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Amundi Doubles Down on Social Impact Investment Strategy

On the 09/18/19 at 11:35AM
Amundi announced a three-year responsible investment action plan in October 2018 that will see ESG analysis integrated across its €1.4 trillion funds .

The firm currently has €280 billion of assets under management[1] invested in three areas of responsible investment, and plans to increase the application of its ESG policy to 100 percent of its open-ended fund management and voting practices by 2021.

In addition, the firm's investment in the social and solidarity economy—companies that provide goods and services meeting the needs of a large number of communities—will reach €500 million by the end of 2021, up from €200 million. “Both moves are in response to investor demand which Amundi views as a fundamental shift in asset management”, explains Laurence Laplane-Rigal, Head of Social Impact Investing at Amundi.

Fighting Rising Inequality

Today, there are reported to be 4 million people[2] who don’t live in a decent home in France, twice the number at the turn of the century, and a further 12 million facing a housing crisis[3]. In addition, there are 600,000 unemployed young people[4], and half of those without a degree cannot find a job, a fourfold increase from 1975, while 2.5 million people cannot read well enough to be independent in their daily lives.

Social and solidarity economy can help, by emphasizing the need to tackle these issues through the funding of profitable social enterprises backed by sustainable business models.

“Today, the challenge is to continue financing social initiatives by promoting the development of profitable social enterprises based on business models with that can be sustained over a long period of time,” Laplane-Rigal explains. “Social impact investing is designed to finance the social and solidarity economy over the long-term by creating a direct link between savers and investors looking for social values in their investments, and social enterprises needing to raise capital. It is a shared objective: contributing to the common good.”

Investing in Smaller Companies

While providing funds to the social and solidarity economy remains a relatively small part of Amundi’s business, accounting for €300 million in dedicated funding of social enterprises, the asset manager believes that investing in unlisted companies is the easiest way to make an impact.

The aim is to invest in companies that can help meet people’s basic needs—a home, a job, food, clean water, adequate hygiene and sanitation facilities—and recognize the importance of environmental concerns and gender equality in building the economy of the future.

“We focus on small companies that are moving to the next stage of their development; says Laplane-Rigal.

Developing Social Solidarity Funds

Amundi first developed its social solidarity funds five years ago and aligns its investments with the U.N.’s 17 Sustainable Development Goals (SDGs) that are guiding environmental and social development priorities until 2030.

“We have tried to feed the aims of the SDGs into our funds, it helps to frame and explain their objectives to people. But we have to remember that they were set up for governments, not for investors,” Laplane-Rigal points out.

Nonetheless, it has always been clear that private-sector capital would be crucial in achieving the SDGs, and the financial sector has been grappling with the thorny problem of how to translate them into investable instruments.

 

amundi infographie

The inflows for the strategies come from large institutions and more than €2.8 billion in solidarity-based employee savings funds, to which employees choose to allocate some of their savings. Some 90 percent of the fund is invested in listed socially responsible companies, while 10 percent goes to the social impact fund, whose investments have to generate a positive return, and have their impact measured on a range of different themes.

Amundi is committed to providing long-term support for the companies financed via its flagship social impact fund diversifying the range of socially committed organizations it invests in and publishing transparent and concrete information about its investments.

The fund looks for SMEs involved in these areas, and it seeks evidence that they are already making an impact. “We measure both their financial and social impact,” Laplane-Rigal says.

Amundi’s Investments via its Flagship Social Impact Fund

amundi infographie

Amundi also maintains a range of other partnerships. The firm is involved in a public/private partnership with Agence Française de Développement (AFD, the French Development Agency), by managing an open-ended mutual fund of 85M€ for retail clients.

Amundi has also set up a partnership with IFC with Euro 1.6 billion funding. The fund invests in green bonds issued by financial institutions in emerging markets to finance business projects with positive environmental impact.

The firm has also partnered with Danone and manages a fund for Danone Communities, which is funded by Danone employees and invests in projects that fight malnutrition and increase access to clean drinking water.

Elsewhere, CPR Asset Management, a wholly owned subsidiary of Amundi, has developed its own risk-based ESG approach that is being progressively rolled out through a number of existing and newly created equity, fixed income, credit and diversified investment solutions.  Moreover this approach, supplemented by impact measures, is also adopted on some of its strategies dedicated to specific themes in listed companies: first theme, food for generations, which aims to make the global food chain more sustainable; second theme, investment in education, with a focus on all levels of the school system up to professional qualifications; and third theme dedicated to the fight against global warming, climate action, in partnership with CDP[5].

Looking ahead, Amundi plans to explore the possibility of issuing social impact bonds with a focus on the SDGs and to meet the ambitions laid out in the three-year plan. “We will focus on our new commitments to impact investment to address our clients’ new expectations,” says Laplane-Rigal. “We will also be looking to use what we have learned in France to expand this approach to other European markets.”

To find out more about Amundi Asset Management: https://www.amundi.com/int/ESG

Written by Mike Scott for Bloomberg Media Studios

Originally published on Bloomberg.com

Disclaimer:

This document is not intended for citizens or residents of the United States of America or to any «U.S. Person», as this term is defined in SEC Regulation S under the U.S. Securities Act of 1933.

Amundi accepts no liability whatsoever, whether direct or indirect, that may arise from the use of information contained in this material. Amundi can in no way be held responsible for any decision or investment made on the basis of information contained in this material. The information contained in this document shall not be copied, reproduced, modified, translated or distributed without the prior written approval of Amundi, to any third person or entity in any country or jurisdiction which would subject Amundi or any of “the Funds”, to any registration requirements within these jurisdictions or where it might be considered as unlawful. Accordingly, this material is for distribution solely in jurisdictions where permitted and to persons who may receive it without breaching applicable legal or regulatory requirements.

The information contained in this document is deemed accurate as at 31 July 2019. Data, opinions and estimates may be changed without notice.

Document issued by Amundi Asset Management, a French “société par actions simplifiée”- SAS with capital of 1 086 262 605 euros - Portfolio Management Company approved by the AMF under number GP 04000036 – Registered office: 90 boulevard Pasteur – 75015 Paris – France – 437 574 452 RCS Paris - www.amundi.com

CPR-AM

All or part of this publication may not be copied or distributed to third parties without CPR AM’s prior consent. All regulatory documents are available on the website www.cpr-am.com, or upon simple request from the company’s headquarters. CPR Asset Management, limited company with a capital of € 53 445 705 - Portfolio management company authorised by the AMF n° GP 01-056 - 90 boulevard Pasteur, 75015 Paris - France – 399 392 141 RCS Paris.

   

 

 

 


[1] Source : Amundi – End-June 2018

[2] Source : Amundi – End-June 2018

[3] Source : INSEE

[4] Source : Abbé Pierre Foundation

[5] Source : INSEE

[6] CDP, a pioneering NGO in the disclosure of companies’ carbon data and the only supplier of such data complying with the recommendations of the TCFD (Task Force on Climate-related Disclosures).

 

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