Amundi lowers European sustainability rating by 100 funds

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LONDON, Nov 22 (Reuters) – Europe’s biggest fund manager, Amundi (AMUN.PA), has downgraded 100 funds representing 45 billion euros ($46.28 billion) in assets to a level of lower durability under European Union rules before the introduction of new reporting requirements in January.

The move comes as regulators take a tougher line on funds’ environmental, social and governance (ESG) credentials, fearing investors could be misled.

Amundi announced on Tuesday that it would reclassify “almost all” of its funds under the Sustainable Financial Disclosure Regulation (SFDR) from the European Union’s highest sustainability category, known as Article 9, in article 8, less strict.

The move comes ahead of January 1, when asset managers will be required to set out their sustainability goals and claims in fund documentation sent to clients.

Since the funds’ initial classification, some regulators like France’s AMF seemed poised to take a tougher stance on what an Article 9 fund should look like, said Jean-Jacques Barberis, head of coverage for institutional and corporate clients and ESG at Amundi.

“Our interpretation of the regulation, based on the position of some regulators, is that to be Article 9 you have to be 100% sustainably invested,” he said.

“SFDR has introduced a new element that you need to define what percentage of your investment is considered sustainable according to a methodology that is not fully harmonized,” he added. “We are advocating… for more harmonization on this front.”

Amundi said in a statement that it is taking a “deliberately cautious approach” to changing regulations, adding that its decision does not call into question “the sustainability characteristics of these funds”.

Amundi’s decision is part of an expected wave of downgrades of Article 9 funds as investors look to anticipate more regulatory scrutiny, the manager of a global fixed-income fund told Reuters.

“The big names in the house are worried about reputational risk, they don’t want the press or the regulator saying you need to switch those funds.”

($1 = 0.9723 euros)

Reporting by Virginia Furness Editing by Nick Zieminski

Our standards: The Thomson Reuters Trust Principles.

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