Stewardship Report
2020

Material reserved for professional investors onlyPreface
Amundi and stewardship
ESG and stewardship have been a core part of Amundi’s investment approach since creation.
We fully acknowledge our role as stewards on behalf of our clients, working to maintain and increase the valueof assets in which we invest for them, and using the full range of rights and influence that investment brings
to help us to do so effectively. We recognise the role that finance can play in delivering real world impacts,
and look to minimise harms and to work to address key issues, in particular the two major contemporary
challenges: climate change (visible in the climate transition and the need to protect ecosystems), and social
cohesion and fairness.
We therefore welcome the development of Stewardship Codes around the world, and the recommendation of
the Shareholder Rights Directive II that each EU country should have its own such Code. We see Stewardship
Codes as an important reminder to institutional investors of the influence that they wield and the need for themto wield it wisely to deliver real world outcomes that operate in the interests of their clients and beneficiaries.
We seek to adhere not just to the words of those Codes but also to their spirit.
This report sets out our response to the requirements of a number of different Stewardship Codes, and webelieve that it is a full answer to the questions that each Code raises. As an appendix, we provide a guide to how
this report delivers on the expectations of the EFAMA Stewardship Code, and the relevant codes and principles
for Australia, Canada, Italy, Japan and the UK.

2 | Stewardship Report 2020

Introduction
Foreword“Amundi believes that having a strong stewardship policy and making a positive
contribution to society’s key global challenges is part of its fiduciary duty as a
responsible asset manager. Since 2015 in particular, progressive alignment withthe framework set out in Paris Agreement has been paramount to our overall
strategy and relationship with the companies we invest in.
As stewards on behalf of our clients, we use Amundi’s influence as a Global
Asset Manager to seek to deliver real world impact. We integrate ESG risks andopportunities in our investment decisions, engage with companies on ESG issues,and take ESG considerations into account in our voting activities. We believethese actions not only drive long term value for our clients’ portfolios, they
provide an impetus for positive change in our society. We focus our efforts on two
major contemporary challenges: climate change (visible in the climate transition
and the need to protect ecosystems), and social cohesion and fairness.
The socioeconomic inequalities exacerbated by the Covid-19 crisis is a brutal
reminder that all around the world, vulnerable populations, companies andcountries, are extremely sensitive to shocks. This pandemic also highlighted
the fact that international collaboration and solidarity are the only effective
responses to address global challenges. This is applicable to governments, butalso to the private sector and the financial community above all.
For the companies we invest in, adapting their business models to the climate
challenge as well as aligning with the Paris Agreement is not just desirable
anymore, but a necessity to ensure long-term growth and profitability.
Furthermore, in the context of the current pandemic, equitable sharing of added
value is more important than ever: there will be no profitable companies in which
to invest on a planet ravaged by climate change, or in societies torn apart byinequality. Asset managers cannot be a substitute for government and publicauthorities however, we have an important role to play.
It is not easy to foster positive change. We aim to play our part through theactive dialogue we have with the companies we invest in as well as throughour voting activity. We shall be modest. Ultimately, these companies are
the real manufacturers of a fair transition and we cannot replace the role ofcompany management. Nevertheless, we hope to contribute positively to thistransformation through our responsible climate and social stewardship.”Jean-Jacques Barberis
Executive Committee Member,Head of ESG

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IndexAmundi and ESG: our philosophy and approach��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 5– Ongoing improvement: our three-year action plan������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 7
Tailoring our approach to client needs����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������8– Understanding and responding to specific client needs���������������������������������������������������������������������������������������������������������������������������������������������������������������������9– Reporting openly and transparently to our clients������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 11
How our structures support and enable ESG and stewardship work������������������������������������������������������������������������������������������������������������������������������13– Review and assurance of our ESG approach������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������15– Conflicts: how we ensure client interests always come first������������������������������������������������������������������������������������������������������������������������������������������������������� 16– Resourcing of ESG: our team, training and skills�������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������17– Incentives and ESG����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 18– Resourcing of ESG: external research providers������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 18
Integrating ESG into our analysis and investment processes�������������������������������������������������������������������������������������������������������������������������������������������������� 20– Exclusionary approach���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 23– Enhancing investment integration: 2021 ambitions and climate����������������������������������������������������������������������������������������������������������������������������������������� 24– Compliance with constraints����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 25
Active and value-focused engagement����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������26– Thematic engagements�������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 28– Ongoing engagements���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 33– Collaborative engagements������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 34– Escalated engagements������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������36
Considered and intelligent voting��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 37– Top level voting statistics for 2020��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 37– Voting oversight and process��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������38– Pre-AGM dialogue statistics�������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������38– Application of voting approach�������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������39
Promoting long-termism in markets��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������42– Active participation with regulatory bodies �����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������42– Further industry organisations of which Amundi is an active member ����������������������������������������������������������������������������������������������������������������� 44– Recent ESG and Stewardship collaborative statements����������������������������������������������������������������������������������������������������������������������������������������������������������������� 45– Support for research into responsible investment matters�������������������������������������������������������������������������������������������������������������������������������������������������������� 45

Appendix 1���������������������������������������������������������������������������������������������������������������������������� 47
Delivery against the expectations of the EFAMA
Stewardship Code 2018

Appendix 4������������������������������������������������������������������������������������������������������������������������� 50
Delivery against the expectations of Assogestioni’s
Italian Stewardship Principles 2016

Appendix 2���������������������������������������������������������������������������������������������������������������������������48
Delivery against the expectations of Australia’s
Financial Services Council Standard 23 Principles ofInternal Governance and Asset Stewardship 2017

Appendix 5����������������������������������������������������������������������������������������������������������������������������� 51
Delivery against the expectations of Japan’s
Stewardship Code 2020

Appendix 3���������������������������������������������������������������������������������������������������������������������������49
Delivery against the expectations of the Canadian
Coalition for Good Governance’s Stewardship
Principles 2017

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Appendix 6�������������������������������������������������������������������������������������������������������������������������� 52
Delivery against the expectations of the UK
Stewardship Code 2020

Amundi and ESG: our philosophy
and approach
Amundi is the leading European asset manager, and seeks to be a trusted partner that acts every day in theinterest of its clients and society. Our ability to earn the trust of a wide variety of private and institutional
investors all over the world has led us to have a global client base of over 100 million retail clients throughour distribution partners as well as our direct institutional and corporate clients.
ESG has always formed a key part of our values andhas been built in to Amundi from the company’s
creation. We are 70% owned by Crédit Agricole (CA),France’s largest bank and insurer. CA was founded by
French farmers as a cooperative and a mutual financial
institution more than a century ago. We are proud of
this heritage, which makes it natural for Amundi tothink first of clients’ best interests and to be responsive
to social needs and the environment. Our role is todeliver long-term value for our clients while being
conscious of the needs of the world around them.

Since its creation in 2010, from the merger of Crédit
Agricole’s fund management business with that ofSociété Générale, Amundi has always been a pioneer
in ESG. Responsible investment was one of our
founding pillars and remains central to our approach,a core commitment of our ongoing strategy. This
commitment is reflected both in our responsible
investment process and the solutions range Amundi
has developed, helping clients define and implement
their own approach to responsible investment.

Our core investment beliefs are founded on the understanding that long-term and sustainable success lies incollective effort and solid processes. Those beliefs are:

“In a non-stationary world,
Investment theory is a support
not a dogma”
Economic and financial models
should be used with a clear
awareness of their limits“Only a prepared mind canreact”
Investment requires theadaptation of widely-accepted
assumptions to navigate
increasingly frequent markets
disruptions“Investing for the long term
is an advantage”
Risk Premia are an importantsource of growth to be captured
over the long term“Long-term & sustainablesuccess lies in collective effort& solid processes”
Teamwork and idea crossfertilization are sources of added
value

Understanding that risk is multi-faceted (and operates
over different time-periods), and that investing for thelong term is an advantage, makes the integration of
ESG into our investment approach a natural elementof these beliefs. Our investment teams look beyond
market risk, recognising that risk encompasses credit,
liquidity, or reputational risks, as well as ESG risk
generated by a company’s activities. They analyse thisrange of risks with the support of an independent risk
department with a broad scope, and an ESG team thataccesses specialist research and can provide its own indepth analysis of ESG risks likely to impact portfolios.

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“Risk is multi-faceted”
Risk goes beyond market risk
to encompass other dimensions
such as liquidity, credit or
reputation“Optimality is not universal”
Opportunities should beassessed within the investor’scontext“Value creation goes beyond
performance”
Being asset owners andmanagers brings responsibilities

Furthermore, our view that value creation goes beyond
performance requires us to consider major systemicrisks, such as climate change and growing inequalities.
We recognise our responsibility to contribute to efforts
to address systemic issues, as well as to efficiently
allocate capital for the future. Our role in raising
standards, not least in terms of ESG performance by
the companies in which we invest, is a key part of this
responsibility. In general, we recognise that the private
sector must integrate environmental, societal andgovernance issues for four main reasons:1.	In a more liberal economy, economic and financial actors have a greater responsibility towards society.
2.	As long-term investors, asset managers have a major role to play in directing capital towards. Such as
projects related to the energy transition.
3.	
We must also influence the strategies of companies, especially when we are among their main
shareholders. ESG is a means of channelling money to the leading actors on these criteria, or on thecontrary to put pressure on laggards, as part of a constructive dialogue.
4.	We have a responsibility to our customers: we must deliver performance over the long term. And in aworld where intangible assets represent an important part of the overall valuation of companies, ESG
makes it possible to capture the decisive criteria over the long term.

The third item here makes clear how central steward­ship is to our ESG mindset, and to our overall investment
approach. We recognise that we are part-owners of the companies in which we invest and have an obligation
to influence their strategies towards approaches that more effectively take account of ESG issues. We seek
constructive dialogue to help drive change by laggards, and to support those which are already delivering
positively in terms of their ESG approaches.
This mindset of long-term part-ownership and collaboration with our investee companies means that our
stewardship approach is framed by our understanding of five key factors:– Integrated approach: social responsibility andsustainability, just as much as governance, areintegral to an understanding of a company as
an operating business. Our focus on ESG factors
allows a holistic view of intrinsic value and longterm economic performance.
– Regular dialogue: we maintain close contact withcompanies to understand their progress against
leading practice over time. We support companies
that improve over time and we recognise that not
everything can change at once.
– Transparency: our approach of dialogue and conti­
nuous progress presupposes relationships of trustwith the companies in which we invest. This is built
on foundations of transparency and honesty fromcompanies in their dialogue with us, and of ourown transparency to companies about our analysis
and the conclusions that we draw from it.

– Priority of major societal issues: we placeparticular importance on (1) the energy transitionand decarbonisation; and (2) social cohesion
through fair treatment of the workforce (including
issues such as pay ratios across each company,
employee share ownership and employee
involvement in corporate governance). These aresystemic risk issues that companies must take into
account.
– Pragmatic approach: we take account of eachindividual company’s specific context. The regula­tory, cultural or economic environment in which acompany operates can be decisive for some of its
choices, notably in societal areas.

We are confident that this approach leads over time to significant change at investee companies that is fully inclients’ best interests as well as having positive real world impacts. Some examples of these positive successes
are discussed in detail in the engagement section of this report and in our annual engagement report available
on the website.

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Ongoing improvement: our three-year action plan
Though we believe that we are already delivering effectively in clients’ interests, we recognise that there is aneed to challenge ourselves towards constant improvement and that every ESG approach can be enhanced.
Therefore in October 2018, Amundi adopted an ambitious three year action plan to increase our commitment
to responsible investment.
Under this action plan, by the end of 2021:– All actively managed open-ended funds will
have to maintain a higher ESG score than theirbenchmark index. We will also work towards the
adoption of ESG within passive management
strategies.
– All securities held in Amundi portfolios andbenchmark indices (more than 8000 companies)
will be covered by our ESG analysis.
– All of our votes (at around 3500 company general
meetings a year) will take account of our bespoke
ESG analysis.
– We will accelerate our development of innovative
solutions for financing climate-positive
development and the energy transition.
– We will extend the reach of our social impact
investing approach from France to the restof Europe and will more than double current
investment levels.

– We will double the passive management
footprint of our ESG approach by enhancing the
Responsible Investing ETF and open-ended index
funds range, implementing a systematic exclusionof the worst-rated companies in all open-ended
funds and developing innovative ESG overlay
solutions.
– We will strengthen our ESG strategic advisory
activities for institutional clients and retail partners
to support them in their own initiatives on ESG
matters.
– We will share knowledge and best practices withclients through our Amundi Executive Program.
– Through the Medici Committee think tank, we willcontinue to contribute to thought leadership on
the major societal challenges confronting global
businesses, and contribute to ongoing reflection
about the principles, applications and impacts of
responsible investment.

As can be seen from this table, we are making strong progress towards delivering on these ambitions aheadof schedule:
Objectives 2021 announced in 2018

Achievements as of december 2020

ESG CAPABILITIES AMBITIONS
Analysis

Increase number of issuers coveredfrom 5,500 to 8,000– Beyond the target: 11,000 issuers covered

Engagement

Systematically include ESG issues in voting
policy– 2020: we voted in favor of 67% of the ESG shareholders’proposals (of which 86% in favor of the climate proposals)– Amundi arguing in favour of including ESG criteria in
corporate officers’ variable remuneration

ESG MAINSTREAMING AMBITIONS
ActiveManagement

100% of open-ended funds* with an ESG
score higher than that of their benchmark
index

Operational set up made available beginning of 2021 across all
investment platforms to enable portfolio managers to include
an environmental and social impact analysis of the companies
in which we invest in their investment process, for 100% of ouropen-ended funds*

RESPONSIBLE INVESTMENT DEVELOPMENT
Specific
initiatives

Step up our specific Environmental andSocial initiatives, doubling assets undermanagement from €10bn to €20bn€ 21,9 bn as of end of December 2020

Solidarity

Increase our commitments to social andsolidarity-based economy, increasing AuM
from €200m to €500m€331 m AuM in the Amundi Solidarité Fund as of end of
December 2020

Advisory

Strengthen our advisory role by helping
institutional investors to take into account
ESG criteria

ESG Advisory Offering drafting is being finalized.
Deployment ongoing.

* All open-ended funds actively managed by Amundi to which an ESG-rating methodology can be applied.

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Tailoring our approach to client needs
Geographical spread of our clients
Europe ex-France and Middle
East client-base (€B)
RetailAmericas client-base (€B)
Retail245

Institutional

159

Total

404

45

Institutional

19

Total

64

Global client-base (€B)
Retail688

Institutional

1041

Total

1729

French client-base (€B)
Retail141

Institutional

792

Total

933

Asia client-base (€B)
Retail

253

Institutional

45

Total

298

Rest of the world client-base (€B)
Retail5Institutional

26

Total

31

We are honoured by the trust that our clients place in us, and seek to act in a reputable way to deserve thattrust. We recognise the fiduciary duty placed on our shoulders by clients entrusting us with their money, andwe work to deliver on that duty by investing always with their long-term interests at heart.
As “Investing for the long term is an advantage” is oneof our core investment beliefs, we believe that all clients
benefit from our long-term investment approach,looking out multiple years into the future to deliver
value for them. Hence, it is natural for us to consider ESG
issues within all of our active engagement approaches
given that these are factors with long-term impact thatshort-term markets often neglect.
For all active management for which we have full
discretion, we also apply a sectoral exclusion policy,
and bar investment in assets from issuers that wedeem of lowest ESG quality (rated G in our A-G scale).
This rating scale is discussed in more detail later inthis report, under Integration.
Our shareholder engagement approach applies acrossall of our assets under management. Depending on
particular client needs, we have deve­loped a seriesof specialist Responsible Investment (RI) solutions.
These encompass the following approaches thatcan be exclusive or combined: negative screening,
best-in-class screening, norms-based screening,sustainability themed investing, Impact investing, andcorporate engagement and shareholder action.
As of end December 2020, Amundi managed €378
billion assets in the following three areas:

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– Broad best in class approach: we manage €356
billion that take into account E, S, and G criteria
simultaneously in addition to traditional financial
analysis. These solutions meet the vast rangeof clients’ RI needs, objectives and motivations.
These solutions combine a best-in-class approach(selecting within each sector the issuers with thebest ESG practices) with a unique engagement
approach.
– Environmental solutions: solutions which support
the energy transition and green growth total€22 billion. These solutions (low-carbon index
solutions, green bond funds, thematic funds, joint
management company with EDF, etc.) form partof a series of actions aiming to mobilise investors
in the transition to a low carbon economy.
– Social impact solutions: solutions which support
the social and solidarity economy through an
impact investing fund of €488 million, including
Finance et Solidarité. This fund focuses on fiveimpact investing themes: access to decent
housing; access to recognised work; access tohealthcare, education and appropriate training;protect the environment; and support international
solidarity activities. Investing in these themesaligns with certain of the Sustainable Development
Goals (SDGs) and can help towards building
stronger social cohesion.

In addition, we are in the process of switching as muchas possible of our passively managed business into
funds that apply a thermal coal industry exclusion.
We are proactively converting our ETF offerings(including in the last year e.g. the flagship MSCI EMU
and S&P 500 ETFs) into coal-screened versions,and are seeking to ensure that any new ETF that welaunch also applies a thermal coal exclusion (unlessthere is specific client demand otherwise). In 2020,

such screened funds amounted to 85% of all our ETF
launches. We also continue to develop more specialist
ESG passive offerings to ensure that clients acrossour investment offerings can benefit from our ESG
expertise. In total, of the €158 billion assets on ourETF, Indexing & Smart Beta platform as at the end of
December 2020, 37% (or €58 billion) is managed withan ESG or climate dimension.

