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Key trends in responsible investment
As the dialogue around sustainable finance magnifies, Amundi, Europe's leading investment manager, has unveiled its Responsible Investment Views for 2024.
Key trends in responsible investment
As the dialogue around sustainable finance magnifies, Amundi, Europe's leading investment manager, has unveiled its Responsible Investment Views for 2024.
The report anticipates a pivotal year for the sector, underpinned by six essential trends predicted to drive the evolution of responsible investment.
The recent consolidation of the regulatory framework and the significant strides made in energy transition are expected to fortify responsible investment's trajectory. Despite challenges, 2023 witnessed the resilience of responsible funds, with assets quadrupling since 2020 to represent 17% of global assets and over half within Europe.
Elodie Laugel, Amundi's Chief Responsible Investment Officer, highlighted the urgency of the upcoming years: "A slower transition would certainly bring huge environmental, financial, economic costs that need to be carefully identified. On the opposite, we see great opportunities if the world enters into a steady and orderly transition scenario."
Investment flows, although impacted by market conditions, continue to incline towards responsible investment, as stated by Vincent Mortier, Chief Investment Officer at Amundi: "Despite challenging market conditions, responsible investment flows keep increasing on the long run. Favorable trends should continue to support its future development..."
The six trends identified by Amundi for 2024 encompass significant policy initiatives like the US Inflation Reduction Act and the EU Green Deal Industrial Plan, which support green technology sectors. Investment strategies must also account for climate change while minimizing transition and physical risks associated with it. Moreover, closing the finance gap in emerging markets through 'blended finance' is noted as pivotal.
Investors' growing focus on nature and a 'Just Transition' signifies a shift towards integrating biodiversity and social considerations into their strategies. Amundi has introduced a 'Just Transition score' to evaluate contributions towards an inclusive global transition. The EU Sustainable Finance Action Plan's milestones in transparency and standards are also expected to direct more capital towards sustainable growth.
In the face of localized backlash against responsible investment, over two-thirds of asset owners still acknowledge its increasing materiality. Mortier emphasized the role of transparency and regulatory frameworks in shaping the dialogue: "In addition, we expect thematic and impact strategies to dominate the market in 2024 and onwards."
Elodie Laugel has emphasised the need for greater clarity in the financial industry: "Now, the financial industry needs to bring greater clarity in the value proposition made at product level, and commitments made at corporate level." Additionally, Mortier adds an international perspective: "Impact investing also need to consider EM markets because these are highly critical areas when it comes to climate transition and energy transition at large."
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