Europe’s largest listed asset manager Amundi SA will partner with endowments at Cambridge and Oxford colleges to start a low-carbon index tracking fund.
The Amundi ESG Global Low Carbon Fund will aim to replicate performance on the MSCI All Country World Index. It will exclude fossil fuels and thermal coal, and aim to improve green revenues and reduce potential exposure to controversies, the company said.
“These clients are looking to replace equity portfolios and move to this low carbon solution to address the financial risk in terms of climate change,” Ashley Fagan, who heads up Amundi’s exchange-traded fund and indexing business in the U.K. and Ireland, said in a Bloomberg TV interview. “We’re seeing ESG become mainstream. It’s replacing the core portfolios now. It’s not just niche, thematic and sitting in a very specific, ethical portfolio.”Play Video
Amundi’s fund will be seeded by Cambridge’s Clare College and will be open to other university endowments, charities and professional investors, with a targeted size of 250 million pounds ($332 million) in the first year, Fagan said. It follows Oxford’s recent move to partner with BlackRock Inc. to start a sustainable tracker fund, as universities and asset managers face increasing pressure to respond to climate change.
After five years of student protests and graffiti on ancient buildings, the University of Cambridge committed to divesting its separately-run 3.5 billion-pound endowment from fossil fuels last month. In April, the University of Oxford said it will remove directly held fossil fuel investments from its 3 billion pounds of funds. They have still moved faster than U.S. peers, with Harvard University only vowing a path to “net zero” emissions by 2050.
Amundi has 345 billion euros ($409 billion) in responsible investments, representing 21% of its total assets managed. Bloomberg Intelligence senior analyst Sarah Jane Mahmud expects it to keep expanding its range of environmental, social and governance exchange-trade funds.
“It can be quite a complex topic when you look at improving specific carbon emissions or specific exclusions,” Fagan said. “From that perspective, we’re having a lot of conversations with investors about making bespoke solutions.”
Ethical investing has also been brought to the forefront as the coronavirus pandemic upended global markets and brought the world to a standstill, Fagan said in a follow-up telephone call.
“Covid has highlighted inter-connectivity between climate change, the climate emergency, health and prosperity,” Fagan said. “That’s opened up people’s eyes. We’ve seen significant interest in institutional investors, such as endowments, pensions, insurers and charities about increasing investment in ESG.”(Corrects to make clear endowment from colleges in headline, lead and that university endowment is separate in fifth paragraph.)© 2021 Bloomberg L.P.