Understanding and responding to specific client needs
We seek to build close relationships with clients tounderstand their needs and to ensure that products
are tailored appropriately to them. Amundi supports
clients by providing tailor-made ESG solutions, anddepending on individual client ESG integration goals
and constraints, we offer the following support:– Defining an ESG charter– Creating a database of ESG criteria andcalculating ad hoc ESG ratings– Using the ESG ratings in the portfolio
management– Designing an ESG reporting system– Engaging with companies on specific themes
One of our 2021 ESG ambitions has been to strengthen
our ESG strategic advisory activities for institutional
clients and retail partners to support them in their
ESG development initiatives. We have moved forwardwith this and now offer customised training forsenior investment professionals from institutional
clients, covering various aspects of ESG such as ESG
integration methodologies, scoring systems, voting
and the SDGs. Where requested, we will also provide
advisory and consulting support to assist institutional
clients to develop their own ESG philosophy, policy
and programme.
Our close relationships with our key distribution
partners (especially in France, Italy and Spain) enable
us to have a close understanding of retail investor
needs. This ensures that we can tailor our ESG
offerings to respond to developing demand in key
markets. We constantly test the effectiveness of our
response to retail investor demand, through assessing
net promoter scores, formal testing of new ideas,
independent surveys, mystery shopper programmes
and so on.
An example of our responsiveness to client needs isour ongoing effort to foster the green bond market
globally, opening new frontiers and so enablingclients to invest in climate aware fixed income
instruments in under-served markets as well as where
green bonds have been established for longer. Given
that the green bond market has developed unevenly,
our strategy is to respond to the segments that are

9 | Stewardship Report 2020

lagging behind and yet where there is a crucial needto meet environmental challenges.
We have taken forward these efforts across threefrontiers, with relevant partners for each one:
– Geographic Frontier – Emerging markets.
In partnership with the International FinanceCorporation (IFC) we have developed an approachthat seeks to address the costly gap between
the low-yield environment in developed markets
that investors face and the extensive green
infrastructure financing need in developing
economies.
– Issuer Frontier – Public and Private. In partnershipwith the Asian Infrastructure Investment Bank(AIIB), we have developed an emerging market
corporate debt strategy focused on real economy
issuers of labelled and unlabelled green bonds,
leveraging AIIB’s Climate Change Assessment
Framework and addressing the underdevelopment of the climate bond market– Instrument Frontier – New debt segments to
be developed. In partnership with the European
Investment Bank (EIB), we are seeking toprovide €1 billion for the development of green
fixed income in Europe, by investing into green
high yield bonds, green private debt and green
securitized credit.
We are also committed to building an active market
for social bonds.
In a similar way, we have worked closely with clients todevelop appropriate products to respond to climatechange. We have prioritised the transition to a lowcarbon economy through an extended investment
offering of off-the-shelf and bespoke climate
solutions. Amundi aims to accompany investors in thedesign, management, and monitoring of their efforts
to integrate climate change into their investment
approaches. We use a structure of two major goals
in constructing climate change-related investment
solutions: managing risks and encouraging thetransition. This table shows the main strategies that
we have developed alongside our clients:

Because we work so closely with clients to understand and respond to their needs, we do not believe that
we fail to manage or deliver funds that fully comply and respond to client needs. Further, we ensure that ourcontractual relationships with clients explicitly set out our delivery of ESG and stewardship on their behalf, andwe work diligently to deliver against those client requirements.

EquityFixed Income

Illiquid Assets

Low Carbon Index
strategies & ETFs

Managing Risks

Climate Action Strategy1
Decarbonisation, Divestment strategies
Partnership
AIIB Climate Change Investment Framework

Encouraging
the Transition

European Equity Green
Impact Strategy

Global Green Bond
Strategy

Joint Ventures

Global Sustainable
Infrastructure Strategy2

Global Impact Green
Bond Strategy

Amundi Energy
Transition

Global Natural
Resources Strategies2

Emerging Green
Bond Strategy

Supernova Invest

Water Strategy

Partnership
IFC Emerging Green
Bond Strategy

Energy Solutions
StrategyPartnership
EIB European Green Credit

1. Strategy managed by CPR Asset Management
2. Strategy managed by KBI Global Investors
Source: Amundi

10 | Stewardship Report 2020

Reporting openly and transparently to our clients
Amundi welcomes the opportunity to be fully transparent and open with its clients, and maintains clear channelsof communication. This includes providing investors with a wealth of documentation on its RI approaches andresponse to ESG issues. This table summarises the documentation available:
Document nameContents

Frequency

Transmission method

Amundi ESG, SRI
and Impact

Amundi's philosophy and approach

AnnualWebsite amundi.com

ESG Corporate
Ambition 2021

Amundi’s Responsible Investment ambitions to becompleted by 2021-

Website amundi.com

RI transparency
reportAmundi's annual report regarding its ESG reporting
obligations arising from its adherence to Principles
for Responsible Investment (PRI)

AnnualWebsite amundi.com

Engagement report

Details of Amundi's engagement process, results ofour dialogue and engagement with companies on
topics related to ESG matters

AnnualWebsite amundi.com

Responsible
Investment Policy

Amundi's Responsible Investment policy

AnnualWebsite amundi.com

Voting policy

Analytical framework for Amundi's voting policy

AnnualWebsite amundi.com

Report on
voting rights
and shareholder
dialogue

Implementation of Amundi's voting policy

AnnualWebsite amundi.com

ESG reporting

For SRI funds: the portfolio's ESG ratings, those ofits benchmark and/or the investment universe

Monthly

Website amundi.com

Environmental, Social, and Governance Indicators
SRI transparency
code

AFG-FIR/EUROSIF transparency code for Amundi
SRI funds

AnnualWebsite amundi.com

Social impact
reporting

For social-impact funds: details of social impact
investments by topic (employment, housing, healthcare, education, non-profit services, international
solidarity, environment), list of social impact
companies funded, and testimonials

AnnualWebsite amundi.com

Furthermore, Amundi is able to provide both generic and customised ESG reports depending on individual
client needs. These can include the following components:
AMUNDI ACTIONS EURO ISR - I

Standard ESG reportingStandard ESG report: sample

Provided for Amundi’s open SRI funds and also for
dedicated funds and mandates on request. Includedin financial reporting and published each month.

SRI Terminology

This standard ESG report includes the following sections:– Definitions of the ESG criteria– The average ESG rating in the portfolio– The assessment for each ESG criterion– The ESG analysis coverage
It reveals the portfolio’s ESG ratings (from A to G)
and compares the portfolio to other ratings in theinvestment universe.

FACTSHEET
31/10/2020

EQUITY ■SRI according to Amundi
Rating scale from A (best score) to G (worst score)Socially Responsible Investment (SRI)

ESG criteria

The SRI expresses sustainable development objectives ininvestment decisions by adding Environmental, Social andGovernance (ESG) criteria in addition to the traditional
ﬁnancial criteria.

The criteria are extra-ﬁnancial criteria used to assess theEnvironmental, Social and Governance practices ofcompanies, states or local authorities:

SRI thus aims to balance economic performance and socialand environmental impact by ﬁnancing companies and public
entities which contribute to sustainable development
whatever their business sector. By inﬂuencing thegovernance and behaviour of stakeholders, SRI promotes a
responsible economy.

“E” for Environment (energy and gas consumption levels,
water and waste management, etc.).
“S” for Social/Society (respect for human rights, health andsafety in the workplace, etc.).
“G” for Governance (independence of board of directors,
respect for shareholders’ rights, etc.)

An SRI portfolio follows these rules :1 - Exclusion of E, F and G scores ¹
2 - Overall portfolio rating of C or above
3 - Overall portfolio rating above the benchmark
index/investment universe rating
4 - ESG rating for 90% minimum of portfolio stock ²

Average ESG rating
Environmental, social and governance rating

Of Portfolio²

From the universe of reference³

7.49%

A

35.86%
47.16%

E

0%

F

0%

G

E

0%

F

0%

G

0.25%

not rated

Benchmark : MSCI EMU

Environment
SocialGovernance

C+
C
B-

Overall Rating

B-

Coverage of ESG analysis

ISR Label

D

5.36%

Evaluation by ESG criteria

11 | Stewardship Report 2020C

15.24%

not rated

Number of issuers in the portfolio% of the portfolio with an ESG rating²

B

44.50%

D

0.67%

A

31.18%

BC

8.69%

0.13%

3.47%
B

131
99.87%C+

AMUNDI ACTIONS EURO ISR - I
FACTSHEET
31/10/2020

EQUITY ■Focus on Environmental, Social and Governance key performance indicators

Reporting with indicators
Produced monthly for the four SRI-labelled funds. This
form of reporting can also be provided to customers whorequest it in the context of discretionary management.
The report covers the following indicators:– Environment: Carbon footprint per million euros inrevenue– Social: Manager Diversity (average percentage offemale managers)– Governance: Board Independence Percentage(percentage of directors that meet the designatedcriteria for independence)– Human Rights Compliance: Decent working
conditions and freedom of association(percentage of companies with policies that
exclude forced or obligatory child labour orthat guarantee freedom of association, applied
universally regardless of local laws.)

Reporting with indicators: sample

In addition to the overall ESG assessment of the portfolio and the E, S and G dimensions, the manager uses impact indicators to assess the ESG quality of his portfolio. Four representative
indicators of Environment, Social, Human Rights and Governance have been identiﬁed. The manager's minimum objective is to deliver a quality score higher than that of the index* on at least
two of the indicators..

Environnement¹

Social²

Carbon footprint per euro million of sales

Managers’ Diversity
40 %Total carbon portfolio footprint (Portfolio/Index) : 261 / 278
300
72

69

200

42

34

100

0

Scope 3*
Scope 2
Scope 131.32 %

30 %

30.37 %

20 %

158

164

Portfolio

Benchmark

10 %

0%

This indicator measures the average emissions in metric tonnes of carbon equivalent per unitof a company's revenue (€ million of sales). This is an indicator of the carbon intensity of thevalue chain of the companies in the portfolio.
* ﬁrst-tier suppliers only
Coverage rate (Portfolio/Benchmark) :97.93%

96.72%

Gouvernance³

Women Managers

Portfolio

BenchmarkAverage percentage of women managers%Rated/Rateable - Women Managers

86.83%

85.65%

Human Rights Compliance⁴
Decent working conditions and freedom of association

Board Independence Percentage

150 %

100 %
72.90 %

75 %99.31 %

100 %

71.72 %

50 %

98 %

50 %

25 %

0%

0%

Human Rights Policy

Portfolio

Independent Board Members

Portfolio

BenchmarkThe average percentage of directors that meet the designated criteria for independence.
%Rated/Rateable - Independent board members

98.49%

98.31%

Benchmark

Percentage of companies with policies that exclude forced or obligatory child labor or thatguarantee freedom of association, applied universally regardless of local laws.
%Rated/Rateable - Human Rights Policy

98.49%

98.31%

Sources and definitions
At 12/31/2019 the impact indicators reported underwent the following changes:
1. Environmental indicator Unchanged: Carbon intensity This data is provided by Trucost, This corresponds to companies’ annual greenhouse gas emissions expressed in metric tons ofcarbon dioxide equivalent. (CO2e). It covers the six greenhouse gases identiﬁed in the Kyoto Protocol with emissions converted into global warming potential (GWP) in CO2 equivalent.
Deﬁnition of scopes:- Scope 1: All direct GHG emissions from sources that are owned or controlled by a company.
- Scope 2: All indirect GHG emissions arising from the purchase or production of electricity, steam or heat.
- Scope 3: All other indirect GHG emissions, upstream and downstream in the value chain. For reasons of data robustness, in this reporting we have chosen to use only part of scope 3:
upstream emissions linked to ﬁrst-tier suppliers. First-tier suppliers are those with which the company has special relations and can inﬂuence directly.
2. Social Indicator Previous indicator: average percentage of women Board members New indicator as from 12/31/2019: average percentage of women managers This indicator gives amore global measure of the advancement of women within the company. Data provider: Reﬁnitiv
3. Governance Indicator Unchanged: average percentage of independent directors on the Board of Directors. Change of data provider as from 12/31/2019: Reﬁnitiv
4. Human Rights Compliance Indicator Previous indicator: average percentage of employees represented in collective bargaining. New indicator as from 12/31/2019: percentage ofcompanies with policies that exclude forced or obligatory child labor or that guarantee freedom of association and which are applied universally regardless of local laws. This indicator enables
better assessment of fundamental human rights issues. Data provider: Reﬁnitiv*It is nonetheless possible that this target may occasionally not be achieved.

■ www.amundi.com

AMUNDI INDEX EQUITY GLOBAL LOW CARBONThis- XE
material is solely for the attention of “professional” investors.

Carbon footprint reporting

Carbon footprint reporting: sample

MONTHLYREPORT
31/ 01/ 2017

Portfolio's carbon footprint
Carbon footprint per euro million inv es ted

Carbon footprint per euro million of s ales
300

150

Scope 3*
Scope 2
Scope 1

41
100

200
40

20
39
54
16

50

100

78

28

169

44
80
0
Portfolio0

BenchmarkPortfolio

Benchmark : MSCI WORLD
This indicator measures the portfolio's carbon emissions in metric tonnes of carbon
equivalent (tCO2e) per euro million invested. This is an indicator of the emissions generated
by investment in this portfolio.

BenchmarkThis indicator measures the average emissions in metric tonnes of carbon equivalent per unitof a company's revenue (€ million of sales). This is an indicator of the carbon intensity of thevalue chain of the companies in the portfolio.

* first-tier suppliers only

* first-tier suppliers only

S ectoral contribution to carbon emis s ions

Geog raphical contribution to carbon emis s ions

40 %

80 %

30 %

60 %

20 %
40 %
10 %
20 %

tili
tie
s

Portfolio weight

ali
a

an
ad
a
C

itz
er
la
nd

Sw

Au
s tr

er
m
an
y

Kin
gd
om

G

U

nit
ed

th
er

N

O

Fr

Sta
te
s
nit
ed

C

U

an
ce
eth
er
la
nd
s

0%

U

En
er
gy
M
Te
ate
le
ria
co
ls
m
m
un
ic
ati
on
R
ea
le
s ta
te

0%
In
fo
Fin
rm
an
ati
c ia
on
ls
Te
on
ch
su
no
m
er
lo
gy
dis
cr
eti
on
ar
y
H
ea
lth
ca
re
In
du
C
s tr
on
ia
su
ls
m
er
s ta
ple
s

– Carbon emissions per €M invested– Carbon emissions per €M of revenue– Sector-based breakdown of carbon emissions(as a %)
– Geographical breakdown of carbon emissions(as a %)– Carbon reserves per €M invested

Scope 3*
Scope 2
Scope 1

62

Ja
pa
n

We have also developed carbon footprint measurement
tools. This enables reporting that can be delivered
according to individual negotiation, including the follo­wing indicators:

Contribution to carbon emissions

Portfolio weightThis chart compares the weight of each sector relative to its contribution to the portfolio's
carbon emissions.

Contribution to carbon emissions

This chart compares the weight of each country relative to its contribution to the portfolio's
carbon emissions.

Cov erag e of carbon analy s is

Issu ers n u m ber
Weight of rated issuers¹

P ort f ol i o
1256
98.62%

Ben ch m a rk
1633
98.65%¹ This measurement corresponds to the portion of private issuers for which we have carbon
data as a percentage of all private issuers.

S ources and definitions
The carbon emissions data is supplied by Trucost. It corresponds to companies' annual emissions expressed in tCO2e, which covers the six greenhouse gases defined in the Kyoto protocol
whose emissions are converted into global warming potential (GWP) in CO2 equivalent
Def i n i t i on of scopes:- S cope 1 : all emissions that arise directly from sources that are owned or controlled by the company.
- S cope 2 : all indirect emissions generated by the purchase or production of electricity, steam or heat.
- S cope 3 :all: other indirect emissions, both upstream and downstream in the value chain. To ensure the robustness of the data, in this report we have chosen to use only part of scope 3,
i.e. upstream em issions linked to first-tier suppliers. First-tier suppliers are those with which the company has a strong relationship and on which it can exercise direct influence.

■ www.amundi.com
This material is s olely for the attention of “profess ional” inves tors .

12 | Stewardship Report 2020

How our structures support and enable ESG
and stewardship work
As ESG is built in to the nature of Amundi and the service we offer to our clients, oversight of both ESG
and stewardship runs from the very top of the organisation, including our CEO and other members of theexecutive leadership. ESG sits at the core of Amundi. In a very real sense, it is who we are: Amundi is both a
responsible investment doer and a responsible investment enabler:
Amundi, Responsible Investment Doer

Amundi, Responsible Investment Enabler– Leading expertise: founding pillar at thecreation of Amundi, giving us a 10-year trackrecord ESG methodology.

– Spreading the word: through pro-active
engagement to promote your beliefs in yourportfolios.

– Evolutive approach: from tools tomethodologies, to integrate new ESG concerns.

– Expanding your reach: through innovation by
supporting supply & demand and creating newmarkets.

– Comprehensive ESG one-stop-shop: foranalysis, off-the-shelf investment solutions,engagement & tailor-made design.
– Concrete solutions provider: across asset
classes and financial markets.

– Tailoring our know-how: to your ESG journey
through our range of expertise, from active to
passive management, across the whole asset
spectrum.
– Fostering meaningful change: our scale gives
scope for real influence.

Jean-Jacques Barbéris, an Executive Director of Amundi and Director of the Institutional and Corporate Clients
division & ESG, has overall responsibility for ESG and stewardship. We have made a deliberate effort in recent
years to reinvigorate the management and oversight of ESG and stewardship. Élodie Laugel, a senior memberof the investment team, was recently appointed Chief Responsible Investment Officer to lead our ESG efforts.
In addition to her appointment in 2020, the following significant appointments have also been made recently:
Timothée Jaulin, Head of ESG Advisory, Business Development and Advocacy (appointed 2020), Caroline
Le Meaux as the Head of ESG Analysis, Engagement & Voting (appointed 2019); Tegwen Le Berthe as Headof ESG Scoring, Methodologies & Financial Engineering (appointed 2019); and Stéphane Taillepied as Head of
Voting (appointed 2018). This broad refreshment leaves the team as follows:

Responsible investment business line
Yves Perrier
Amundi CEO

Jean-Jacques Barberis

Member of the Executive Committee andHead of Institutional Clients Coverage & ESG

NB: Yves Perrier has
recently announced
that he will be stepping
down from the role of
CEO at Amundi.
He will be replaced byValerie Baudson on the10th of May 2021.

