an asset class uncorrelated to the volatility of traditional markets.
The investment themes are notably:
- small hydroelectricity,
- solar or wind-powered farms,
- energy efficiency (public lighting, high electricity-consuming industries).
Amundi committed to responsible financing
of assets under SRI management
of SRI management companies in France2
professionals dedicated to SRI analysis and management
Source: Amundi data and perimeter as at December 31, 2015.
1. The members of this coalition, which aims at mobilising financial markets in the fight against climatic changes, are committed to decarbonize their portfolios for a total amount of USD 100 billion by the climate conference end-2015.
2. In term of assets under management. Besides, 1st asset manager to be certified by the Afnor (French standardisation organisation) for its SRI approach.
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