The French financial regulator has urged investors to establish more robust voting and engagement policies when it comes to fossil fuel activities.

AMF published an evaluation of the climate commitments made by French financial-market participants, in partnership with Banque de France’s Prudential Supervision and Resolution Authority.

The fourth annual edition of the report was focused on how financial institutions considered allocations to fossil fuel companies, and concluded that, while insurers and banks currently demonstrate a fragmented approach, investors were more joined up.

“The majority of commitments publicised by investment management companies now correspond to participating interests in collective initiatives,” said AMF. But, it added, “efforts are nevertheless required to clarify and specify the objectives of these initiatives” – in particular, timelines and implementation goals.

Investors have increased their communication around voting policies and shareholder engagement initiatives recently, the report noted.

“However, investment management companies are invited to formalise their policies more fully, particularly with regard to transparency in terms of dialogue and commitments to issuers, and to link them to sufficiently robust systems to ensure that the information provided is clear, accurate and not misleading.”

In particular, asset managers should be more transparent about how they apply exclusions to companies involved in fossil fuels, and how they decide when to exempt a firm from those rules.

Read the digital edition of IPE’s latest magazine