Élodie Laugel

Chief Responsible Investment Officer

Hélène Nanty
COO

Tegwen Le Berthe

ESG Method and Solutions
ESG scoring methodology, engineering & ESG
database monitoring

Caroline Le Meaux

Research, Engagement & Voting

ESG Research (Caroline Le Meaux)– Proprietary ESG analysis methodology– ESG Engagement policy– ESG Exclusion policy
Voting (Stéphane Taillepied)

Source: Amundi. As of March 2021

13 | Stewardship Report 2020

– Assess resolutions and Vote at AGMs
– Pre-AGM discussions with companies

Timothée Jaulin

Development and Advocacy
ESG advisory, bespoke ESG solutions
development, advocacy & external
communication

In the last year, we also made the decision to separate out the Responsible Investment team into an inde­
pendent business line separated from the investment department. As we hoped it would, this formal distancing
has enabled us to ensure that relationships are strengthened across the whole business, and the responsible
investment team is clearly available at the service of all business lines and across all investment platforms.
As the organisation chart indicates, the responsible
investment approach is built on three pillars, eachwith its own senior leadership: ESG data; qualitative
research, engagement and voting; and advisory,development and advocacy. The independence of the

ESG analysis team from the investment management
and financial analysis teams ensures the quality and the
independence of the ESG analysis. Nevertheless, ESG
analysts work in close collaboration with Amundi’s
portfolio management teams.

To provide formal oversight of our ESG and stewardship approach and its effectiveness, we have five key
committees in place. These are monitored by Amundi’s CEO on a regular basis.

ESG Strategic Committee
Chaired by Amundi’s CEO, this committee approves and monitors Amundi’s ESG and climate strategy. It approves
major strategic positioning of the Responsible Investment policy and monitors key strategic projects. The committee is
responsible for:– Approving Amundi’s ESG and climate strategy– Approving the strategic positioning of the Responsible Investment policy (exclusion, engagement and voting policies)– Steering and monitoring the ESG 2021 ambition project– Deciding on issues escalated from the ESG Rating, Voting or Social Impact Committees
The committee meets on a biannual basis.

ESG Rating Committee

Voting Committee

Including senior managers from investment, financial,
extra financial, sales, marketing and risk departments.

Including senior managers from investment, financial
and extra-financial departments, as well as external
advisors. It supervises the different entities’ voting
policies to ensure their consistency and acts as anadviser for voting decisions on individual cases.
This committee is in charge of reviewing and validating
the following key voting activities:– Principles of Amundi as an active and responsible
shareholder, and interaction with issuers– Periodic reports on shareholder dialogue or on
voting activities– Local or individual issues not specifically covered byvoting policies– Escalation process with issuers presenting specificrisks– Voting decisions for individual cases where theimplementation of the voting policy could not in thebest interest of the holders of the funds
The committee also ensures alignment of voting
activities with key ESG engagement themes.
The committee is held on an ad hoc basis as necessary,
as well as on demand by members, and with a peakfrequency rate during the voting season. It reviews thevoting policy annually.

The committee is responsible for:– Defining Amundi’s ESG standard method, tools,
processes and resources– Approving the rules on exclusion and sectoral
policies– Reviewing and taking decisions regarding ESG
rating issues– Approving changes to the standard ESG method
requested by investment managers– Developing Amundi’s ESG jurisprudence
The Committee also deals with ESG subjects related
to climate and the energy transition (such as our coal
policy, carbon footprint methodology, rating of issuers
facing climate related controversies), and social andsocietal issues.
The committee meets monthly.

ESG Management Committee
Including the senior leadership of the ESG function.
It approves investment strategies for private equity
and private debt in the field of social and solidarity
investments. This committee is responsible for:– Setting objectives and priorities for the ESG andvoting teams– Building a consolidated view of ESG capabilities andresources across the Group– Promoting ESG across the business, addressing key
client requests and business opportunities
The committee meets weekly.

Social Impact Committee
This committee includes senior staff in the ESG andinvestment functions, and is chaired by the Chief ofSocial Impact Investing.
It approves investment strategies for private equity
and private debt in the area of social investment andinequality.
The committee meets every two months.

14 | Stewardship Report 2020

Review and assurance of our ESG approach
We keep our ESG approach under regular review.
Each of the committees has the responsibility toreview at least annually our policies and processes
under their remit. They also oversee our progress
towards delivering the changes necessary to fulfil ournine ambitions by the end of 2021. Amongst otherchanges in 2020, we developed our approaches on
engagement and voting to more fully reinforce our
two key ESG priorities of climate change (the energy
transition and the need to protect ecosystems), andsocial cohesion and fairness to the workforce.
Specifically, we have further tightened our exclusion
policies in relation to thermal coal production and use,
and in relation to tobacco (the latter a reflection of
having signed the Tobacco-Free Finance Pledge). We
also made key changes to our voting policy, including
now requiring that long-term incentives for executives
include ESG key performance indicators (KPIs), andstandards that made it more likely we would support
shareholder resolutions (particularly on climatechange). We continue to evolve our approach: for the2021 year, we have agreed to vote against director
elections or discharge at companies operating insectors heavily exposed to climate change which do
not have satisfactory strategies to align with the Paris
Agreement, and in our passive funds we will do thesame for all companies excluded from active portfolios
for climate reasons. We continue to challenge ourselvesto do better on behalf of our clients, and expect further
enhancements in future years.
On specific funds, we also have in place French SRI
labels and IFC Performance Standards, and will
look to put in place other certifications as relevant.
We reinforce these external certifications throughour internal assurance and oversight processes. In
particular, ESG constraints are verified daily by our Risk
Department. This ensures compliance with the Amundi
exclusion policy and ESG-specific portfolio rules. Our
ESG processes and systems are also audited internallyby the Amundi Internal Audit Department.
There are two levels of quality controls on the ESG
data input into our systems: the first relates to data
(project management), and the second to businesslines. The first, data-related quality control, is
performed on the files provided by suppliers. It covers,in particular: (1) checking the files’ contents, not least
to ensure scores are up-to-date; and (2) checking
the format quality of the files provided by suppliers.
The second-level controls in the business line ensures
the integration quality and scoring of the criteria. It
is particularly used to detect missing criteria, as wellas insignificant or anomalous scores. Relevant alerts
require members of the analyst team to intervene.

15 | Stewardship Report 2020

Furthermore, every month, in order to calculate ratings,
a ratings simulation is sent to the entire team. Eachanalyst then validates the ratings of the companies
that they oversee. In each step in the process, multiple
quality controls are performed, including: (1) controls
on stability of the analysis universe, identifying entries
and departures from the universe or those that are
excluded, as well as companies coming close to
doing so; and (2) controls analysing the rotation rate,
verifying the dynamic of the rating breakdowns byquintile between different months, and performed
with respect to the overall rating (ESG) as well as eachindividual component (E, S, and G).
Internal audit and risk play a key role in our oversightof ESG processes and systems, providing confidence
and assurance about quality and consistency of ourapproach and delivery. The risk team is independentand provides challenges and input across the business.
As an example of their input into our Stewardship and
ESG work, there has been an annual assessment of ourvoting processes for each of the last three years (withthe fourth still under way), which has made a series ofconcrete recommendations for improvement. Despite
an increase over that time (because of mergers andconsolidation of our workload) of more than 30% in
the number of AGMs at which we voted, and of morethan 25% in the number of resolutions considered, thereview process noted only a small number of issues.
Nonetheless, over the last two years we have been
implementing a set of recommendations to enhance
our procedures and remove the risk of humanerror, across a range of areas including ensuring all
portfolios are covered by our voting approach, allappropriate holdings are voted, powers of attorney
are up to date and stock recalls are successful, andensuring our record-keeping covers every voteagainst management. We continue to make progressagainst the action plan; this progress is itself subject
to regular review by our risk team.
In addition to this internal review process, we also
benefit from annual independent assurance under
ISAE 3402, carried out by PricewaterhouseCoopers.
This provides independent assurance in relation to our
key internal processes, with a particular focus on ourdelivery effectively on behalf of clients and in line withour client agreements. Among other key elements
covered by our ISAE 3402 report is client reporting,where the assurance confirms that our processes are
effective in their aim of delivering fair reporting toclients. This bolsters our confidence that our work tocheck and assess the fairness of our reporting, andthen to apply controls and checks overlaying thatwork, does in fact deliver fair and honest reporting on
our activities to the benefit of all our clients.

Conflicts: how we ensure client interests always come first
We are conscious that the assets we manage are ourclients’ money, and we therefore recognise that weare fiduciaries on their behalf, needing to exercise
any rights or influence wholly in their best interests.
To help respond to this, we have active processes
to minimise and manage any conflicts of interest.
Our approach seeks to identify, prevent and manage
any conflicts of interests that may arise in the conductof our activities.
The approach to stewardship conflicts sits within abroader approach to the management of conflicts
which encompasses:– An internal policy for managing conflicts ofinterest detailing employees’ responsibilities to
identify, prevent and manage conflicts;– Strict procedures and rules governing the primacyof the client interest;– Strict procedures and rules governing theselection and remuneration of intermediaries;– Internal committees (broker/dealer, products, risk
management, compliance, audit, compensation),
which take full account of ethical considerationsin their decisions; and– Appropriate training of relevant employees
to ensure that they are fully aware of their
responsibilities and obligations.
Amundi has long had in place protections regarding
stewardshipconflicts
arisingfromAmundi’scommercial relationships with key business partners,
and recognising the potential for an appearance of
conflicts from cross-directorships of senior Amundi
staff. We maintain a register of such situations andparticularly detailed record-keeping to ensure that the
management of conflicts is kept in mind. In all cases
we seek to ensure the primacy of clients’ best interests.
The register of specific companies where Amundi has
a partnership or joint venture relationship that leads
to a particular conflict, or risk of conflict, is reviewed
annually and active consideration is given to whether
there are additional companies that ought to be
added to the list (or, more rarely, removed). The teamalso considers these issues and applies judgement
during the year, so for example during 2020 thevoting team noted that there had been partnerships
announced between Amundi and Sabadell in Spain
and Bank of China. These partnerships did not exist
when the last annual review was carried out but bothpartners were added to the list during the year suchthat any appearance of conflicts could be managed.

16 | Stewardship Report 2020

The following conflict mitigation and management
measures are in place:– Organisational measures - Amundi maintains
strict independence of the voting and stewardshipfunction from the client relationships area tosegregate stewardship from any possible conflicts.
– Procedures and controls – we have in place
the following mechanisms: (1) internal policy on
conflicts and code of ethics, requiring employees
to identify, mitigate and manage conflicts; (2)strict procedures asserting the primacy of clients’best interests; and (3) an ad-hoc committee
can be called to deal with the approach to any
appropriate conflict. For example, any voting
decision in relation to Amundi’s partner and joint
venture companies is automatically escalated to
the Voting Committee and the decision-making
on all votes is fully documented – with particularattention to any situation where the vote is not inaccord with the usual Amundi voting policy.

Case study on management of conflicts
During 2020, the voting committee was
asked to confirm a proposed voting decision
on behalf of Amundi’s clients at a financecompany that is one of Amundi’s business
partners – a local distributor of our products.
While most of the resolutions were mundane
and uncontroversial and therefore deserved our
support, we were concerned by the resolution
regarding executive remuneration. In particular,
it seemed that decision-making was wholly at
the discretion of the supervisory board of thecompany and that there was no clear alignmentof pay with disclosed performance conditions.
We concluded that it was not appropriate tosupport the proposed remuneration on behalfof clients without greater clarity regarding thelink of pay to performance.
The voting committee confirmed this decision
to vote against, notwithstanding the existenceof the conflict of interest.

Following a review during 2020 by an independent
stewardship specialist, with regard to our stewardship
activities, Amundi has decided to enhance theformal documentation of the prevention of potential
conflicts of interest to fully reflect that we record,monitor, manage and mitigate all conflicts under thethree following categories:

– Conflicts where an investee company is related
to a large client: Amundi is in the process ofenhancing the prevention of potential conflicts ofinterest where Amundi exercises voting rights at
the AGMs of its largest clients. The implementationof this process will follow the same approach aswhere Amundi exercises voting rights at the AGMs
of its main distribution partners: by escalating
all such stewardship decisions to the arbitrationof the voting committee to ensure a fair andindependent stewardship decision.
– Conflicts between the interests of different clients(such as where they have different interests in a
corporate transaction or different exposures to acompany subject to bankruptcy or restructuring):
Amundi is in the process of enhancing theprevention of potential conflicts of interest related

to corporate transactions (such as restructuring
or bankruptcy) by escalating all such stewardshipdecisions to the arbitration of the voting
committee to ensure a fair and independent
stewardship decision.
– Conflicts involving individual employees (suchas where stewardship staff have personal
relationships with individuals at investee
companies, going beyond the current approachof monitoring situations where there are common
directorships): Amundi is in the process ofenhancing the prevention of potential conflicts ofinterest related to its employees (including voting
and engagement teams) by additional specificreporting and an annual review of the conflicts ofinterest of employees.

We will continue to keep the issue of conflicts under review in relation to ESG and stewardship activities, andwill look to enhance our approach over time to ensure that clients have full confidence that we continue tooperate solely in their best interests.

Resourcing of ESG: our team, training and skills
Our ambition that every open-ended fund should beat its benchmark in ESG terms means that we now expect
all of our investment teams to integrate ESG and consider it actively, and all investment professionals are
moving forwards to develop their skills and work to ensure they have the necessary insight to deliver on thisexpectation. They are supported in these efforts by a dedicated resource of 36 people in our global stewardshipteam. Of the 36 people in the stewardship team:

5

16

5

6

4

people areresponsible for data
provider selection& ESG rating
methodology

people areresponsible for
ESG research &engagement

people areresponsible
for voting &pre-meeting
dialoguepeople cover advocacy
and the developmentof new products andapproaches throughclose dialogue withclients about their needs

people offer
central leadershipand oversight

These specialists work alongside and support thedecision-making of all of our investment teams.
Every portfolio manager is expected to consider ESG
issues as a normal part of their investment analysis;
this expectation has particular emphasis since weintroduced the requirement that every actively
managed open-ended fund should have an ESG rating
above that of its benchmark. Investment integration is
discussed fully in Integrating ESG into our analysis
and investment processes below.
The profiles of the ESG analysts are diverse and wecontinue to seek to maintain a balance of diverse
skills and backgrounds within the team. They are of
six nationalities and based in four offices around theworld, having had work experience in 10 different
countries. We believe this diversity is one of the
key features that contributes to the quality of our

17 | Stewardship Report 2020

ESG research. There is strong experience acrossthe team in analysis, both on the sell-side andbuy-sides, but also a range of experience in audit andin ESG and CSR consultancy, as well as direct industry
experience in a variety of businesses, from fashion
to insurance, and from construction to IT software.
This breadth of experience helps shape the industry
specialisms within the team, and gives strong insight
into the operational challenges of the business,enabling more thoughtful understanding of the issues
faced by the companies in which we invest on clients’behalf. Our ESG analysts broaden their knowledge
and enjoy ongoing training and development on ESG
matters through:– Monthly training meetings between analysts(informal workshops)

– Online course platforms or MOOCs(Massive Open Online Courses)– Third-party conferences (e.g. OECD, brokers)
Additionally, annually a group of four analysts andportfolio managers benefit from dedicated training
on ESG issues in emerging markets from a partner
Multilateral Development Bank.

Moreover, as well as ad hoc and customised training
as required, Amundi offers two internal ESG
training modules to all employees, enabling the ESG
team to share their knowledge and expertise andensure a baseline understanding of ESG matters isshared broadly across the organisation. Mandatory
presentations are organised to train all staff
concerned with ESG integration, including RI analysts,
management, marketing, control, compliance, risks
and governance.

Incentives and ESG
ESG is integrated into remuneration structures acrossthe organisation, from the CEO downwards. For the
CEO and top management, non-financial criteria,
including various ESG criteria, form around 35% of
the annual performance assessment. In addition, thedeferred element of annual variable compensationis only fully released on the basis of success against
ESG criteria.
ESG criteria are fully integrated in portfolio managers’
role description and as such are part of their annual
evaluation and their compensation. In addition, ourinvestment teams are incentivised on risk-adjusted
investment performance over periods up to 5 years.
Among the qualitative criteria helping us assess therisk-adjusted aspects is an assessment of compliancewith the ESG policy and other risk factors. The
expectation as part of our 2021 ambitions that active
open-ended funds have the objective to exceed theirbenchmarks on ESG measures has automaticallyraised the threshold for delivery of this qualitativerequirement in recent years.
The salaries of ESG team members are benchmarked
against peers. Their variable remuneration is basedon both qualitative and quantitative analysis of theireffectiveness and delivery against expectations, aswell as an element of broader profit-sharing basedon Amundi’s overall performance. For ESG analysts,
quantitative criteria are primarily related to thenumber of: analyses and meetings with companies;
sector analysis; and cross-sector thematic analysis.
The qualitative criteria include: quality of analysis,
understanding of companies and sectors, maintenanceof the analysis; proficiency in ESG analysis and efforts
to continuously improve analytical skills; active
participation in engagements; and active participationin thematic research. Similarly, voting analysts areevaluated based on both quantitative and qualitative
factors relevant to their responsibilities.

Resourcing of ESG: external research providers
Our ESG expert research team leverages off data
provided by external providers. The information
received covers ESG scores, ESG controversies, andother ESG-related information. Our ESG Analysis
draws on this data to generate internal ESG scores/
ratings, ESG controversies analysis, and processes thedata to serve clients’ specific exclusion requirements.
Some external research providers have also beenchosen for their climate-related data with regards toclimate risk management and CO2 data.
We source inputs from market-leading sources
globally. We recognise that each of the leading
research providers has its own methodology andinbuilt biases, but by taking inputs from a range ofsources and applying our own proprietary analysis
and approach we believe that we can gain a fuller
understanding of companies and provide ourinvestment teams with unique and valuable insights.
Comparing the data we receive is crucial for us in order
to assess the quality of the underlying information that
we deploy in our strategies. We seek to identify any
significant discrepancies in terms of the outputs from18 | Stewardship Report 2020

different ESG or climate-related data providers, and(in addition to our standard ESG analysis) conduct a
deeper analysis ourselves.
ESG data is verified internally to assure its consistency.
As well as this ability to cross-refer, the use of multiple
data providers has several additional benefits:– It allows for a greater overall coverage of issuersby combining different footprints (some providers
have better coverage of particular regions/sectors/asset classes).
– It allows us to have multiple perspectives on theanalysis of an issuer on a specific criterion. As data
providers take different approaches to analysing
a particular criterion, the use of multiple data
providers’ information gives the ESG analysis teama 360° view on critical ESG topics and relevant
issuer behaviour.
– It gives Amundi access to more frequent analysis
updates, as each data provider updates theiranalyses according to different schedules.

