Interview with Frédéric Samama, Co-Head Institutional Client Coverage, Amundi Asset Management
Mar 20, 2018
Climate Action had the pleasure of speaking with Frédéric Samama about Amundi's growing role in sustainable finance.
Amundi is one of the best-known asset management companies worldwide and has a department dedicated to responsible investment. Why did you decide to expand on this area?
The expansion of Amundi’s responsible investment capabilities is grounded in our firm belief that an asset manager's responsibility extends beyond the purely financial aspect and is eager to be a driver of environmental progress and change. One of Amundi’s founding principles from the time of its inception in 2010 was that investment policies should be shaped not only by financial criteria but also by sustainability and social utility criteria. With that in mind responsible investing is ingrained in Amundi’s DNA with more than EUR200 billion responsible investment assets under management.
Amundi’s responsible investment capabilities have been developed alongside our conviction that in order for an asset manager to be the best ESG manager possible, a broad responsible investment approach should be deployed.
Responsible investment solutions are not “one size fits all”. Every asset manager has a different approach to ESG as the drivers for responsible investments are multiple ranging from value alignment to risk management. Amundi believes that instead of taking a dogmatic approach, we should have a broad range of responsible investment capabilities to accompany asset-owners in meeting their objectives.
For this reason, Amundi has gone beyond integrating ESG assessment and ratings in our investment processes as Amundi has developed strong capabilities on active engagement with issuers as well. This is a direct way for asset managers to encourage companies to improve their ESG performance.
Amundi is also co-founder of the “Portfolio Decarbonisation Coalition”. How can this initiative help investors decarbonise their portfolios?
An increasing number of asset owners have become aware of the high carbon footprint of their portfolios and the long term risk this high carbon footprint entails, as they expect carbon intensive businesses to be penalized by more stringent climate related regulations. To protect themselves against this so called “carbon risk”, it is possible to implement decarbonisation strategies, where the most carbon intensive companies are removed from the investors’ portfolios. These decarbonisation strategies are made possible thanks to the increasing availability of carbon footprint data at the company level.
The Portfolio Decarbonization Coalition (PDC) is a multi-stakeholder initiative that will drive GHG emissions reductions by mobilizing a critical mass of institutional investors committed to gradually decarbonizing their portfolios. Members of the Coalition share a dual vision, setting themselves two interconnected and intermediary targets of disclosing their carbon-footprints and taking action to decarbonize their portfolios.
Specifically, the PDC encourages and supports investors in meeting this dual objective through acting as a platform for sharing best practices. The PDC does not advocate a particular strategy. Rather, it encourages each member to identify which approach is best suited to their investment practices. This is facilitated by publishing each member’s carbon reduction plan on the PDC website, and convening member networking events to enable the exchange of ideas and information.
Through this dual objective the PDC expects that having a critical mass of institutional investors - owners of large segments of the global economy - decarbonize their portfolios, will send a strong and unequivocal message to carbon-intensive companies that carbon-efficiency is now centre-stage. It provides strong incentives to actors in the real economy to re-channel their own investments from carbon-intensive to low-carbon activities, assets, and technologies.
Green bonds hit a new record in 2017 reaching the milestone of $155 billion. However, how long do we still have to go and what is your future projection?
The global green bond market has experienced impressive growth since its inception and this has continued suit in 2017. There has been diversification across issuer types, projects and currencies, but it cannot stop there in the face of the challenges ahead. USD1 trillion needed annually by 2030 to finance the energy transition under a 2C scenario. China alone will require annual investments of over USD0.4 trillion in the next five years with 85% coming from the private sector. As Christina Figueres and other climate leaders have advocated, further growth in green bond investments is needed with a goal of reaching USD1 trillion by 2020.
Undeniably, in order to reach that goal, further financial innovation stimulating both demand and supply aligned with international best practices is needed. This is why at Amundi, in order to help our clients align themselves with such an initiative, a multitude of innovative green bond strategies have been developed.
A quintessential example thereof is the IFC-Amundi Partnership which has been designed to simultaneously stimulate the demand and the supply of green bonds to “complete the circuit” and propel climate finance in emerging markets where future climate change impacts are expected to be most severe.
The fund’s investment strategy based on the gradual investment into green bonds over a 7-year ramp up period is one-of-a kind, and has been designed in order to ensure the portfolio manager only selects green bonds aligned with international best practices thereby encouraging the long-term development of a green bond market aligned with international standards in emerging countries.
In addition, in order to foster the development of green bonds aligned with international standards (the Green Bond Principles) and develop sound impact reporting in emerging countries, a Support Program to be administered by the IFC will leverage the latter’s capabilities and knowledge in the area of fostering capital market development. Such work will focus on securing sound impact reporting and ESG analysis in order to encourage best practices for green bond issuance in emerging markets.
Amundi sponsored the Sustainable Investment Forum in New York during the New York Investment Week in September 2017 and is also sponsoring the Sustainable Investment Forum Europe. What made you come back?
As a long-term partner seeking to enhance value creation in the real economy, Amundi believes that climate change is not an issue to be overlooked. In general, not only do we attempt to provide specific solutions to meet the investment gaps to finance the energy transition, we also thrive to participate to and encourage the debate to ensure that market developments are aligned with our beliefs.
- In 2014, Amundi co-founded the Portfolio Decarbonization Coalition, a coalition of 27 investors that have committed to align over $600bn of their portfolios with a low carbon economy, and that was a key representative of the business and finance community at the COP21.
- Most recently, Amundi was elected representative of the investor community at the Executive Committee of the Green Bond Principles, thereby exemplifying its commitment to best represent investors’ interest for green bond market development and spreading of best practices.
- Meanwhile, we have co-published academic papers on climate change-related risks and the financing of the energy transition with prominent institutions of the green ecosystem.
- Amundi has also organized in the past a series of high-level meetings with key actors in the financial community, with Columbia University and with the Rockefeller Centre at Bellagio on long-term investing and climate change.
Amundi believes that such initiatives like the Sustainable Investment Forum are key to facilitating the development of green financing to finance the energy transition. Amundi sees the Sustainable Investment Forum as a vector through which to spread best practices and share knowledge, and we believe that it is an opportunity to share with all actors all along the value chain on key aspects for the development of financial innovations pertaining to green finance.
Hear Frederic Samama speak at the Sustainable Investment Forum North America on the 26th of September 2018.