French regulator to conduct voting and shareholder engagement policy checks

Financial watchdog notes engagement policies can represent a 'strong commercial focus' of managers’ ESG approaches.

Paris, view of the Seine with Eiffel Tower

France’s financial regulator the AMF has announced it will start examining asset manager voting and shareholder engagement policies as part of its 2024 supervisory priorities.

Through checks referred to as Supervision of Operational and Thematic Practices (SPOT) inspections, the AMF will analyse the governance in place for voting and engagement. It will also look at the related human and technical resources, including the use of external service providers.

The watchdog will assess engagement policies and procedures and how these are implemented.

It will also look at information provided to investors on engagement and voting, and related monitoring and control systems.

The AMF said engagement policies play “an increasingly important role in asset managers’ ESG strategies and communications” and can represent a “strong commercial focus of their ESG approach”.

It is therefore important to “ensure the content and effective scope of these policies”, it added, while noting that some market participants are strengthening their engagement policies.

The regulator said it will continue its broader supervisory work on sustainable finance this year, which is one if the three thematic priorities of its Impact 2027 strategy.

The AMF carried out SPOT inspections in 2022 on the compliance of asset managers with non-financial contractual restrictions and obligations, and in 2023 as part of the ESMA common supervisory action on the application of the Sustainable Finance Disclosure Regulation.

This year, the regulator will also carry out an inspection campaign on governance and the role of senior managers in asset management companies.

Alongside this, the AMF is launching a new optional module on green and responsible finance. It is aimed at professionals who want to learn about the institutional and economic framework of sustainable finance.

Market competition

AMF president Marie-Anne Barbat-Layani presented the 2024 priorities in a speech last week.

She stressed the extent to which a “powerful, attractive, upstanding and well-regulated” financial centre is essential, and said two of her four wishes were for the Paris financial centre to remain “at the forefront of European financial centres” and become “even more attractive” in 2024 through the relaunch of the Capital Markets Union.

These comments sparked backlash from Finance Watch chief economist Thierry Philipponnat who wrote in a LinkedIn post that the AMF’s mission is not “business development”, but to “guarantee the integrity of financial markets”.

The UK’s Financial Conduct Authority was met with similar backlash in 2022 when it included “competitiveness and growth” as a statutory objective in its financial services bill.