At present, the different data providers we use are as follows:
Team of ESG experts

External data providers
General scope

Controversies / controversial weapons

40+
specialists responsible for
ESG development, research
and methodology in a

Climate

Dedicated Responsible
Investment Business Line

Sovereigns

Proprietary ESG tools– Internal ESG database tocollect, analyze & processdata from providers– Quality check done in two
steps: an automated and
ESG analyst review– Dissemination of ESG
ratings on Amundi’s
portfolio management
system ALTO* formanagement / control /reporting teams to access> 11,000 issuers ESG rated

ESG coverage expands across main equity & fixed income indexes
Source: Amundi, March 2021. ALTO*: Amundi Leading Technologies & Operations

We use these data sources to inform our proprietary
ESG analysis and rating methodology. This applies
37 quantifiable and measurable criteria reflecting key
challenges by sector. Of these, 16 are applied acrossall sectors and 21 are specific criteria only applied
to one or more sectors. These criteria are weighted
using performance drivers (reputation, operational
efficiency and regulation), and the weights assigned
to each criterion translate its importance into thefinal ESG ratings. Our ESG analysts retain discretion
and are expected to use independent professional
judgement before agreeing the Amundi ESG ratings.
We update our ratings on a monthly basis.
Our ESG analysts also have access to informationfrom additional sources beyond these extra-financial
data providers, including:– Dialogue with companies’ management andstakeholders– Companies’ publicly disclosed documents– Equity and credit analysts of the Amundi Group– Sectoral experts– NGOs, scientists, unions, media, brokers sell-side
reports– Bloomberg, Reuters
There is therefore a direct feedback from engagement
activity into the ESG ratings and analysis – and so into
the integration of ESG matters into the investment
decisions of our portfolio managers. These sources of
information form an essential component in the ESG
analysis process. They allow ESG analysts to cross-19 | Stewardship Report 2020

check information and data on specific topics, as
quality and reliability of information is essential.
All the information provided by external managers,
once quality checked and filtered through theprofessional assessment by our analysts, feeds ourinternal IT tool (ALTO). This insight in ALTO facilitates
all of our Portfolio Managers to deliver thoughtful andactive ESG fund management.
We continually monitor the market for developments
and to ensure access to quality information. This
ensures we are aware of increases in coverage andscope of the ESG data that is available, including
making sure we have access to innovative products,
including raw data and forward-looking assessments.
We constantly monitor ongoing development projects
at important and innovative ESG data providers.
We also continuously monitor the quality of its
ESG research and data from external sources. This
monitoring includes an automated quality check (setout under Review and assurance of our ESG approach),
as well as an ongoing qualitative check from our ESG
analysts, who are specialists in each of their sectors.
Comparing the data is crucial for us in order to assess
the quality of the underlying information that we usefor our strategies. Typically, if ESG or climate-related
data gives us very different outputs, we observe
these discrepancies, and conduct a deeper analysis inaddition to our principal ESG analysis.
In order to successfully monitor ESG data suppliers
and select the appropriate data, the ESG Rating &Methodologies team and the ESG analysts carryout the following actions, producing annual reports
on each for consideration by the ESG Ratings
Committee:– Complete annual review of each major ESG
supplier and production of a detailed assessment;– Summary table of supplier offers in relevant ESG
categories, updated regularly and including anassessment of services;– Monitoring table of regular supplier meetings anddiscussions, including the main points covered;and– Annual supplier assessment report updated by
the ESG Analysis team, integrating the views ofdifferent analysts on all ESG data suppliers.

Integrating ESG into our analysis
and investment processes
The environmental, social, and governance issues that face companies have a major impact on society.
They also have financial consequences for businesses, both in terms of risk and opportunities. Amundi wishes
to better understand these factors in order to fulfil its role as a good corporate citizen and to incorporate
those risks and opportunities when making its investment decisions on behalf of our clients.
We firmly believe that ESG analysis consolidates value
creation as it provides an all-round vision of companies.
This view has led us to integrate ESG criteria across all of
our active management processes, and to implement
an engagement policy. Underlying ESG integration isthe conviction that a strong sustainable development
policy enables issuers to manage their regulatory andreputational risks better and in addition to improvetheir operational efficiency. By integrating such issues
fully, investors can therefore take into account longterm risks (financial, operational, reputational, etc.)
and also fully exercise their responsibility to clientsand society as a whole.

1. Criteria & Weights
Using a Best-in-Class approach,
the ESG analysts are in charge of:– Defining the most relevant criteria
for each sector– Weighting the criteria and theunderlying data by sector– Assessing the quality of data
providers & improving themethodology

Qualitative Approach

Thus for us, the aim of ESG analysis is to raise awarenessand encourage companies to do business with asustainable development approach, while assigningthem an ESG (Environmental, Social, Governance)
rating. Our analysis makes it possible to incorporate risks
related to the company’s activity, enabling us to reduce
the overall level of risk our clients face. We therefore
constantly monitor our investee companies, across all
E, S and G factors as well as more traditional financial
metrics. We seek to identify problems and concerns
early before they damage company performance andaffect our clients’ investment performance.

2. ESG rating calculation

3. Qualitative input– ESG Rating are calculated byusing the ESG criteria andweights assigned by the analysts
and combining the ESG scoresobtained from our external data
providers

In addition to ESG ratings, our ESG
analysts integrate qualitative input
retrieved from:– Strict calculation process– Monthly update– Over 10-year track record in ESG
ratings

Quantitative Approach+11,000 issuers ESG rated–M eetings with companies–M eetings with industry experts–E SG data/research from external
providers and open source
materials

Qualitative Approach

ESG coverage expands across main equity & fixed income indexes
Source: Amundi as of December 2020.

20 | Stewardship Report 2020

This enables them to integrate sustainability issues
into their investment decisions and apply any relevant
constraints for their portfolios.

Our ratings are based on insights from the range ofdata providers set out above under Resourcing of ESG:
external research providers. Once quality checked
and with an overlay analysis from our sector specialist
ESG analysts, these inform our 37 quantifiable andmeasurable criteria reflecting key challenges by sector.
Of these, 16 are applied across all sectors and 21 are
specific criteria only applied to one or more sectors.
These criteria are weighted using performance drivers,
and the weights assigned to each criterion translate
its importance into the final ESG ratings. We update
our ratings on a monthly basis.

Our ESG analysts also annually review the application
and weightings of the 37 criteria to each sector.
This enables us to maintain quality and ensure that
we continuously seek to improve our analysis byconsidering the materiality of the criteria and theirweights. Our ESG analysts are sector specialists andwithin each sector are tasked with:– Tracking trends (macroeconomic, regulatory, etc.)– Establishing weights based on the materiality of
ESG factors

The outcome of this aggregation and analysis ofa range of sources is our proprietary rating, now
applicable to 10,000 issuers. This ranges from A toG, with G considered the worst. Different funds are
permitted to hold different stocks – for example,
almost all portfolios (the only exceptions being somepassively managed portfolios) are required to exclude
G rated stocks. These ratings, and the calculations of
the 37 criteria that are relevant to arriving at the ratings,
are available to all of our portfolio managers throughtheir investment portfolio management software tool.

– Interviewing a representative panel of companies– Writing sector analysis reports– Selecting the most qualified external data
suppliers meeting the definition of our criteria– Defining the weights to each data supplier that
represent the level of contribution of each supplier’s
ESG score to the final ESG score of an issuer.

The outcome of this analysis in terms of headline A-G ratings is as follows:##stocks
stocks

G

F

E

D

C

B

A

ESG Rating Scale200

is based on a letter rating scale from A to G (where A
is the best, and G is the worst). The ESG Rating is thetranslation of the Z-score into an alphanumeric scaleof 7 segments from A to G.

150

ESG score

250

Weighted average of the issuer’s E, S and G scores. Eachpillar is the weighted averaged of the scores obtained
from each criteria that the E, S, or G pillar is composed of.

100

Single ESG rating per issuer,
applicable to all asset classes

0

G-rated issuers are assessed manuallyand submitted to the ESG rating committee
for examination and approval.

-3.1
-2.9
-2.7
-2.5
-2.3
-2.1
-1.9
-1.7
-1.5
-1.3
-1.1
-0.9
-0.7
-0.5
-0.3
-0.1
0.1
0.3
0.5
0.7
0.9
1.1
1.3
1.5
1.7
1.9
2.1
2.3
2.5
2.7
2.9
3.1

50

Z-Scores
Z-Scores*Calculation methodology which transforms ESG criteria into Z-scores (deviation in the security’s score compared with the average score for the sector,
by number of standard deviations).

Issuers are monitored on an ongoing basis and any news on controversies is factored in the ESG analysis.
Controversy analysis can lead to a change of rating either at the level of the relevant criterion or at the final
ESG rating level.

21 | Stewardship Report 2020

Our proprietary Stock Rating Integrator (SRI) tool also enables total transparency. At any time, the rating
assigned to a given company can be explained using a flower graph based on the company’s scores on thevarious criteria. Here is an example of an ESG rating of a company displayed in the SRI tool:
A transparent and granular ESG rating system
Board Structure
ESG Strategy

D

B
8%

Ethics8%

Remuneration

C

Green Investing

B

B

9%

3%

C

Emissions and energy use

B

Responsible Marketing

B

5%

23%

Shareholder’s rights

Green Insuring

23%

E
A

C
G 43% ESG 35%

6%

Audit & Control

10%

7%

C

C

S
B

C
2%

9%
3%

B

1%

Labour Relations

8%

Employment practices

C

C
B

Health & Safety
Source: Amundi

Financial inclusion

In addition to the standard calculation of ratings, an active and in-depth analysis is carried out on a number ofissuers selected by the ESG analysts. Such coverage of a company can be triggered by:– specific requests from portfolio managers;– the overall level of exposure of Amundi to a given issuer;– our annual engagement campaigns;– issuers with a particularly weak ESG rating for a given criterion; and– the quarterly controversies screening.
The above approach to rating issuers applies independent of the instruments that are issued, whether equity
or fixed income, and is therefore relevant to both asset classes. A similar approach is applied in a tailored
way to other asset classes. For example, with regard to sovereign debt issuers, our approach again seeks toconsider the main ESG issues to which an investor is exposed. We seek to assess the ESG issues embedded ingovernments’ current and past policies, which could be reflected in a country’s ability to reimburse its debt in
the mid to long-term, and so thus represent a risk for investors. We also seek to assess how countries handle
the major sustainability issues that contribute to the stability of global society. Our methodology relies on
about 50 indices or factors, each of which represents one ESG issue. These are constructed from an external
data provider which bases them on information from various sources including the World Bank and the UN as
well as proprietary databases and expert scorecards. These are combined into an Amundi ESG sovereign index,
grouped into eight categories under the pillars E, S and G:

Environment

SocialGovernance

Climate Change

Human Rights

Natural CapitalSocial Cohesion

Government
Effectiveness

Human Capital
Civil Rights

22 | Stewardship Report 2020

Economic
Environment

With regard to other types of instruments or issuers,
we have developed specific methodologies to assess
the ESG quality of different instruments and issuers.
These methodologies respond to issues arising fromthe nature of the relevant instruments or because
our existing external data providers do not provide
relevant coverage. These methodologies cover private
equity, private debt issuers, impact investing and realestate, as well as specific instruments such as green
or social bonds. Each methodology is specific, butthey all share the same target: the ability to anticipate
and manage sustainability risks and opportunities, aswell as the ability to mitigate their potential negative
impacts on sustainability.
The ESG analysis team is independent from theinvestment management and financial analysis
teams. This organisation ensures the quality and the
independence of the ESG analysis and opinions. In
addition, all issuers rated G are validated by the ESG
Rating Committee, directly or through the approvalof the exclusion process. The separation of the ESG
analysis allows our portfolio managers to benefit
from different skills sets (both financial analysis and
ESG analysis) and to make their investment decisions
independently. Except for G-rated issuers, ourportfolio managers have the final say on whether or
not they should invest in a given issuer’s securities.
We believe this structure and separation provides thehighest value to our clients, who can benefit from thefull expertise of our ESG analysis, financial analysis
and investment management teams, collectively andindividually.
Amundi regards its active engagement approachas an integral part of its ESG integration policy. One
aim of engagement is to assist companies in making
progress in terms of our ESG ratings analysis. Thisenhances their impact on the real world, and also
widens the investment universe for our portfolio
managers and for our clients.

Exclusionary approach
Amundi applies a strict exclusion policy of the worst
ESG-rated companies across all actively managed
portfolios. We regard such targeted exclusions asarising directly from our fiduciary duty to protect
clients’ interests. These exclusion policies apply toall our active investment strategies and lead us to
exclude companies that do not comply with our
ESG policy, international conventions, internationallyrecognised frameworks, and national regulations. Our
exclusion policy is kept under active consideration,and is formally reviewed annually and approved by
the ESG Committee.
The current exclusion policy bars any of our funds
from investing in:– Issuers involved in the production, sale, storage
or services for and of anti-personnel mines andcluster bombs, prohibited by the Ottawa and Oslotreaties;– Issuers involved in the production, sale or storageof chemical, biological and depleted uranium
weapons; and– Issuers that violate, repeatedly and seriously,
one or more of the 10 principles of the Global
Compact.

23 | Stewardship Report 2020

Case study on exclusions
In late 2020, the ESG Rating Committee
considered the possible exclusion of threecompanies from all Amundi active portfolios
because of human rights issues related to theirinvolvement in the private provision of prisonsand immigration detention centres. Two ofthese companies are US-listed, one is UK-listed,
and the operations in question are in the US, UK
and Australia.
The committee concluded that the allegationsof human rights issues was so significant that
it was not appropriate to expose clients to therisk of investment in these businesses, andthe profitability of these operations was itself
inconsistent with client best interests as the
profit margin arises only from providing poor
conditions for inmates, and from undercutting
the equivalent wages for staff in the public
sector provision of such services.
The Committee also agreed to keep two
additional companies (one French, one
from the UK) under review because of theiroperations in this controversial sector.

In addition, Amundi applies specific sectoral exclusions to controversial industries: coal and tobacco. These
sectoral exclusions apply to all actively managed strategies in which Amundi has full portfolio management
discretion and always subject to applicable laws prohibiting their implementation. These apply unless clients
specifically request otherwise in the context of individual mandates or tailored funds (or fully passive strategies):

Thermal Coal
The following companies are excluded from all active strategies:– Any companies developing or planning to develop new thermal coal capacity along the entire value
chain (mining, production, utilities and transport infrastructure).
– Companies generating more than 25% of their revenues from coal mining, or with annual coal
extraction of 100 Mt or more, without having declared an intention to reduce this.
– Companies with revenues from coal mining and coal-fired electricity production equal to or greaterthan 50% of their total revenues.
– Coal-fired power generation and coal mining companies with revenue between these thresholds of
25% and 50% which do not have an improving energy transition score.

TobaccoAs a signatory of the Tobacco Free Finance Pledge, in 2020 we further strengthened our tobacco exclusion
policy. This applies as follows:– We exclude any investment in companies that manufacture complete tobacco products (applying arevenue threshold of 5%).
– We cap our ESG rating of an issuer with more than 10% of its turnover from tobacco (this includes
suppliers, manufacturers and distributors) at E. As a result, such companies are excluded from our SRI
funds range, which is historically subject to the exclusion of issuers rated E, F or G.

Enhancing investment integration: 2021 ambitions and climate
To fulfil Amundi’s 2021 ESG ambition that all actively
managed open-ended funds will have to maintaina higher ESG score than their benchmark index,
we are working to enhance the skills and processesof our investment teams. All investment hubs are
upgrading their investment processes in order tomove from exclusionary screening toward full active
and systematic integration of ESG factors in theirrespective management platforms.
To facilitate this, we have implemented a Straight
Through Processing tool that enables managers andrisk control teams to access companies’ ESG ratings,
alongside their access to financial ratings and credit
ratings. This Stock Rating Integrator tool guarantees
the consistency and transparency of information at all
times. A security’s rating may be justified at any timeusing a decision tree based on scores assigned to thesecurity for each of the reference system’s criteria.
The following ESG data is now uploaded as standard
into the ALTO analysis tool used by all of our portfolio
managers:– ESG ratings: overall rating and component ratings(E, S and G pillars), as well as all underlying criteria.

