'ESG is an economic issue, not morality'... How 'Amundi' changes companies

Amundi, Europe's largest asset manager with over 2 trillion euros in assets, systematically engages with companies on environmental, social, and governance (ESG) issues, framing shareholder involvement as an economic imperative rather than solely an ethical concern. This approach contrasts with the political debates often surrounding institutional investor actions in South Korea.

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Our demands are not based on moral judgments but solely on the perspective of economic sustainability.

The firm employs a highly structured process, analyzing shareholder meeting agenda items using a predefined 'decision tree.' Amundi then follows a phased 'escalation' procedure, which can involve dialogue, voting against proposals, downgrading a company's ESG rating, and ultimately, divestment. This transparent, step-by-step method ensures that interventions are based on objective criteria and not arbitrary targeting.

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The experience is that there is no real backlash from US companies. However, the way of speaking has certainly become more cautious.

Amundi's policy mandates 100% voting on all holdings, regardless of whether they are active or passive funds. The rationale is that for passive funds, where selling shares is not an option, voting rights become the primary leverage for engagement. The firm acknowledges that engaging with companies in countries like South Korea and Japan, often characterized by family-controlled ownership, requires tailored approaches, such as adjusting expectations for board independence based on the specific governance structure.

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In the past, it was a cycle focused on 'announcements,' but now it is a cycle focused on 'implementation.' This entry into the implementation phase is a more important change than the political phenomena in the US.

"Our demands are not based on moral judgments but solely on the perspective of economic sustainability," stated Caroline Le Meaux, Amundi's Group Head of ESG Research and Voting. She emphasized that while the discourse around ESG has become more cautious in the US due to political backlash, the underlying actions by companies are shifting from 'announcements' to 'implementation.' Amundi's practical approach, focusing on 'materiality', the impact of ESG issues on corporate value, allows it to maintain its policies despite external pressures.

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We approach it pragmatically. The way we engage varies depending on the company's situation.