Amundi Technology to develop ESG offering - COO

Amundi Technology has said it plans to build out its environmental, social and governance (ESG) offering this year and beyond.

Europe's largest asset manager launched the tech business in March last year to expand the sale of its technological solutions to asset managers and other investment and savings firms.

Currently, Amundi Technology has an ESG offering but it is looking to expand it over the coming years.

Speaking to Global Investor, Guillaume Lesage, chief operating officer of Amundi, says: "With ESG there are at least three domains. The first one is making sure that you've got the data and that you can calculate all the analytics and the ratings. In this space, we integrate 25 different ESG data sources to calculate ratings for those companies and measure the portfolios."

Amundi Technology selected at the start of this year fintech Causality Link to provide insights into drivers of ESG investment performance.

The second area of focus for Amundi Technology within ESG is concerned with reporting, specifically regulatory reporting. "These are very complex reporting requirements, and you need to be able to clean the data, and have people who know the regulations and can adapt if and when they change," adds Lesage.

Reporting requirements for non-financial disclosures vary between regions. The European Union's Sustainable Finance Disclosure Regulation (SFDR) came into force last year and mandates that managers label their products according to their sustainability levels.

Article 8 products under SFDR promote environmental and social characteristics while an Article 9 fund has sustainable investment as its objective. Article 6 products do not promote ESG and do not have any sustainability objectives.

The Task Force on Climate-Related Financial Disclosures (TCFD) was created by the Financial Stability Board to improve and increase reporting of climate-related financial information.

The UK Government announced at the end of 2021 that it would enshrine TCFD in law for large companies. From April 6, more than 1,300 of the largest UK-registered firms and financial institutions will be mandated to disclose climate-related financial information. This will affect some of the UK's largest traded companies, banks and insurers, as well as private companies with more than 500 employees and £500 million in turnover.

Regarding another ESG area of focus for Amundi Technology, Lesage says: "The third area is around the impact of climate and the new types of impacts such as biodiversity. We have created a new product called ALTO Sustainability which will expand to cover all the needs that will come, for asset managers, financial institutions, banks. It is clearly one the main technological evolutions of the next years."

As part of Amundi Technology's wider strategy, it wants revenue of €150 million (£126 million) by 2025 and Lesage says that the asset manager is on track with this goal. In terms of its approach, the business line targets the whole savings industry with technological cloud solutions, complemented with best-of-class services.

Amundi Technology announced on March 7 that US custody giant BNY Mellon had selected the firm and its Amundi Leading Technologies & Operations (ALTO) platform for trustee controls and compliance monitoring.

Lesage adds: "At the end of 2020, we created a new offer for asset servicing, with a tool for trusted control. We first sold it to CACEIS, then we expanded with Societe Generale Securities Services and now BNY Mellon. This is exactly aligned with my strategic objectives: we launch a new product and then we expand to more clients and go progressively bigger and bigger." Amundi has said it is targeting larger clients in 2022.

"Last year we signed with two major French asset managers, AG2R for €120 billion and Malakoff Humanis for €50 billion. We also signed with Bank Austria for discretionary portfolio management, we've just signed with a private bank in France, and we have equipped LCL with an advisory solution for all of its retail and wealth banking," comments Lesage.

Amundi Technology also has two insurance clients; one is Credit Agricole Assurances and the second is a French company called Agrica. The asset manager's technology arm has gained 15 new clients in 2021, which represents a 60% increase compared to the previous year.

Whilst the asset manager's technology arm is focused on ESG, the COO said he is not currently interested in cryptocurrencies, blockchains and non-fungible tokens (NFTs).

That said, Amundi Technology is part of different working groups and staying vigilant on how these technologies could evolve. "It's not an area of focus because I am very pragmatic on areas of growth and what exists today, as well as what the real needs are of banks and asset managers. Cryptocurrencies, NFT, and blockchain are an area of focus in the future, rather than in the next two years, so we are vigilant and will move if necessary," Lesage concludes.