24 | Stewardship Report 2020

– TEE ratings: energy transition ratings.
– Carbon data: CO2 scope 1, 2, 3; CO2 reserves; coalshares; etc.
– All data and information relevant to client specificexclusion lists or exclusions criteria (such as
alcohol, civil arms, fur producers, etc.).
This ALTO ‘Extra-Financial-Analysis’ module is anasset allocation module that displays not only the data
for each security held in a portfolio but also calculates
the average ESG rating of a portfolio and compares itto the one of the benchmark or universe of reference,
among other ratios and information. Amundi’s
portfolio managers thus benefit from our internal ESG
ratings, and at all times know the financial and ESG
ratings of the securities held in their portfolio, andits benchmark index(es), if any. Portfolio managers
monitor the financial and ESG profiles of the issuers
in which their funds invest and can liaise with the ESG
analysts to get their insights to assist with buy, sell or
hold decisions.
Depending on the investment strategy and the ESG
approach of the fund, the portfolio manager may
focus on:– The overall ESG rating of the issuer. For example,
SRI portfolio managers take both financial analysis
and ESG analysis of an issuer into consideration
before making a buy or sell decision. In mostcases, this translates into a matrix of decisionacross both financial and ESG factors. The lower
the ESG rating, the higher confidence in futurefinancial performance is needed.
– The rating on specific criteria. For example,
in our Green Bond strategies we focus on theenvironmental and energy transition sub-criteria
in order to assess the ability of an issuer fully toembrace the energy transition.
Naturally, the weighting of the ESG Scores and Ratings
within each investment process varies by asset classand by strategy.
Given our particular focus on climate change issues,
our approach in this area is especially developed.
Specifically, we use scenario analysis to:
1. estimate the impact of CO2 regulations ahead of
their implementation in order to anticipate potential
disruptions to investment cases; and2. stress test the outlook for different types ofactivities under a carbon-constrained world.
As an illustration of the latter, we compare trends
between the IEA Sustainable Development Scenario(which factors in a carbon constraint aligned with

objectives set under the Paris Agreement) and the IEA
base case scenario. This allows us to identify which
activities face more upside/downside as regulatorstighten CO2 regulations. We draw heat maps bysector to take into account risks both at the top line
level (price/volumes) and bottom line (CO2 costs).
For instance, in the oil & gas sector, some activities
appear more at risk than others, with the modelled
downside much greater for oil prices (30% lower in
IEA SDS than in the base case) than for gas (6% lower
in Europe). We then compare the exposure of issuer
portfolios against these heat maps.
We try to use 2°C scenarios modelled by different
institutions or by issuers themselves in their TCFD
reporting to increase our understanding of areas of
uncertainty. After this exercise, we may end up having
a different opinion on the sustainability benefitsof certain technologies and their contribution to
the low-carbon transition; but overall we consider
that using scenario analysis allows us to go a stepbeyond the initial carbon-intensity analysis of sectors,
activities and issuers in our understanding of supply
and demand shifts caused by carbon constraints. For
instance, scenario analysis allows us to understandthe likely pressure from the ramp up of electric carson the supply of key battery materials such as nickel.
This is not captured by current carbon footprint
methodologies.

Compliance with constraints
ESG ratings are also among the tools available to the risk department. This enables ESG topics to be integrated
within Amundi’s control framework. Under this framework, responsibilities are spread between the first levelof controls performed by our investment teams and the second level of controls performed by our risk teams.
The risk department oversees adherence to regulatory requirements and management of risks related to these
topics, as well as monitoring adherence to ESG constraints (whether exclusions or other rules) within mandates– which are regarded in the same way as any other contractual requirements. Alerts as to potential breaches
are automated both pre and post-trade.

25 | Stewardship Report 2020

Active and value-focused engagement
Amundi engages issuers regardless of the asset class through which we have investment exposure to thebusiness. The issuers with which we engage are primarily chosen based on the extent of their exposure
to the relevant engagement issue. As a global investor (see map of investments), we engage across theworld, taking account of local realities but with the same level of ambition and gradual expectations acrossgeographies.
We regard divestment as a last resort. By divesting, an asset manager gives up any opportunity to exert
influence over a company’s or sector’s ESG practices. By staying invested in companies that are committed to
improving their ESG practices, investors can promote the best sustainable practices within a sector. This is why
Amundi has put in place a strong engagement policy. It is an essential part of our fiduciary duty to our clients,and our role as responsible investor.
Amundi publishes an annual report on our engagement
activities on the website1. Engagement is not simply
meeting companies and asking questions about ESG.
We are clear that proper engagement should:– Have a pragmatic, realisable goal or outcome
and an agenda– Be specific– Be evolutionary or be based on a series ofmilestones– Have KPIs, either qualitative or quantitative– Have a clear end, a defined timeframe andobjectives

The issues covered by our engagement arise from anunderstanding of the double materiality perspective.
This means that engagement with issuers should not
only be based on how sustainability issues may affectthe company (sustainability risks), nor the material
issues that affect financial measures of businessperformance. Engagement is also based on how thecompany affects society and the environment. Thismeans that we may choose to engage on issues
even where they not be material for the financial
statements of the company, in the short- to mediumterm, if those issues have material impacts on society.
We do not seek material non-public information
through our engagement work.

Where our assets are invested

Europe asset exposure (€B)
Equities

208

Fixed income

571

Americas asset exposure (€B)

Money market

218

Equities

27

Multi-asset

249

Fixed income

34

Other

90

Money market

1

Total

1,337

Asia asset exposure (€B)
Equities

61

Fixed income

179

Multi-asset

2

Money market

31

Other

0

Multi-asset

20

Total

64

Other

6

Total

298

Other emerging asset
exposure (€B)

Global asset-base (€B)
Equities

318

Fixed income

791

Money market

252

Multi-asset

272

Other

96

Total

1,730

1. https://www.amundi.com/int/ESG/Documentation

26 | Stewardship Report 2020

Equities

22

Fixed income

6

Money market

2

Multi-asset

1

Other

0

Total

31

We engage with issuers on different topics identified
through a range of routes:– Topics that are related to major systemic risks
and sustainability risks or factors. In particular,
Amundi believes that the following two priorities
represent systemic risks for companies as well
as opportunities for those who wish to integratethem in a positive way: (1) Climate change
and ecosystems protection, which threaten to
provoke destructive chain reactions; and (2)Growing inequalities that generate social divisions,endangering the economic and political stability of
democracies.
– Topics that are important for the success of the
UN Sustainable Development Goals, and in linewith our clients’ and regulation’s areas of focus.
– Topics that are related to our responsible
investment or sector policies, or to somecommitment related to specific products or clients.

We carry out a number of different forms ofengagement:
1. Thematic Engagement
Thematic engagement refers to cross-sectorial
engagement on key topics such as climate-related
issues or on matters related to inequalities, as wellas on other environmental, social and employee
concerns, respect for human rights, anti-corruption
and anti-bribery – matters that are deemed torepresent building blocks of a sustainable economy.
Engagement streams are launched for a periodof several years. Thematic engagement revolves
around themes common to several sectors, aiming tounderstand existing practices, promote best practice,recommend improvements and measure progress.
For emerging themes, the objective is to raiseawareness among issuers and highlight best practice.
For established themes, we target specific outcomes.
2. Ongoing engagement

2020 Engagement broken down by topic

21%

 nergy transition &Eclimate related issues

20% atural capital &Necosystem protection
 irect & Indirect employeesDprotection, Human Rights

14%

16%
10%

19%

 lients, product & socialC
responsability
 overnance practices forGsustainable development
 ngagement related toEthe proxy voting’s season

Engagement issue

Number of
dialogues(2020)

Energy transition & climate related
issues472

Natural capital & ecosystem
protection

378

Direct & indirect employees
protection, Human Rights

447

Client, product & social responsibility

251

Governance practices for sustainable
development

341

Engagement related to the proxyvoting's season489

Ongoing engagement is typically company or sector
focused engagement (also sometimes called company
dialogue). Ongoing engagement can cover multiple
issues or themes (and by consequence result in a varietyof performance benchmarks for companies to meet).
Specific reasons for ongoing engagement include:– engagement around specific challenges,
sustainability risks or opportunities, either forthe company or its sector as a whole. Our aim
is to encourage enhanced performance and thedelivery of specific performance benchmarks.
– engagement around controversies, responding
to a failure properly to manage a sustainability risk.
Our aim is to encourage proper remediation andensure that changes are made so as to prevent a
repeat occurrence.
– engagement with leaders, to encourage them tocontinue to pursue leading practice, recognisingthat best practice is always evolving. Our aim isto encourage improvement and also to identify
leading practices and future directions of travel.
– engagement with improvers, working closely withcompanies that wish to learn how to enhance theirapproach. Our aim is to help identify short- andlong-term targets for improvement.
– engagement with laggards, working with thosecompanies with poor performance on one or more
ESG criteria. Our aim is to press for improvementsin the specific areas where these companies lag
behind and where change is most needed.
– engagement around Amundi policies prior
to possible divestment, because we regard
divestment as a serious matter meaning we needto engage with companies that are at risk, to makesure that our policy is clear and the company

27 | Stewardship Report 2020

We are pleased to discuss thedetails of some of our engagement
activities below. Because weregard trust as very importantfor our positive relationships
with the companies in which
we invest, we only specifically
identify companies in our public
reporting where we have obtained
their permission to do so. We
believe that anonymised reporting
nevertheless provides useful
insights into our engagement
activities on behalf of clients.

has time to make the necessary changes before
any possible exclusion – see case study under
Escalation: divestment below.
3. Engagement through pre-AGM dialogue
We carry out pre-AGM dialogue to encourage sounder
corporate governance and management of E&S
matters in line with our Voting Policy. Our voting
reflects our overall approach to stewardship, meaningthat we are committed to long-term relationships withthe companies in which we invest, and strive to haveactive dialogue with them. Amundi is committed totransparency and, where possible, we will inform issuersof planned negative votes. This is discussed in more
depth in considered and intelligent voting, below.

Thematic engagements
We are pleased to highlight some of our most active thematic engagements in response to our priority systemic
issues: climate change and ecosystems protection; and growing inequalities.

THEME: CLIMATE CHANGE AND ECOSYSTEMS
Climate change: Science-Based Targets
In 2020, we wrote to 253 companies across a rangeof sectors, inviting them to commit to or upgrade
their Science-Based Targets (SBTs) to fight climatechange. SBTs are targets that are in line with what thelatest climate science considers necessary to reachthe goals of the Paris Agreement., specifying by how
much and how quickly a company needs to reduce its
greenhouse gas emissions to limit global warming towell below 2°C. We regard Science-Based Targets as arobust, credible standard for companies and investors
alike, and we also welcome the transparency that theybring to disclosures and progress.
Our objective with these engagements is to encouragecompanies to set validated scientific objectives toreduce their GHG emissions in line with the 2015 Paris
Agreement. As for all of our engagements, we set
clear and tangible objectives for the campaign:
1. Request 203 companies that have not yet committed
to Science-Based Targets to do so;
2. Invite 31 companies that have made the commitment
to have their targets validated;
3. Encourage 19 companies that have validated 2°C
targets to commit to tougher 1.5°C targets.
This campaign will last 3 years, involving close enga­
gement with companies to persuade them to addressthese recommendations. Should companies still
consider it not necessary to commit to SBTs, we willconsider expressing concerns at companies’ AGMs.
We are heartened by progress so far, with a number

28 | Stewardship Report 2020of companies in the process of committing to the
SBTs and others agreeing to consider it.

Climate change: CA100+
Amundi continues to be an active participant in
CA100+ collaborative engagements, with the world’s
most carbon-intensive public companies. We weredirectly involved in specific engagements withfour companies in 2020: a Japanese capital goods
company, a US construction materials company, aBrazilian oil and gas company and a Japanese auto
manufacturer. We have been encouraged by somepositive developments (see our focus on Petrobras
below), but also note that some points of concern
have not yet been resolved.
We firmly believe that corporate lobbying and publicaffairs efforts should refrain from providing direct
or indirect support to regulatory initiatives that riskslowing down the energy transition. We therefore,
maintain our full support to the CA100+ investor
group effort to encourage Toyota to evolve its support
for rolling back new car greenhouse gas emission andfuel efficiency standards. With regards to Daikin, it isnecessary to keep a close eye on whether its next midterm action plan will advance the company towards
delivering its 2050 net zero target.
Petrobras (Brazil): In August 2020, we took part ina joint investor call where Petrobras provided an
update on its energy transition. We welcomed thecompany’s further positive progress with regards

to implementing TCFD, in particular publishing its
oil price assumptions, and how they compare withscenarios drawn by the International Energy Agency(IEA), and the valuation sensitivity of its assets to the
IEA Sustainable Development Scenario (SDS). We
agreed to maintain dialogue with the company on
disclosure of emissions from its value chain (including
Scope 3, related to the use of its products).
For 2021, we have committed to increase our efforts
in support of CA100+:– As lead CA100+ investor for a US construction
materials company, while we are encouragedby the first disclosure of group-wide Scope 1
emissions and CO2 reduction targets, we willcontinue to press the company to address wider
low-carbon transition challenges.
– We have also agreed to join the group of investors
collaborating on engagement with two further
large oil and gas companies.

Climate change: energy transition
and thermal coal
In accordance with the IEA’s recommendations foralignment with the Paris Agreement, Amundi has
pledged that coal must be phased out by 2030 for
European and OECD countries and by 2040 for the
rest of the world. It is a key conviction for us thatcompanies must organise their own energy transition.
We recognise that engagement is essential to achieve
this Paris-aligned exit from coal.
We have thus asked companies to provide us with adetailed plan to phase out their thermal coal mining
and generation operations, by 2021, in accordancewith the 2030/2040 timetable. Companies thathave yet to announce a clear coal exit strategy orcompanies that do not demonstrate a coal exit
strategy in line with the Paris Agreement have beena focus of our engagement efforts. We have madeclear that a failure to develop such a strategy puts
companies at risk of divestment.
In 2020, we engaged with 31 OECD-domiciled
companies recognised as having the highest thermal
coal exposures. By the end of 2020, four of thesecompanies had confirmed that their coal exit is in linewith the 2030 timetable. Other companies – thosethat have not communicated a coal exit or have onethat is not in line with our 2030 timelines – required
more detailed engagement. These included:– BHP (Australia/UK): At the time of ourengagement in May 2020, BHP had not announced
a coal exit strategy, nor any medium-term climate
strategy; we highlighted both as areas of key
concern. By September, BHP had revealed not only
a thermal coal exit in the next few years but also atarget to reduce operational emissions by at least

29 | Stewardship Report 202030% from adjusted 2020 levels.
– RWE (Germany): We engaged with RWE on
multiple occasions in 2020. We emphasised theimportance of decarbonisation, especially the2030 coal phase-out for OECD companies. While
RWE was already on a journey of decarbonisation,
the speed of the transition became the core of our
discussions. By the end of the year, we saw two
sizeable developments:
1. RWE participated in the first German auction
to decommission coal-fired power plants in
H2 2020. The company applied for, and won,compensation to close two sites, enabling it toclose all its German hard coal plants by the endof 2020.
2. RWE expanded its decarbonisation targets fromjust Scope 1 to include both Scope 2 and 3. Its
commitments to cut Scope 1 and 2 greenhousegas emissions by 50%, and Scope 3 emissions
by 30%, both by the year 2030 against a 2019baseline, have been certified by the Science
Based Targets initiative to be Paris Agreementaligned.
These moves are very welcome, though we aim tocontinue our discussions regarding RWE’s coal exit
strategy.

Climate change: Insurance
and fossil fuel policies
We have begun active dialogue with insurers on theirfossil fuel exit strategies. We believe that a change
in this sector’s policies can significantly contributeto the energy transition. Specifically, the industry
has two key levers: both its investment approachand its underwriting policies. An insurer’s coal policy
will be consistent with the IPCC’s 1.5°C pathway if itstipulates:– an exit from coal-related investments– an end to underwriting new coal projects and coalcompanies– an end to insurance cover of existing coal projects
and companies, unless the latter are engaged in a
rapid transition away from coal to clean energy
As of November 2020, 23 insurance companies had
committed to end or limit the underwriting of coalprojects. Additionally, at least 65 insurance companies
had adopted a policy to divest from coal or to end
further investments in the coal industry. We have been
asking insurers to announce a fossil fuel exit policy
and for this policy to be specific. We believe that it
is not sufficient for an insurer simply to announce
an exit from coal. Instead, a robust fossil fuel policy
should include the following:– A clear definition of coal mining and coalfired power plants (a relative threshold basedon revenues or electricity generation and an
absolute threshold based on annual thermal coalproduction or coal capacity);– A date for the full exit from coal (which should beat the latest by 2030 in EU and OECD countries,
and by 2040 worldwide); and– The exclusion of coal developers.
We also argue that the fossil fuel policy should apply
to the investment side (including assets managed forthird parties as well as the insurer’s own assets) as
well as underwriting activities.
In this respect, we pressed a number of insurers,
from European, Japanese and US markets, to agree,
establish and publish a coal exit policy. We welcomeannouncements by these and other companies, orwork towards preparing such announcements. We
also took forward these points in individual dialogues
with companies. For example, when meeting witha European insurer, we asked the company to fully
phase out from coal (it continues to insure a numberof Eastern European coalmines and coal power
stations). We also asked the company to extend its
coal policy to the third-party assets managed by its
investment arm. The insurer has put an engagement
policy in place for its remaining exposure to coal.
At meetings with a second European insurer, we
asked the company to adopt a more restrictive coal
policy (an end to the insurance of existing coal plants,of coal-related projects and corporates in emerging
markets, the exclusion of coal developers, and thecommitment to a full phase out). The company has
now developed a robust methodology and announced
a broad decarbonisation strategy in December
2020, shifting away from coal, oil and natural gas
for its investments, (re)insurance transactions andown business operations. The strategy includes acommitment to exit thermal coal fully by 2040.

Ecosystems: plastic engagement
Plastic’s flexibility and durability, as well as its cheapness,mean it is used widely. However, some of these samecharacteristics make plastic pollution a major issue
for the environment, requiring in-depth thinking bycompanies using it heavily. This is the reason why welaunched a 3-year engagement that aims to examinecompanies’ plastic exposure and how they manage
plastic in the context of increasing regulation andpublic pressure – a particular challenge as few viable
alternatives currently exist. Our engagement focuseson 3 sectors: household personal products, automobile
components, and healthcare/pharmaceuticals, withthe aim of not only looking at sectors that are the mostvisible in the public eye but sectors that overall havesignificant exposure to plastics.

30 | Stewardship Report 2020

Last year we provided specific recommendations foreach sector, with the aim of tracking performanceover subsequent years:– Household & Personal Products: More granular
reporting on the impacts of a company’s plastic
packaging including breakdowns of the recycling
rates as well as breakdowns by geography witha focus on impacts in areas with poor recycling
infrastructure.
– Healthcare Equipment & Pharmaceuticals:
Making plastic a higher priority in environmental
management with an increase in focus,transparency, and reporting to better shape astrategy on plastic that focuses on the specificneeds and concerns of the sector.
– Tires & Automobile Components: Increasedtransparency and reporting on how companies
work with their suppliers to address plastic issues
as well as increased reporting on environmental
impacts of components.
Our engagement with Novo Nordisk (Denmark), a
global pharmaceutical company specialised in chronic
diseases such as diabetes, was typical. Novo Nordisk
is significantly exposed to plastics through injection
devices, such as insulin pens, of which it produces
more than 550 million a year. We recommended thatthe company:– include the topic of plastic in its sustainability
communications; and– expand its circular economy mindset to its plastic
pens, by making the end-of-life of these devices
more environmentally friendly, through better
disposal and ideally through recycling.
Our dialogue has borne fruit in many ways andconfirmed the company’s nascent ideas on the issue.
In mid-2020, the plastic issue was addressed on
the company website, from where it was previously
absent. The environmental section of its CSR website
now describes how the company plans to tackle its
plastic challenge as part of its aspiration to have zeroenvironmental impact. It also has taken concrete
actions with the recent launch of two pilot initiatives
on its plastic pens. The first consists of recycling pensdiscarded after production; it is now looking into how
to scale-up the solution so it can be applied to usedinsulin pens. The second initiative, which is notably
required for a large-scale recycling of the pens, wasthe launch in 2020 of a pilot take-back programme toeffectively collect used pens. First tested in Denmark,this pilot programme is due to be further expanded
to other countries. As Novo Nordisk takes its plastic
exposure more seriously into consideration, we areencouraging the group to expand its communicationon this topic going forward by providing more KPIs
and targets (such as KPIs around packaging, internal
plastic use, and end-user products).

