Amundi unveils suite of net-zero strategies across asset classes

Tailoring approaches and providing a 'wide range of choices' to investors

Amundi has launched a suite of funds across asset classes that aim to support the transition to net zero by 2050.

The European asset manager said that although all its strategies are aiming to reduce their portfolios’ carbon intensity by 30% by 2025 and 60% by 2030 compared with 2019, it has decided to launch a set of strategies that use different approaches to reach net zero.

For example, its Net Zero Ambition Global Equity fund, managed by head of equity solutions Piergaetano Iaccarino, uses a new proprietary methodology that places a cost value on carbon ‘externalities’ (such as emissions) using the concept of ‘environmental capital’. Environmental capital adjusts the company’s assumed return on invested capital to include the costs and cap-ex the company will need to spend to reduce its carbon intensity.

The firm has also launched another equity fund, Net Zero Ambition Top European Players, managed by senior portfolio manager Andrew Arbuthnott. Both fund invest in large-cap companies and are constructed to have carbon intensities aligned with Paris-aligned benchmarks.

In emerging market equities, the Amundi EM Equity Target Net Zero fund aims to deliver a carbon footprint aligned with the MSCI EM Climate PAB Index with alpha generation, by targeting the incorporation of carbon transition costs into the valuations of companies. This is one of the first strategies on the market focused on CO2 reduction in emerging market equities and is managed by Mickaël Tricot, portfolio manager and Andrea Salvatori, senior portfolio manager and head of ESG strategies – emerging markets.

In fixed income the Net Zero Ambition Global Corporate Bond fund, managed by Nadine Abaza, global credit portfolio manager and Steven Fawn, head of global credit, selects companies that have set a net-zero trajectory and engages those in high-emitting sectors, although it favours issuers with low carbon intensity. It aims to reduce its carbon footprint in line with the Solactive Paris Aligned Global Corporate benchmark.

Meanwhile, the Net Zero Ambition Pioneer US Corporate Bond fund, managed by head of fixed income US Jonathan Duensing,identifies opportunities primarily from the US Corporate bond universe (~7,500 bonds, ~850 issuers) and focuses on low-carbon emissions at the portfolio level. It aims to reduce the carbon intensity of its portfolio and maintain superior carbon metrics relative to the MSCI US Corporate Paris-Aligned Index.

In real estate, the Real Estate European Net Zero Ambition Strategy, managed by conducting officer – real estate Benjamin Launay, will focus primarily on the deeper, more mature markets in Western Europe, while also investing in a selection of European peripheral markets. It will predominantly target offices in prime locations benefiting from high demand and home office megatrends, as well as sectors such as logistics, residential, retail, and hotels.

The strategy aims to pay a regular coupon accompanied by growth in net asset value over the long term in the belief that, in the future, decarbonised assets will be more attractive to tenants and investors. The aim is to maintain the carbon footprint of the portfolio below the CRREM 1.5°C trajectory model at all times and to target a reduction of -40% GHC emissions by 2030.

Amundi’s Net Zero Ambition Multi-Asset strategy’s allocation is based on “climate-aware” market scenarios (such as the implications of the road to net zero on the global macroeconomic environment) while issuers selection relies on both financial and climate-related metrics (e. g. carbon emissions, GHG reduction targets, green financing). It is managed by Raphaël Sobotka, head of diversified premia and dynamic risk strategies and Jean-Gabriel Morineau, portfolio manager.

Finally, Amundi has launched a passive suite of net-zero strategies across both equity and fixed income, with more than 30 climate ETFs aligned with the goals of the Paris Agreement.

Amundi’s ETF, indexing and smart beta business line offers investors a simple way to invest in Climate Transition and Paris-Aligned benchmarks across World, Europe, EMU, US, and emerging market exposures, with the aim of: 1) helping to limit global warming to 1.5° C with EU Climate Transition and Paris-aligned benchmarks; and 2) implementing annual decarbonisation and ambitious carbon intensity reductions relative to parent index, by offering investors a cost-efficient range to suit their objectives.

Vincent Mortier, group CIO at Amundi, said: “Trillions of euros of capital will be needed to speed the path to decarbonisation, which cannot be done by governments alone. The global asset management industry – which is expected to be managing over $145trn by 2025 – has the scale to make things happen and trigger the momentum required to get the world to net zero.

“This is why we are launching the net-zero ambitions range across active, passive, and real assets, so investors can fuel the transition and put their savings to work, while earning investment returns. It is also critical to provide investors with a wide range of choices in order to help them align their investments to a net-zero decarbonisation pathway.”