Scaling back: Wright holds a copy of a report on US liquified natural gas exports while speaking to reporters in Washington. US money managers are adapting to a political reality in which net-zero targets have been called “a sinister goal” by Wright. — AFP
PARIS: Amundi SA is positioning itself for a realignment in investor flows triggered by a growing divide in how asset managers on either side of the Atlantic handle stewardship and climate policies.
There are already signs that a number of asset owners across Europe are currently conducting reviews of their US mandates, said Jean-Jacques Barberis, head of institutional and corporate division and environmental, social and governance (ESG) at Amundi.
Europe’s largest asset manager, which won business from State Street earlier this year, expects the broader reassessment underway to play out over several months, he said.
“We do see some indications that some investors are reviewing what they do with some American asset managers because of responsible investment alignment,” Barberis told Bloomberg.
Money management is becoming the latest stage on which transatlantic tensions are now playing out.
So far this year, State Street has lost mandates in the United Kingdom and Scandinavia amid concerns it no longer does enough to address climate change.
BlackRock Inc faces similar challenges, with PME in the Netherlands saying it’s in the process of reviewing a €5bil mandate over climate concerns.
Barberis said the People’s Pension, a UK pensions manager that reassigned £28bil worth of mandates to Amundi and Invesco Ltd earlier this year, first approached the Paris-based firm about a year ago, shortly after State Street said it was pulling out of Climate Action 100+ (CA100+).
State Street is just one of a number of major US asset managers to have exited CA100+, which is the world’s largest investor coalition dedicated to addressing global warming.
Others that have walked away include BlackRock, Pacific Investment Management Co, as well as the asset management arms of Goldman Sachs Group Inc and JPMorgan Chase & Co.
For much of the US investment industry, continued membership has become untenable as firms adapt to a political reality in which net-zero targets have been called “a sinister goal” by US Secretary of Energy Chris Wright.
Firms that don’t conform face bans in Republican-led states, as well as lawsuits.
But as US asset managers adapt to politics at home by scaling back their climate commitments, investors in Europe are taking note.
According to data provided by Morningstar Direct, funds domiciled in Europe and identified as pursuing ESG goals attracted an estimated US$3.5bil of inflows in the first two months of the year.
In the United States, meanwhile, such funds suffered about US$3.1bil of client outflows in the same period.
“The anti-ESG backlash and regulatory uncertainties on both sides of the Atlantic are the biggest drivers of this trend,” said Hortense Bioy, head of sustainable investing research at Morningstar.
Asset managers’ support for ESG resolutions at AGMs hit a low last year, according to a February report by the non-profit ShareAction.
The world’s largest asset managers including State Street and BlackRock supported just 7% of key shareholder resolutions, the advocacy group said.
Barberis said European institutional investors almost always ask about stewardship and engagement when they approach an asset manager to inquire about handling a mandate.
It is a “material” criterion in their decision-making process, he said.
“We have a lot of questions from clients at the European level asking us: ‘We see some announcement that has been done by others, what do you do on your side? Have your commitments changed or not?’
“So I think there is pro-activity among clients at the moment,” he said.
Against that backdrop, Amundi is now choosing to be “vocal about what we’re doing and explaining that it’s in the interest of our clients and on behalf of what our clients are saying,” Barberis said.
“From a business perspective, it’s much more convincing vis-a-vis institutional clients that are long-term oriented players to demonstrate consistency.”
And that’s how “we can probably attract additional business”, he stated. — Bloomberg