Ecosystems: Biodiversity and deforestation
Biodiversity loss is a risk that can no longer be ignored.
According to the World Economic Forum’s 2020
annual survey, biodiversity loss has now been cited
as one of the top 5 global risks for the next 10 years
along with other environmental risks such as extreme
weather and climate action failure. However, measuring
and accounting for biodiversity risks and impacts isincredibly complex. With biodiversity, there is no onesize-fits-all metric (such as CO2 equivalent emissions
for climate change) nor long-term scenario analysis.
Furthermore, a wide variety of corporate actions (fromwaste to over-consumption of resources) impact
biodiversity loss. Finally, the implications of biodiversity
loss are not uniform, with certain geographies andspecies being particularly vulnerable.
Corporate disclosure is limited with only a handful ofcompanies demonstrating efforts on robust biodi­
versity disclosure. While there are some initiatives toboost nature related disclosures such as CDP Forests(see Promoting long-termism in markets below), weare a long way off from a clear investment framework
on biodiversity reporting.

To increase the quality of biodiversity data, investors
must engage on the topic. This can include
engagement with corporates on specific biodiversity
related topics such as deforestation or a more generalengagement on how a company is reporting on
biodiversity risks and impacts to push for overall morerobust and granular reporting. In 2020, we engaged
with 96 companies on the topic, across a wide rangeof sectors from extractives to consumer goods. For
many of these engagements the key priority is getting
companies to better understand and report on
biodiversity-related risks and impacts.
Due to the overall weak disclosure on biodiversity,
a current key KPI on the subject is simply increased
reporting. What is required differs considerably by
sector (e.g. supply chain transparency for palm, soy
and cattle, versus more asset-level biodiversity dataat mining sites). Regardless of the sector, it is clearthat solving the issue requires more collaboration withexperts and stakeholders to address the reporting
difficulties and reporting needs.

THEME: GROWING INEQUALITIES
Growing inequalities: Pay Ratios
It is a conviction at Amundi that companies must
participate in the social cohesion of the countries inwhich they operate. One way they do so is through theirwage and profit-sharing policies. More specifically, weprioritise a fair pay ratio – the gap between CEO pay
and the median pay level among employees (often
known as the CEO pay ratio). In 2020, Amundi started
engagement with a focus on the US for two reasons:– First, US publicly traded companies are required todisclose the pay ratio between CEO and median
employees, making it easier to collect this data; and– Second, in the US, CEO pay has outpaced
increases in worker pay. The CEO worker pay ratio
was 21:1 in 1965, 61:1 in 1989, and 320:1 in 2019. CEO
pay grew by 337% between 1978 and 2018 whilst
typical worker pay grew by just 13.7%.
Companies’ compensation strategies need to put
more focus on delivering a fair pay ratio, particularly
in sectors where median salaries are far below a living
wage. Factoring living wage considerations into staff
pay has been observed to decrease turnover rates andincrease productivity. Furthermore, a fair pay ratio can
indicate that the company prioritises high wage job
creation and recognises that investing in employees is
key to the long-term health of the company.

31 | Stewardship Report 2020

We carried out an engagement campaign with US
companies with some of the most unequal CEO pay
ratios. These companies were, for the most part, inthe retail, food retail, and consumer services sectors,
and had median pay levels well below a living wage.
The pay ratios of the companies we targeted were
well over 1,000:1, with median salaries often below$15,000 a year.
Our aim was to encourage companies to deliver amore equitable pay ratio, particularly relevant given
the financial difficulties arising from Covid-19. We
encouraged remuneration strategies that ensure aliving wage for lowest paid employees in addition to
incentivising sustainable long-term value creation.
While overall these aims are broad, the initial goal of
the campaign is to begin dialogue on this particularissue and set benchmarks for targeted companies
going forward in 2021. We will continue to push formore a more equitable pay ratio in 2021 and, if we donot see any developments, we are likely vote against
executive pay.

Growing inequalities:
Workforce Disclosure Initiative
Amundi is a signatory of the Workforce Disclosure
Initiative (WDI), which provides a universal reporting
system for social issues in line with various disclosurestandards. The WDI platform allows companies todemonstrate to their investors, clients and otherstakeholders how they manage their staff and supply
chain workers, and show how their approach toworkforce management aligns with their businessstrategy. While the overall list of questions can seem
overwhelming, they are classified into tiers so thatcompanies can start at the foundational level and work
to increase social reporting disclosure every year.
Given the general issue of a lack of information on the
S in ESG, we see collaboration with groups such as
WDI as the best way to help achieve uniform, granular
data that can be used to benchmark company
performance across and between sectors. WDI
also benefits issuers by potentially streamlining thedemand for disclosures, which at present are highly
varied. Corporate time could be better spent on
actually addressing the concerns raised by investors
rather than just reporting issues.
For the aims of WDI to be achieved, companies must
be convinced to begin reporting through WDI. To
support the initiative, we helped by writing to morethan 10 target companies identified by the WDI todemonstrate our support for the initiative. Among
this list, only one has so far confirmed its support for
the initiative, but we will continue to engage with theothers to help increase support for WDI reporting.
Overall, though, 141 global companies took part in the
WDI initiative in 2020, which was a 20% increase from2019. We will continue to help promote WDI disclosure
among issuers with the goal of one day having acomprehensive dataset of ESG social indicators.

Growing inequalities: Just transitionin the automobile sector
Before the Covid-19 pandemic and its dire economic
implications, the automobile industry was alreadyfacing considerable structural change, with bothautomation and electrification. As CO2 emissions
regulations continue to tighten globally, it is estimatedthat electric vehicles (EVs) will represent 32% of thetotal market share for new car sales in 2030 comparedto 2.5% in 2019. This shift will have important anddisruptive consequences, not least in terms of theworkforce – especially as EVs are significantly lesscomplex and have far fewer electromechanical parts.
It is estimated that the assembly of an EV will requirearound 30% less work.
The concept of a Just Transition (which is acknow­
ledged in the Paris Agreement) aims not only at
ensuring that the benefits of the transition to a greener,
low carbon economy are shared, but also to securesolutions for those who, in the process, might suffer
economically; these may include countries, regions,industries and individual workers. In the automotive
industry, this implies the need for companies to ensure

32 | Stewardship Report 2020

that their workforce remains employable and to limit
redundancies as far as possible. The objective of ourengagement is to assess the capacity of companies
to guarantee the employability of their workforce
and support them through the structural changes theindustry faces.
During 2020, we contacted 11 automobile companies
that have ambitious targets for the manufacturingand marketing of EVs, and 2 automobile components
companies that are heavily involved in combustion
engine parts. We tested company training andcareer management policies, and asked companies
about their social dialogue processes to help preventsocial conflicts and disruptions to production. Our
engagement with Volkswagen (Germany) offers a
useful case study:
Volkswagen, who employs more than 600,000 staff
worldwide, has pledged to spend €33 billion on its
EV business over the next few years. The company
recognises that a large proportion of the workforce
will be impacted by the electrification of its fleet andthat relocation of employees will be required. However,it reported that there are no major redundancies
planned before 2025; there will be job reductions
but mostly through retirement. Volkswagen argues
it is well prepared for the electrification of its fleet
and recognises that employees need very different
qualifications for that challenge. Employees arecontinuously trained through targeted programmes:
for example, the company has initiated a compre­
hensive qualification programme for around 3,500
employees for the successful ramp-up of the newelectric models at the pilot site for e-mobility in
Zwickau in Germany.

Growing inequalities: PLWF, Living Wage
and Covid-19
The year 2020 was our second year as a signatory ofPlatform Living Wage Financials (PLWF), a growing
alliance of currently 15 financial institutions thatencourages investee companies to address failures
to pay living wages in their global supply chains. As
an investor coalition with over €3.2 trillion of assets,
we collectively engage with over 30 listed garment
and footwear brands, 11 food producing companies,
and 10 food retail companies (with added targets
each year). The PLWF evaluates companies basedon an externally assured living wage assessment
methodology.
The impact of Covid-19 on the garment industry –store closures and changes in consumer preferencesaway from discretionary spending – has had knockon consequences for global supply chains. Brands
have re-shuffled inventories, slowed production andcancelled orders. Global suppliers, and their workers
in particular, have felt the consequences.

Therefore we have supported PLWF’s work toemphasise that Covid-19 reinforces the need for an
acceleration in the payment of living wages in global
supply chains. The core foundation of the PLWF
methodology in this regard, was based on the ILO Callto Action. This statement created by the ILO calledon brands, retailers, financial institutions and otherstakeholders to take immediate action to protect
garment workers’ income, health, and employment.
The PLWF publicly endorsed the Call to Action andissued an investor expectations letter to brands in
April and May 2020, emphasising our expectationthat they should publicly commit to a range of actions
outlined in the ILO statement including:– paying manufacturers for finished goods andgoods in production;– maintaining effective and open communication
with supply chain partners about the status ofbusiness during the pandemic;– direct financial support to factories when possible;– promoting core ILO labour standards as well as asafe and healthy workplace; and– continuing to strengthen social protection systems
for workers globally.
Of the brands under engagement, 50% publicly
endorsed the ILO Call to Action. Overall, results weremixed, with some companies revealing good practices
and others unable to give investors confidence thatthey are protecting suppliers from the worst impacts of
Covid-19. Companies that demonstrated more robust
measures in this respect also ranked higher in our living
wage study, demonstrating a strong link between
companies implementing appropriate practices toimprove wage levels in their supply chain and strong
management practices to account for Covid-19
impacts. These practices include building long term,
resilient relationships with manufacturers and greatercollaboration with stakeholders such as global unions
to help workers achieve collective bargaining.

Ongoing engagements
We welcome the opportunity to highlight a few examples of our ongoing engagement activities, giving an
indication of the range of geographies covered and issues discussed with companies. In some cases, we havechosen not to name the companies in question because of specific sensitivities.

European financial services company
ESG in executive pay
We engaged with the company on multiple occasions
regarding the need to integrate ESG criteria into
executive pay. We discussed the nature of appropriate
ESG targets for the business that could be integrated
in this way. We also talked through how this could
be delivered both in the short-term bonuses and thelonger-term incentive structures, noting our viewthat this is best done in the long-term incentives.
We also pressed the company to make progress
regarding diversity because the gender split among
the executive team is currently poor. We took theopportunity to welcome the company’s decision tocancel its dividend and make conservative decisions
on executive pay in the light of the Covid-19 pandemic.

European advertising businessSocial media responsibility
As part of a range of engagement activities in relation
to the challenges facing the social media industry,
particularly in relation to disinformation and damage
to public trust, we engaged with an advertisingbusiness. In particular, we noted their responsibility
with regard to inadvertently financing harmful
content through ad buys. This is an aspect which is

33 | Stewardship Report 2020

traditionally monitored under the brand protection
programmes and is key to the service provided totheir customers. We stressed the importance ofstrengthening audits in this regard and the possibility
for increased transparency on breaches. Just as thesocial media companies publish transparency reports
including the number of occurrences of violations of
their terms of service, and how much content they
had to remove, we believe the advertising industry
should build a proper framework to report on thiscritical facet of their business model. This would also
reduce the risk of any negative externality in this area,
supporting their overall record on sustainability.

European business services SME
Business ethics
We recognise that small and medium-sized enterprises(SMEs) play a key role in the global economy andoften operate in difficult environments, making themvulnerable to corruption in all its forms. With more
limited resources, knowledge, and experience thanlarger businesses, they may be less likely to have inplace effective anti-corruption measures, and so
we seek assurance around their approaches. For
example, in 2020 we engaged with a European SME
offering business services. The company has enjoyedseveral years of strong growth across several markets,reaching a point where its governance needed to
evolve, both in terms of structures and the hiring of
new skilled individuals. We stressed the importance ofthe company extending its bribery and anti-corruption
controls to third parties such as partners and suppliers
to help shore up the credibility of its governance.
The company understands the acute need for such
improvements, which should be implemented as soon
as practically possible. The strengthening of internalrisk procedures around its anti-corruption policy for
third parties as well as the establishment of a formal
whistle-blowing mechanism with legal protection
for employees are two steps that we argued werenecessary for a robust anti-corruption framework.

European telecoms company
Sustainability and climate-change
We held in-depth discussions with the company
regarding its need for significant enhancements to
its sustainability approach, not least in light of its
increased scale following a transformative merger.
We discussed climate change-related issues andthe use of renewable energy sources, and won anundertaking that the company will disclose its carbon
intensity data to CDP in the future. Given its businessmodel is heavily reliant on outsourcing, we also calledon the company to consider its role in pressing forhigh employee relations standards among its supply
chain, and urged for better reporting in this area.

Japanese insurance company
Thermal coal policy
We urged the company to develop a policy fully toexit from all exposure to the thermal coal industry,and discussed how and when such a policy should
be made public. We discussed a full range ofgovernance issues, including significantly enhancing
the independence of the board as a whole, as wellas the nomination and remuneration committees.
We also encouraged the creation of an independent
audit committee for the first time. Finally, we argued
that the company should transparently integrate ESG
issues into executive remuneration, providing clear
visibility on the delivery of each of the relevant KPIs.

Japanese financial services company
Corporate governanceWe urged the company to enhance the independenceof its board, which is currently dominated byexecutive directors. We asked for an increase in thetransparency around executive pay, and in particular
the incorporation of ESG targets within incentive
structures. The company acknowledged both of theseissues. We also talked through its approach to financing
controversial weaponry, as it is included in some
reports from NGOs on these issues, and discussed
broader issues around ESG and green finance where
the company recognises it has work to do.

Chinese technology company
Human rights issues
We pressed the company regarding human rights
concerns, and encouraged them to produce atransparency report, in the same way that some ofits US peers do, covering the removal of content
because it did not meet terms of service and visibility
on requests from host governments. We welcomedplans to review its public disclosures and seek ways
to enhance them. We also argued that the company
needs to enhance the independence of its board andintegrate ESG issues into executive pay. We discussed
in particular the company’s efforts to enhance
employee relations and staff retention.

Collaborative engagement
Collective efforts can often have a greater impact. Just as we encourage issuers to act collectively on key
sustainability issues, investors also often collaborate. Collaborative initiatives can provide additional scope forengagement or provide opportunities for greater impact.
We highlight here examples of our collective engagement activities (beyond those already referenced underthematic engagements), where we work actively with other institutional investors through formal and informalgroupings to influence change at issuers. In some cases, we take leading roles in specific engagements, whilein others it is a better use of our overall resources simply to lend our support to activities. We typically prefer
to play an active role, generally meaning that Amundi takes the role of lead investor to engage with one ormore companies. By contrast, occasionally, we are simply a participant in a collective initiative, often where theinitiative is dynamic and impactful without particular direct assistance other than lending our support.

34 | Stewardship Report 2020

Among the industry organisations through which Amundi participates in collective engagement with issuers are:Responsible Investment initiatives

Geography

Principles for Responsible Investment (PRI)

GlobalClimate Action 100+

GlobalFarm Animal Investment Risk & Return (FAIRR)

GlobalPlatform Living Wage Financials (PLWF)

GlobalAccess to Medicine Foundation

GlobalAsia Investor Group on Climate Change (AIGCC)

Asia

Institutional Investors Group on Climate Change (IIGCC)

EuropeLeading engagements: Access to Medicines (ATM)Amundi has been an active supporter of the Accessto Medicine (ATM) Foundation, an independent nonprofit organisation with the mission of encouraging
pharmaceutical companies to do more for the people
who live in low and middle-income countries, since2010. Roughly, every other year, ATM publishes theAccess to Medicine Index, a ranking of 20 of the world’s
largest pharmaceutical companies, based on the steps
they take to improve access to medicine. The Index isbased on a framework of 33 indicators that together
capture the core role of pharmaceutical companies in
improving access to medicine, as confirmed through awide-ranging multi-stakeholder dialogue.
The Index is viewed by investors as one of the mostcredible sources of information for assessing how
pharmaceutical companies can strengthen theirlicence to operate globally and expand in international
markets. It is endorsed by a more than 100 investors,
including Amundi, which have signed the Access to
Medicine Index Investor Statement and committed
to using the Index in their investment analysis andengagement with companies.
When the 2018 Access to Medicine Index was laun­
ched, investors expressed strong interest in a collabo­
rative engagement with pharmaceutical companies

based on the Index results. As part of this, Amundiis lead investor for two companies, Sanofi (France)
and Astellas (Japan). The 2021 edition of the index,
published in January, shows the companies areenhancing the integration of access to medicine into
their governance structures, R&D processes, andmonitoring efforts. This improvement is surely due
to the increased engagement between investors andcompanies on these topics.
Improvements are particularly obvious for the twocompanies where Amundi was lead engager:– Sanofi has progressed by 2 notches to 5th position
thanks to multiple new initiatives resulting in astronger performance in R&D planning and in
product delivery management.
– Astellas jumped 5 notches to 14th position, thanks
to improved governance of access (including
through implementing access-related incentives
for senior executives) and the launch of a coupleof dedicated initiatives. While improvements
were made in 2020, there is scope for further
improvement, as initiatives to address accessto specific needs remain focused on too few
products and countries.

