Rise in populism is unlikely to derail progress towards a new ‘climate first’ world order
AXA Investment Managers (AXA IM) today publishes its annual Responsible Investment (RI) Review, From ESG to Impact, highlighting how RI is firmly on its way to becoming the norm in investment management supported by regulation and increasing social consciousness.
Matt Christensen, Global Head of Responsible Investment at AXA IM, commented: “It is becoming increasingly clear that consumers and regulators are more and more concerned with ensuring businesses contribute to the societies and environments in which they operate.
“We don’t for one moment doubt that there will be periodic and significant challenges to the development of a new responsible ‘climate first’ world order, but it would be difficult for anyone to deny that the transition to a low-carbon economy is on the cards. Stranded fossil fuel assets have gained considerable attention and we expect divestment from carbon-intensive sectors and companies to accelerate.”
From niche to norm – the influence of RI is spreading rapidly
In its annual RI Review, AXA IM draws attention to the key events and regulations that are shaping the landscape for RI globally. For example, the impact of the Paris Agreement should not be underestimated even after the election of Donald Trump as the President of the US. While any global climate agreement would undoubtedly be weakened by the absence of the US as a key partner and leader, AXA IM believes that the impetus towards climate friendly policies has advanced too far to be immediately overturned. It will be complex for the US to ditch its climate commitments and doing so might cede influence to China, which has quickly seized the opportunities presented by clean energy.
“We expect to see coordinated national strategies to embed sustainability into financial policy and legislation, and more explicit guidance on environmental metrics for institutional investors in Europe with the recently launched High-Level Expert Group on sustainable finance,” said Matt Christensen .
The regulatory revolution for RI
AXA IM believes that the proactive RI message is now filtering through to policy and legislation. In 2016, France reinforced its claim to lead the investment world’s transition to a low carbon economy with its ground-breaking Energy Transition for Green Growth Bill that deals with the longstanding conundrum of how to maintain GDP growth while holding down CO2 emissions. Backed by influential global bodies, the Act requires energy producers and consumers in all sectors to cut toxic greenhouse gas emissions and Article 173 of the Act specifically requires large institutional investors to disclose how they factor ESG criteria and carbon-related issues into their investment policies. The first reporting mandated by this clause is due by 30 June 2017.
“We believe that RI enables clients to align their investments with the megatrends that are changing the investment landscape through the integration of environmental, social and governance factors (ESG) in the investment process. By tapping into longer term trends, RI has the potential to direct resources towards those activities that contribute to building stronger communities rather than exploiting them,” added Matt Christensen.
Andrea Rossi, CEO of AXA IM, commented: “We are convinced that our investment activities should build and strengthen the social and physical environment that we live and work in. To that end, we are committed to ensuring that all of our investment teams progressively incorporate RI principles into their research and fundamental analysis processes and we’re evolving our tools and practices to measure societal issues in a financially relevant way.
“AXA IM has committed to seven concrete initiatives to make a tangible contribution to a more sustainable future. These include developing attractive solutions for investors to shift their conventional investments to specific environmental needs such as helping clients align their investment decisions to a low-carbon economy, and obtaining a green certification on 75% of our real estate assets under management by 2030.”
Key RI highlights for AXA IM in 2016 include:
- Significant ESG credit mandate wins awarded to AXA IM from Nippon Life in Japan and Oikocredit in the Netherlands.
- AXA IM ACWI SmartBeta Equity Fund received a Responsible Investment Certification by Responsible Investment Association Australasia (RIAA).
- AXA IM Real Assets won the ‘Best Innovative Green Building’ category at the annual property industry’s MIPIM Awards for the Treurenberg building, the first net zero energy office building in Brussels.
- In France, the RI team provided AXA Group with ‘best in class’ climate reporting resulting in the Prix International du Meilleur Reporting Climatique des Investisseurs from the French Environment Ministry being awarded to AXA Group.
- The volume of ESG-integrated and impact investments managed by AXA IM grew substantially to reach €406 billion.
- The RI team voted at 5,408 annual general meetings engaging with companies on a broad range of issues from board diversity through to remuneration and health and safety.
- AXA IM’s proprietary platform, RI Search©, evaluated more than 5,000 companies across 90 countries and AXA IM’s proprietary due diligence system measured more than 60 green bonds (source: AXA IM, 31 December 2016).
To download the full report, please see here.
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Jayne Adair +44 20 7003 2232 - Jayne.Adair@axa-im.com
Jess Allum +44 207 003 2206 – Jessica.Allum@axa-im.com
Tuulike Tuulas +44 20 7003 2233 - Tuulike.Tuulas@axa-im.com
Amy Butler +44 20 7003 2231 - Amy.Butler@axa-im.com
About AXA Investment Managers
AXA Investment Managers is an active, long-term, global, multi-asset investor focused on enabling more people to harness the power of investing to meet their financial goals. By combining investment insight and innovation with robust risk monitoring, we have become one of the largest asset managers in Europe with ambitions to become the chosen investment partner of investors around the world. With approximately €717bn in assets under management as of end December 2016, AXA IM employs over 2,350 people around the world and operates out of 29 offices in 21 countries. AXA IM is part of the AXA Group, a global leader in financial protection and wealth management.
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