Supporting initiative: FAIRR
Animal Protein remains a major ESG concern forboth the climate and impact to health. Meeting future
demand for animal proteins (meat, fish or dairy
products) will require an unfeasible amount of natural
resources (in terms of both water and land) as well as
leading to a boom in GHG emissions. Furthermore, theuse of antibiotics in intensive farming is responsible
for the emergence of antibiotic-resistant bacteria,
which threaten their effectiveness in human medicine.

35 | Stewardship Report 2020

An ecological transition, as desired by Amundi, will
not be possible without an agricultural transition.
This agricultural transition must focus: (i) on protein
reductions and raising meat alternatives, (ii) on
animal welfare, and (iii) on drastically reducing theantibiotics given to animals. In July 2019, we becamea signatory of FAIRR, an innovative peer network forinstitutional investors, who use their influence to help
global livestock, fish and dairy companies change
their behaviour and build a more sustainable global
food system.

Amundi has signed up to three of FAIRR’s engagements:– The Sustainable Proteins Engagement which asks
companies (food producers and food retailers)publicly to disclose information on their longterm approach to transitioning protein portfolios
to include plant-based/alternative proteins to
support a dietary transition in line with a 2-degree
world (started in 2019);

supply chains (started in 2019);– The Investor Action on Antimicrobial Resistanceinitiative which is supported by investors managing
over $4.8 trillion worth of assets. The coalition
has committed to assessing and integrating risks,
opportunities and impacts related to antimicrobial
resistance when making investment decisions andengaging with investee companies.

– The Global Meat Sourcing Engagement
encourages restaurant companies to develop a
strategic, forward-looking approach to managing
the climate and water risks in their meat and dairy

Escalated engagement
On occasions, it is necessary to escalate engagement with companies through a number of more powerfultools such as making concerns public, proposing shareholder resolutions, litigation, divestment and exclusionfrom the active investment universe. We use each of these tools only sparingly, because most use significant
resources, and for us divestment is a last resort. However, retaining the option to escalate plays an importantpart in our ability fully to influence issuers. The following are a sample of our escalated activities.

Escalation: making concerns public
Barclays (UK) climate shareholder resolution
In February 2020, we revealed publicly our intention
to vote in support of the shareholder resolution on
climate change at Barclays. Barclays is Europe’s leadingbank financier of fossil fuels, and had set out no clear
plan to transition its business away from this segmentof the market. ShareAction, a campaigning group for
more responsible investment, had facilitated a groupof investors proposing a shareholder resolution thatcalled on the company to make this transition. We
regarded this resolution as a sensible one, which had
already obliged the company to start a fuller strategic
debate on its future. In the end, while it gained 24%
votes in favour (and a further 15% abstentions), theshareholder resolution was defeated at the May AGM;
however, a parallel resolution put forward by thecompany setting out its plans to change its strategy
to address climate issues received resounding (near100%) support from shareholders. We believe that
this resolution would not have been proposed, but
for the ShareAction resolution and the public support
it gained, and note the significant improvement overthis year in Barclays’ approach to climate issues.

Escalation: shareholder resolutions
HSBC (UK/Hong Kong) climate shareholder
resolution
We are willing to consider the need for specificresolutions to help persuade target companies(and indeed their peers) of the importance thatshareholders in general place on particular issues.
Climate change is a systemic issue in which Amundi
takes a close interest, and we recognise that the

36 | Stewardship Report 2020

funding decisions by major banks can have a
key influence on the carbon intensity of relevantbusinesses and potential emissions. We were therefore
pleased to work with ShareAction in 2020 to be partof the shareholder coalition that in early January 2021
publicised it had proposed a shareholder resolution at
HSBC (Europe’s biggest bank) calling on the firm todevelop a strengthened approach to climate issues.
We hope this proposal may replicate the success ofthe one put forward at Barclays.

Escalation: divestment
Japanese manufacturer (Japan)
We have been engaging with this Japanese company
since 2019, when we met with an external director. We
supported moves to improve governance, in particular
the departure of the ageing chair, who was replacedby his son. In spite of the ongoing family dominance,
this change seemed likely to encourage stronger
ESG practices, including increased transparency andenhanced governance. During 2020, we continued
to press for increased board independence andtransparent, effective corporate governance. Whilethe company has indicated some intention to improve,no actual changes have yet been observed, leading us
to downgrade our ESG rating. We have made it clearthat if no changes are observed in the near future, we
may need to consider divesting from the company.

Considered and intelligent voting
We regard the considered and intelligent exercise of investor voting rights as a central aspect of our role
as a responsible investor. Our voting policy responds to our holistic analysis of all the long-term issues that
may influence value creation, including material ESG issues. Furthermore, our voting reflects our overall
approach to stewardship, meaning that we are committed to long-term relationships with the companies
in which we invest, and to active dialogue with them. Amundi is committed to transparency and, where
possible, it informs issuers of planned negative votes.
As part of our regular dialogue with issuers, Amundi
informs companies of our proprietary methodology
for ESG analysis and rating and the rating assigned tothem, as well as explaining any changes. The positions
we express in our votes should not take companies
unawares. They are the result of our analysis anddialogue, based on fully transparent criteria.
The nature of the commitments made by companies
on our two priority societal issues (the energy
transition and social cohesion) and the existence of
positive momentum on these issues will over time
be reflected in our voting decisions. Our perspective
will be expressed either by a vote on resolutions
directly related to these priority themes, such as theapproval of executive pay, or indirectly, such as how
we vote on the appointment of directors who overseesuch issues. Furthermore, our voting approach isinformed by how companies have responded to thechallenges of the Covid-19 pandemic. We recognisethat company approaches take time to evolve andlook to see progress and momentum as much as
achievement; our dialogue with companies aims toencourage ongoing improvement over time.
We have a common basis for our voting policy, appliedon all five continents. Nonetheless, the implemen­tation of this policy adapts to local contexts. Ourdecisions are always made with a view to protecting
the interests of our clients as investors and with theaim of being as effective as possible in supporting
long-term value creation by issuers.

shareholders’ rights and ensure fair treatment of
all shareholders, including minority and foreign
shareholders.
– Boards, committees and governing bodies: Boards
have strategic authority and their decisions
affect the future of their company, both in the
short and long-term; all board members haveindividual responsibility. Boards are accountable
to the company and its shareholders, but mustalso have due regard to, and respect the interestsof other stakeholders, in particular employees,
creditors, customers and suppliers. Compliancewith social and environmental standards is alsoa board responsibility. Amundi is fully backing
the 8 principles of the World Economic Forum’s
Climate Governance Initiative, including theclimate accountability.
– Financial structure: Unless the company sets out
a clear and substantial plan, cumulative capitalincreases should not constitute more than 60%of the capital.
– Compensation policy: We analyse executive
compensation holistically and vote based on
two main criteria: the CEO’s compensationmust be reasonable, and also economicallyjustified. Further, we are vigilant to ensure thatthe company’s pay approach, and more broadly,
its sharing of value overall, do not generateunacceptable situations of social inequality.
Amundi is vigilant on the inclusion of ESG criteria
in the variable remuneration.

The key elements of our voting policy include:– Shareholder rights: A corporate governanceregime must protect and facilitate the exercise of

A fuller version of our Voting Policy is available on our
website: www.amundi.com/int/ESG/Documentation

Top level voting statistics for 2020
Voting statistics (global)
Number of meetings voted
Meetings where opposed management on at least one resolution

4,241
71%

Number of individual resolutions voted

49,968

Number of resolutions voted against management

10,031% age of resolutions voted against management

20.1%

37 | Stewardship Report 2020

Proportion of votes against management per issue

Share of total votes against management by issue

60
50

12%
5%

40

Structure of the board
Remunerations

30

47%

20%

20

Shareholder Resolutions
Other100Capital transaction

Total acrossall resolutions

Board
structure

Compensation

Financial
structures

Shareholders’proposals(votes castin favour)

16%

Other

Voting oversight and process
Our Voting Committee is chaired by a member of the executive committee, head of institutional clientscoverage & ESG and includes senior managers from the investment, financial and extra-financial, as well as
external advisors. The Committee oversees an annual review of the company’s voting policy.
One of our ESG ambitions set in 2018, to be completed
by the end of 2021, is to integrate ESG issues into
our voting policy. It is in this context that we further
tightened our voting approach for the 2020 season,requiring the inclusion of ESG factors in executive pay
and becoming much more likely to vote in supportof shareholder resolutions (leading us to support
fully 85% of climate resolutions and 72% of those inrelation to human rights issues). Our changes for the2021 season, to oppose director elections or discharge
at companies operating in sectors heavily exposed
to climate change which do not have satisfactory
strategies to align with the Paris Agreement, and in
our passive funds to do the same for all companies
excluded from active portfolios for climate reasons,are the latest evolutions to respond to the ambition.
The committee also has an oversight role on all voting
matters. It reviews files presented by the voting
and engagement analysts and agrees key votes, inparticular maintaining oversight of any votes where
there might be a perception of conflict of interest. The
committee meets monthly, and on a bi-monthly basis
during the peak of the voting season, but can also be
summoned as need be.
On a day-to-day basis, voting is delivered by Amundi’s
voting & corporate governance team, which consistsof 5 people who analyse resolutions and carry out

ongoing dialogue with companies pre and post-AGM
with the aim of better understanding their strategy
and pushing for continuous improvement in practices.
These dialogues are also an opportunity to exchangewith companies on the practices that we would liketo see developed in order to foster a dynamic ofprogress. We recognize that company approaches
necessarily take time to evolve and look to see
progress and momentum as much as achievement;
our dialogue with companies aims to encourageongoing improvement over time. The applicationof the general principles of the voting policy allows
Amundi to adjust its vote according to the quality ofthe shareholder dialogue.
The team is fully integrated in the global engagement
effort of Amundi. Apart from the themes specific toa sound corporate governance, as well as a strong
voting exercise, we emphasise in our dialogues theneed for the board to discuss and be accountable forcorporate social responsibility and climate strategy.
We have also highlighted the need to include ESG KPIs
in executive compensation, if possible including KPIs
related to climate. Social cohesion, wage balance andinvolvement of a large number of employees in thecompany’s growth have long been engagement topics
for Amundi. Since 2019, we have reinforced our voting
and engagement efforts on those, and redoubled our
focus since the advent of the Covid-19 crisis.

Pre-AGM dialogue statistics
The Amundi ESG Voting team conducted dialogue
with 489 issuers in 2020. Of this, 322 alerts were sentout concerning the Amundi voting exercise which
triggered 70 dialogues. We also conducted dialogue
with 167 issuers outside the voting season.

38 | Stewardship Report 2020

Pre-AGM dialogue statistics
Europe295

Rest of the world

194

Total

489

Proxy-voting flowchart
Access to internal expertise,
Access to external expertise& custom recommendations,
Dialogue with issuers

The Corporate Governance team (the Team) analyzes the compatibilityof the proposals with the voting policy so as to determine the best voting intentions
for every proposal

If the Team identifies a conflictof interest: preparation of an
explanatory file for the Voting
Committee

If voting intentions in linewith the voting policy can be
determined without question,
the vote is instructed

If the issue is not covered by
the voting policy (ex. non routine
financial operations), then theTeam asks the fund managers
for their opinions

If the initial voting intention
based on policy does not seemto be in the client’s interest, thenthe Team asks the fund managers
for their opinions

If all fund managers agree andthe voting intention is not inbreach of the voting policy, thenthe vote is instructed

If fund managers disagree or ifthey agree on a voting intention
in breach of the voting policy

Voting Committee: Chaired by the ESG Supervisor, member of the Amundi Management
Commitee, it includes Senior Managers from investment, financial and extra-financial analysis,
as well as external advisors. The Committee determines the vote which is then instructed

Proportion of votes in favour of shareholder resolutions by issue (2020)
100
90
80
70
60
50
40
30
20
10
0

Shareolder
resolutions
over allCompensation

GovernanceBoard
structures

ClimateEnvironment

Social/Health/Human Rights

Other

Application of voting approachThis voting approach applies to all Amundi managed funds, apart from some whose overall value is less than
€15 million, because we have concluded that the costs of voting on such funds outweigh the benefit to clients.
In the same way, voting rights are exercised on the entirety of the shares held, unless the required period during
which trading is blocked by the market or custodian risks an adverse impact on our clients because it would
hinder portfolio manager trading discretion. Exceptionally, we may not be able to ensure effective voting forsome or all of the shares held.
For the 2020 voting campaign, for European companies,
our funds exercise voting rights at the meetings of allcompanies in which they have an equity investment.
However, again in the interests of cost control, Amundi
reserves the right not to exercise the voting rights

39 | Stewardship Report 2020

when it considers the economic cost to be excessive in
relation to value invested. At non-European meetings,
voting rights are exercised only where our consolidated
vote will represent more than 0.05% of the company’s
share capital. This criterion is not applied for GeneralMeetings that are of particular importance, nor forfunds that specifically require all holdings to be voted.
For 2021 we have agreed that we will vote on all
holdings when it is economically rational to do so, andwill ensure that we vote at least at 90% of the AUMof any given fund (which means we will be voting on
more than 4500 issuers).
When the management of an equity portfolio istrusted to an outside manager, that manager may
hold the voting rights, as provided in the delegation
contract. The delegated manager is free to exercise
the voting rights pursuant to a general voting rights
policy defined at the outset of the agreement.
Amundi ensures that the elements included in thisvoting policy are not in contradiction with our own
guidelines, and that the delegated manager can
provide a report of votes cast at General Meetings.
Clients with segregated mandates can require us toapply their own voting policy, subject to an agreement

on appropriate fees. Clients in pooled funds cannot
vote differently, not least as we believe that theirinterests are best served by aligning voting withinvestment and stewardship. We welcome discussions
with all clients on their perspectives on voting issues,outside of the peak season.
Voting rights are exercised for securities held in
portfolios at the time of the General Meeting. To fully
exercise these rights, securities that have been subject
to stock lending are recalled in accordance withlocal laws, technical constraints, and the perceived
importance of the meeting. Shares are automaticallyrecalled for all meetings considered sensitive and for
all French meetings. For ESG labelled funds, all stocks
are recalled sufficiently in advance of shareholder
meetings so that we ensure that all voting rights canbe exercised.
Full disclosure of all our latest voting decisions isavailable on our website.

Examples of our voting are below:
Chevron Corporation (US)We recognise that governments will play the key role in setting the trajectory for a carbon-constrained world
and that companies on their own cannot determine whether the goals of the Paris Agreement are met. However,this makes it particularly important that companies are careful in their approach to lobbying on these issues
so that they are not seen to hinder governments from taking appropriate decisions. A number of European oil
and gas majors have severed ties with certain trade associations because of this, among them AFPM (American
Fuel & Petrochemical Manufacturers). Chevron remains a member of this organization and has no clear policy toconstrain lobbying on climate, and so we voted in favour of a shareholder resolution encouraging alignment of thecompany’s lobbying activities with the Paris Agreement.
Deutsche Bank (Germany)
Having voted against the discharges of both the Supervisory Board and the Management Board in 2019, becauseof concerns about excessive remuneration and its disconnection from the economic and financial performanceof the bank (there being no resolution more relevant to remuneration matters), we held active dialogue withthe company twice in 2020. First, before the AGM we discussed the forthcoming resolutions, and pressed foran evolution of the compensation policy, not least by integrating ESG criteria into variable pay. We spoke to thebank a second time at the end of 2020 to discuss a proposed new remuneration policy, which will be brought
forward for approval at the 2021 AGM. We welcomed the move in integrate ESG: ESG criteria (including diversity
and climate-related KPIs) will influence up to 20% of long-term variable remuneration. We also welcomed moves
to make pay ratio disclosures in 2021.
Fortum (Finland)
Following the acquisition of Uniper, Fortum faces greater climate change transition risks as the deal substantially
increased its exposure to fossil fuels (including lignite, coal and natural gas). A large share of Fortum’s fossil fuelbased generation is concentrated in Russia, where decarbonisation may prove challenging; notably, Fortum
has no decarbonisation strategy or relevant targets for that market. Because of the deal and the lack of aclear plan to phase out coal aligned with the Paris Agreement, we participated in a collective engagementwith company, including a dialogue directly with the CEO to discuss the strategy for emissions reduction. To
reflect and reinforce our continuing concerns, we voted in favour of a resolution seeking the inclusion of a Paris
Agreement compliant 1.5 degree Celsius target as part of Fortum’s Articles of Association.

40 | Stewardship Report 2020

JP Morgan (US)We engaged the US bank regarding its climate change strategy, which we believe lags behind industry peers.
Even though JP Morgan indicated that it was considering what its next steps ought to be, we did not gain
confidence that the bank was likely to announce ambitious targets in the near term. We therefore took thedecision to vote in favour of two shareholder proposals put before the AGM: the first seeking a policy onlending to unconventional oil and gas businesses, and the second calling on the bank to establish a target foremissions reductions in line with the Paris Agreement.
Macquarie Group (Australia)
We voted against the remuneration report at this Australian financial institution. Amundi calls for executive
pay that is ‘reasonable’ and fully aligned with shareholder and also stakeholder interests, including being‘acceptable’ from a societal perspective. Given that the proposed annual base salary of the CEO amount to a
10% increase over the prior year, and CEO pay is more than two times the median CEO pay at peers, we do notbelieve that these standards are being respected.
Microsoft Corporation (US)We voted in favour of a shareholder resolution calling for a report into employee representation on the board.
This reflects our general view in support of employee involvement in corporate governance and employee shareownership, because these practices help align the interests of shareholders and employees over the long term.
Swedbank (Sweden)
We felt it necessary to vote against the discharge of board members at Swedbank following the Baltic money
laundering scandal. The Swedish FSA had concluded that the board members failed to keep themselves
sufficiently informed about the Baltic operations and didn’t request the information they would have needed
to understand the risks of money laundering there. Given the reputational and business cost of this failure, wewere clear that the board needed to be held accountable.
Television Broadcasts (Hong Kong)
In a pre-AGM alert to the company we clearly stated that our voting intentions were not in favor of the dividend
resolution. TVB was proposing a dividend even though it had made a net loss in both 2019 and 2018, and wewere strongly of the view (particularly in light of the Covid-19 pandemic) that dividends should be paid only
if the company’s financial strength was maintained, in the interests of shareholders, employees and otherstakeholders. Following dialogue we were unable to gain comfort that the dividend was appropriate andmaintained our negative vote on the proposal.
Walmart (US)We were pleased to vote in support of a shareholder resolution seeking a report on supplier antibiotics use
standards. We recognise the importance of controls on antibiotic use in the farming sector, given the risk it
poses of creating antibiotic resistance – a major emerging health concern. As one of the largest buyers of meatproducts in the world, Walmart has scope to be significantly influential on this issue. As the proposal would
enable shareholders to assess how the company’s policy on the matter operates, and also to flag up investor
concern about the issue, we felt support for the resolution was warranted.

41 | Stewardship Report 2020

Promoting long-termism in markets
As a responsible investor with a clear understanding of the role and importance of ESG criteria, Amundi
participates in numerous initiatives as a member and signatory. We are an active participant in working groups
at a range of market bodies – both regulatory and industry-led organisations – aimed at moving responsible
finance, sustainable development and corporate governance forward in the interests of our clients.
These international initiatives include institutional investors and asset management professionals. Their goal isto encourage businesses to improve their practices and transparency in the fields of fighting climate change
and deforestation, protecting water resources, health, nutrition in developing countries, and so on. We actively
participate in the development of standards and initiatives where we believe the additional effort will be
important to client outcomes, and lend our weight to other initiatives where we feel this is the most positive
contribution we can make.

Active participation with regulatory bodies
Organisation

Geography

NatureRole

Autorité des Marchés Financiers(AMF)

FranceSecurities
Regulator

Member of Climate and Sustainable
Finance Commission

Autorité des Marchés Financiers(AMF)

FranceSecurities
Regulator

Member of consultative committee
on asset management andinstitutional investors

Autorité de Contrôle Prudentiel etde Résolution, Banque de France

FranceCentral bank

Member of scientific committee

Ministère de la Transition
Écologique

FranceGovernment
ministry

Member, Finance Lab

Paris Europlace

FranceIndustry
promotion

Vice-chair; Member of working
groups on Taxonomy and European
green deal, and Just transition

Euronext

EuropeSecurities
exchange

Member of expert committee on low
carbon indices

European Financial Reporting
Advisory Group (EFRAG)

EuropeReportingstandards adviser

Member of Lab Task Force on
Reporting of non-financial risks andopportunities

OECD

GlobalGovernmental
association

Member of Trust in BusinessNetwork (TriBuNe)

42 | Stewardship Report 2020

Examples of regulatory work
EU Green Bond Standard
As part of our broader work in fostering the development of green bond markets, we have been actively
participating in the EU work to develop a green bond standard. To encourage the development of the market
we are arguing for voluntary application of any standard that is developed to enable a range of different
products to be offered to investors. We believe that to qualify, a bond should maintain its status through tomaturity. Further, we would welcome alignment of the standard with the broader EU sustainable investment
taxonomy, though we recognise the challenges that this may pose.
EFRAG lab task force
The task force began its work in September 2020, preparing the ground for a significant enhancement of EU
non-financial reporting standards. Our involvement allows us to seek greater coherence among the current
wide range of reporting standards in this area, and to press for much more consistency between the reportingof financial and non-financial matters.
ICMA Sustainability-Linked Bonds Principles
Following the substantial efforts of the working group of which Amundi is a member, the International CapitalMarket Association released its first Sustainability-Linked Bonds Principles in June 2020. These aim to extend
the concept of green bonds to also encompass the financing of social impacts. By requiring transparency anda verification process we hope that the principles will build investor confidence in these instruments and soenable increased capital allocations to such investments – and their end benefits.

Industry bodies on which Amundi staff members hold formal roles
Organisation

Geography

NatureRole

International Capital Market
Association (ICMA)

GlobalCapital markets
association

Executive committee and working
group member, Green Bonds
Principles and Social Bonds
Principles

European Fund and AssetManagement Association (EFAMA)

EuropeFundmanagement
association

Co-chair of Stewardship, Market
Integrity and ESG Investmentcommittee

Association Française de la Gestion
financière (AFG)

FranceFundmanagement
association

Member of responsible investingcommittee

Institut du Capitalisme Responsable

FranceCSR association

Board member

Forum pour L’Investissement
Responsable

FranceESG investment
association

Chair of dialogue and engagement
committee

Finansol

FranceESG investment
association

Board member

43 | Stewardship Report 2020

Further industry organisations of which Amundi is an active member
Responsible Investment initiatives

Geography

Principles for Responsible Investment (PRI)

GlobalInternational Corporate Governance Network (ICGN)

GlobalEmbankment Project for Inclusive Capitalism

GlobalPensions for Purpose

GlobalPortfolio Decarbonization Coalition (PDC)

GlobalMontreal Carbon Pledge

GlobalClimate Bonds Initiative

GlobalCDP

GlobalOne Planet Sovereign Wealth Fund Framework

GlobalFarm Animal Investment Risk & Return (FAIRR)

GlobalPlatform Living Wage Financials (PLWF)

GlobalAccess to Medicine Foundation

GlobalAsia Investor Group on Climate Change (AIGCC)

Asia

Invest Europe

EuropeInstitutional Investors Group on Climate Change (IIGCC)

Europe30% ClubFranceJapan TCFD ConsortiumJapan

SIFs – Sustainable and Responsible Investment Forums for various markets

Australia, Canada, Italy,
Japan, Spain, Sweden,
Switzerland

Examples of work promoting best practice
Fondation de la Mer: promoting greater corporate reporting on Ocean impacts and SDG 14
One aspect of Amundi’s overall work on biodiversity is specifically Sustainable Development Goal (SDG) 14,‘Life Below Water’. Oceans face many threats including climate change, acidification, pollution (including
plastic pollution), overfishing, destruction of marine biodiversity, and so on. Yet SDG 14 is among those least
prioritised by businesses worldwide. We regard preserving the oceans and their biodiversity as a key part ofaddressing biodiversity loss and climate change.
This is why, in 2019, we started a close collaboration with the Fondation de la Mer (FDLM). The FDLM is a
French NGO that works with civil society including sailors, corporates, scientists, and investment institutions
to help protect marine ecosystems, fight pollution, support ocean-related research, encourage innovation,and educate audiences on protecting the oceans. FDLM is working actively in collaboration with the French
Ministry for the Ecological and Inclusive Transition to help corporates better assess their impact on the ocean.
We actively participated in the development of the methodology, both in its initial design and by engaging with
French corporates, encouraging them to participate to test the approach.
We are now working to promote the framework further to companies. We will also begin using the frameworkon selected corporates to begin impact assessments pertaining to SDG 14.

44 | Stewardship Report 2020

30% ClubThe 30% Club is a global campaign to take action to increase gender diversity at board and senior managementlevels. The campaign was launched in the UK in 2010 when women represented just 12% of FTSE 100 boards;
30% was set as an aspirational target and it was confirmed by research that 30% represents a critical mass
form which point minority groups can impact boardroom dynamics. The target is a floor not a ceiling with theultimate goal to strive overall for a more equitable gender and diversity balance. Companies should address
imbalances in their talent pipelines and strategies to drive long-term progress and this ultimately must comefrom top management.
We share the 30% Club belief that gender balance on boards and senior management encourages better
leadership and governance. We also believe that diversity and inclusion further contribute to all-round board
performance and ultimately enhance business performance. This is why we participated in the creation of theFrench chapter in 2020.
The French investor group has two main early objectives:– conduct a soft email engagement campaign with the SBF 120 to communicate the launch of the initiativeand investor expectations on gender diversity;– launch an engagement campaign targeted at the top 15 ‘worst offenders’ in the CAC40.
These engagements, which started in 2020 and will continue in 2021, cover why this initiative was set up, what
the initiative’s expectations are for each company, and seek clarity on what the company’s current efforts areto address its gender imbalance.
CDP Forest Engagement Campaign
Organisations like CDP (formerly the Carbon Disclosure Project) can help provide a starting point to assess
corporate performance on key sustainability issues. Pushing for further collaboration with experts such as
through the CDP Forest survey is for Amundi a key way to encourage companies to find solutions to biodiversity
reporting until a clear standard emerges. CDP Forests provides a framework for companies to measure andmanage forest-related risks and opportunities, transparently report on progress, and commit to proactive
action for the restoration of forests and ecosystems.
We started an engagement campaign to encourage companies with large deforestation exposures (according
to Forest500 and Canopy), encouraging 32 companies to make disclosures to CDP Forest. So far, the response
rate has not been what we have hoped so going forward in 2021, we will commence deeper engagement on
the topic of limited biodiversity disclosure including further engagement to push for increased reporting aspart of CDP Forest.

Recent ESG and Stewardship collaborative statements
Date

Name

Topic

Geography

2020

PLWF Luxury Statement

Living wage in the luxury goods sector

Global2019

IFC - Operating Principles for
Impact Management

Principles for impact investing market

Global2019

TCFD initiative

Enhancing issuers’ reporting on environmental
matters

Japan

Support for research into responsible investment matters
Amundi actively supports academic research and hasforged several partnerships with university chairs ingreen finance:– ESSEC Amundi Chair in Asset & Risk Management
aims at promoting academic research in the fieldof Asset and Risk management and stimulating
the cooperation between ESSEC and Amundi

45 | Stewardship Report 2020

researchers, in particular in offering a series ofresearch seminars on specialized topics to Amundi
collaborators and institutional clients and diffusing
the results of academic research towards thesecollaborators.
– Academic Chair on Sustainable Finance andResponsible Investment, created in 2007,

sponsored by the Association Française deGestion (AFG) and led by the École Polytechniqueand the Institut d’Économie Industrielle (IDEI) in
Toulouse.
– Climate Economics Chair, an initiative of CDC
Climate and Paris-Dauphine University under
the aegis of the Institut Europlace de FinanceFoundation. We support its research initiative“Carbon Prices and Markets”.
Amundi is also an active participant in the St Gallen
Symposium, the Louis Bachelier Institute and Les
Rencontres Économiques d’Aix – Le Cercle deséconomistes. Further, the ESG Analysis team regularly
hosts doctoral students researching matters relevant
to ESG-related investment.
Furthermore, the Medici Committee is a think-tank
dedicated to responsible finance created by Amundi.
Chaired by our CEO, the Committee draws on theskills and knowledge of a network of academics,
intellectuals, business leaders and prominent figuresfrom various sectors of civil society. The Committee
considers the principles, techniques and impacts of
responsible investment, with a two-fold ambition: (1)to analyse ongoing changes and (2) to issue concrete
recommendations that may guide the practices of
economic and financial players.

46 | Stewardship Report 2020

To this end, the Committee is studying four major
projects:– Environment: how can economic and financial
players contribute to a socially just energy
transition?
– Social: how responsible capitalism can address thesocial question.
– Governance: how responsible shareholders cancontribute to improving corporate governance.
– The responsibility of economic and financial
players as part of a more general socialtransformation.
The aim is to help inform our approach to responsible
investment, including considering broader andemerging ESG criteria the firm should be taking into
account, as well as to contribute to the wider publicdebate. Our aim is to enable Amundi fully to accept
its social role and be a different kind of financial firm.
Amundi is also an active participant in other thinktanks, such as the Institut de L’Economie Positive, theInstitut Montaigne and the Institut de l’Entreprise.

Appendix 1
Delivery against the expectationsof the EFAMA Stewardship Code 2018#

Principle

Coverage in this report1

Asset managers should have an
engagement policy available to the public
on whether, and if so how, they exercise
their stewardship responsibilities.

– Amundi and ESG: our philosophy andapproach2

Asset managers should monitor theirinvestee companies, in accordance with
their engagement policy.

Integrating ESG into our analysis andinvestment processes

20

3

Asset managers should establish clear
guidelines on when and how they will
escalate engagement with investee
companies to protect and enhance value of
their clients’ investments.

Active and value-focused engagement

26

4

Asset managers should consider actingwith other investors, where appropriate,having due regard to applicable rules on
acting in concert.

Collective engagement

34

5

Asset managers should exercise theirvoting rights in a considered way.

Considered and intelligent voting

37

6

Asset managers should disclose theimplementation and results of theirstewardship and voting activities.

Reporting openly and transparently to ourclients

11

47 | Stewardship Report 2020

Page
5,
13

– How our structures support and enable
ESG and stewardship work

Appendix 2
Delivery against the expectations of Australia’s Financial Services
Council Standard 23 Principles of Internal Governance and Asset
Stewardship 2017#

Principle

Coverage in this report1

Organisational and investment approach

Amundi and ESG: our philosophy andapproach52Internal governance

How our structures support and enable
ESG and stewardship work

13

3

Asset stewardship– Integrating ESG into our analysis andinvestment processes

20,
26,
37

– Active and value-focused engagement– Considered and intelligent voting

48 | Stewardship Report 2020

Page

Appendix 3
Delivery against the expectations of the Canadian Coalition
for Good Governance’s Stewardship Principles 2017#

Principle

Coverage in this report

1

Develop an approach to stewardship.

Amundi and ESG: our philosophy andapproach52

Monitor companies.

Integrating ESG into our analysis andinvestment processes

20

3

Report on voting activities.

Considered and intelligent voting

37

4

Engage with companies.

Active and value-focused engagement

26

5Collaborate with other institutional
investors.

Collective engagement34

6Work with policy makers.

Promoting long-termism in markets

427

Focus on long-term sustainable value.

– How our structures support and enable
ESG and stewardship work

13,
20

– Integrating ESG into our analysis andinvestment processes

49 | Stewardship Report 2020

Page

Appendix 4
Delivery against the expectations of Assogestioni’s Italian
Stewardship Principles 2016#

Principle

Coverage in this report

1

IMCs should have a documented policy
available to the public on whether, andif so how, they exercise their ownership
responsibilities.

– Amundi and ESG: our philosophy andapproach2

IMCs should monitor their investee
companies.

Integrating ESG into our analysis andinvestment processes

20

3

IMCs should establish clear guidelines onwhen and how they will intervene withinvestee companies to protect and enhancevalue.

Active and value-focused engagement

26

4

IMCs should consider cooperating withother investors, where appropriate, having
due regard to applicable rules on acting inconcert.

Collective engagement

34

5

IMCs should exercise their voting rights in aconsidered way.

Considered and intelligent voting

37

6

IMCs should report on their exercise ofownership rights and voting activities
and have a policy on external governancedisclosure.

Reporting openly and transparently
to our clients

11

IMCs are investment management companies

50 | Stewardship Report 2020

Page
5,
13

– How our structures support and enable
ESG and stewardship work

Appendix 5
Delivery against the expectations of Japan’s Stewardship Code 2020#

Principle

Coverage in this report

1

Institutional investors should have a clear
policy on how they fulfil their stewardship
responsibilities, and publicly disclose it.

Amundi and ESG: our philosophy andapproach52Institutional investors should have a clear
policy on how they manage conflictsof interest in fulfilling their stewardship
responsibilities and publicly disclose it.

Conflicts: how we ensure client interests
always come first16

3

Institutional investors should monitor
investee companies so that they canappropriately fulfil their stewardship
responsibilities with an orientation towards
the sustainable growth of the companies.

Integrating ESG into our analysis andinvestment processes

20

4Institutional investors should seek toarrive at an understanding in common
with investee companies and work tosolve problems through constructive
engagement with investee companies.

Active and value-focused engagement

26

5Institutional investors should have a clear
policy on voting and disclosure of voting
activity. The policy on voting should not becomprised only of a mechanical checklist;
it should be designed to contribute to thesustainable growth of investee companies.

Considered and intelligent voting

37

6

Institutional investors in principle shouldreport periodically on how they fulfil theirstewardship responsibilities, including theirvoting responsibilities, to their clients andbeneficiaries.

Reporting openly and transparently to ourclients

11

7

To contribute positively to the sustainablegrowth of investee companies, institutional
investors should develop skills andresources needed to appropriately engage
with the companies and to make proper
judgments in fulfilling their stewardship
activities based on in-depth knowledgeof the investee companies and theirbusiness environment and considerationof sustainability consistent with theirinvestment management strategies.

How our structures support and enable
ESG and stewardship work

138Service providers for institutional investors
should endeavour to contribute to theenhancement of the functions of theentire investment chain by appropriately
providing services for institutional investors
to fulfil their stewardship responsibilities.

[Not directly relevant to Amundi,
nonetheless the following highlights
our relationship with service providers]
Resourcing of ESG: external research
providers18

51 | Stewardship Report 2020

Page

Appendix 6
Delivery against the expectations of the UK Stewardship Code 2020#

Principle

Coverage in this report1

Signatories’ purpose, investment beliefs,
strategy, and culture enable stewardshipthat creates long-term value for clients andbeneficiaries leading to sustainable benefits
for the economy, the environment andsociety.

Amundi and ESG: our philosophy andapproach

52Signatories’ governance, resources andincentives support stewardship.

How our structures support and enable
ESG and stewardship work

13

3

Signatories manage conflicts of interest
to put the best interests of clients andbeneficiaries first.

Conflicts: how we ensure client interests
always come first16

4

Signatories identify and respond to marketwide and systemic risks to promote a wellfunctioning financial system.

– Thematic engagements– Promoting long-termism in markets

28,
42

5

Signatories review their policies, assure
their processes and assess the effectivenessof their activities.

Review and assurance of our ESG approach

15

6

Signatories take account of client andbeneficiary needs and communicate
the activities and outcomes of theirstewardship and investment to them.

Tailoring our approach to client needs

97

Signatories systematically integrate
stewardship and investment, including
material ESG issues, and climate change, to
fulfil their responsibilities.

Integrating ESG into our analysis andinvestment processes

20

8

Signatories monitor and hold to accountmanagers and/or service providers.

Resourcing of ESG: external research
providers18

9Signatories engage with issuers to maintainor enhance the value of assets.

Active and value-focused engagement

26

10Signatories, where necessary, participate
in collaborative engagement to influenceissuers.

Collective engagement

34

11

Signatories, where necessary, escalatestewardship activities to influence issuers.

Other escalations: Making concerns public
and shareholder resolutions

36

12

Signatories actively exercise their rights andresponsibilities.

Considered and intelligent voting

37

52 | Stewardship Report 2020

Page

Composition: Art6 - Photo credit: 123rf