Our approach and offering

At AXA Investment Managers we maintain a three-tiered approach to RI and impact investing.

At AXA Investment Managers (AXA IM) we believe that responsible investment (RI) can not only deliver sustainable, long-term value for clients but that it can also make a positive impact on society.

Foundations

Our screening policy applies to more than 90% of assets as of end 2019. We were among the first asset managers to put in place a blanket exclusion for companies which derive more than 30% of revenues from coal. We also exclude assets linked to food commodities and palm oil production and follow exclusion rules on controversial weapons.

Analysis

We have developed our own ESG scoring system which we use to compare assets and influence decision making. We use raw data to deliver a score from 0 to 10 and we monitor carefully companies with the lowest scores as they may represent a risk. Our objective is to consider and address most significant ESG risks to protect client returns into the future[1]. Portfolio ESG score and Carbon footprint are included in our standard reporting.

Framework

Screening and scoring provide a stable base for our approach. From here we steadily increase the intensity and assign investment products to one of three responsible investment categories, all of which are subject to our active stewardship policy.

How do we categorise our RI offering?

We segment our RI offering into three sections; ESG integrated and sustainable investing and Impact Investing. Below we outline what this means and how this is implemented across at AXA IM.

ESG integrated [2] 

Funds in this group expand on our screening policy to exclude tobacco producers and companies in violation of the Global Compact – a UN

initiative which promotes 10 sustainability principles for corporations. ESG and engagement training, as well as research and key performance indicators (KPIs) are provided for all portfolio managers.

ESG scores form part of the investment decision-making process and are used to identify and address risks. A portfolio manager must submit a written justification of any decision to hold stocks with an ESG score below 2. A review of these submissions is carried out twice a year.

On average, about 4% to 5% of a benchmark index are excluded from investments at this level.

Sustainable 

Funds in this category embed sustainability factors more meaningfully into the portfolio construction process, with a significant and engaging ESG approach. They adopt the same screening policies as detailed above but use responsible investment criteria to refine the investment universe further. For example, funds might follow a best-in-class policy with an eligible universe defined by removing the bottom companies in terms of ESG-score with a selectivity threshold defined in the prospectus. They might also for instance adjust portfolios to target a specific KPI such as a carbon footprint.

Each specific objective is clearly stated in the fund prospectus, and in a manner aligned to the latest regulatory demands. Granular ESG and voting reporting is published on our Fund Centre, and detailed information on the broad ESG approach at company and fund level is provided.

Local market labelling regimes may add further requirements.

Impact

This is our most focused responsible investment offering. Products incorporate the demands of the Sustainable category but are specifically designed to have a direct and positive impact on society and/or the environment.

Our strategies will report definitive and measurable data against impact KPIs such as carbon footprint, and each will target one or more UN SDGs. These strategies have a parallel commitment to deliver market-rate returns by tapping into key themes of the sustainability economy.

Portfolio managers may directly invest in projects or companies which address the SDGs, or in listed assets or funds which are exposed. Funds incorporate our full exclusion and stewardship policies and take an enhanced engagement approach on ESG and SDG issues, seeking change where appropriate.

Source: AXA IM as at 31.12.2019. Non audited figures.

 

[1] More details available in our study How responsible investing standards and policies affect returns

[2] The Real Assets approach to ESG integration is adapted to the idiosyncrasies of the real estate, infrastructure and debt business.

  • ESG Integrated

    €530 bn

  • Sustainable

    €14,8 bn

  • Impact

    €1.4 bn

Our approach

  • Avoid

    Avoid exposures that conflict with your principles & values

  • Identify

    Identify ESG risks & opportunities

  • Invest

    Invest by incorporating ESG analysis

  • Impact

    Impact with outcome-oriented investments

  • Influence

    Influence through in-depth research and engagement

Our Responsible Investment policy

Fulfilling our ambition of consistently satisfying our clients’ needs worldwide requires continued efforts to understand and anticipate changing factors which impact financial markets and our customers’ objectives.

ESG integration: a firm wide approach

ESG integration at AXA Investment Managers is developed using input from teams across the business and ensuring that ESG at part of our DNA.

The illustration below demonstrates the holistic approach to ESG at AXA Investment Managers.

 

 Corporate Culture

Corporate responsibility and RI are part of AXA IM’s DNA, ESG training is available for employees and our management board have a strong commitment to ESG.

 Voting

Voting is overseen by a corporate governance committee which is attended by representatives from the RI and investment teams. Our voting policy reflects our convictions as a responsible investor, in particular with regards to climate change and gender diversity.

 Company and Thematic Engagement

Engagement provides us with the opportunity to act as key influencers
towards creating better and more responsible corporate behaviours and disclosure, using our ongoing dialogue with company management teams as an active engagement tool.

 Frameworks, Solutions and Tool

Governance has been developed to ensure a successful and consistent approach to ESG integration across AXA IM. This approach leverages common tools and solutions, such as ESG scoring methodologies and reporting for instance.

 

 Investment Decision

Investment professionals have access to the ESG scores of issuers as well as KPI’s in their front office and analytical reporting tools.

 Thematic ESG Research

Our RI team analyses the thematic research on topics such as climate change, human capital and diversity. This research helps inform engagement activities as well as investment decisions.

 Proprietary ESG Scoring

We have developed proprietary ESG scoring methodologies for several asset classes. As an example, over 7,200 companies in 100 countries are scored through our corporate ESG scoring framework*.

 Analysis and Reporting

Transparency is a central dimension of our ESG integration strategy. More detailed ESG reports available for our ESG integrated and responsible investing (RI) funds. These reports contain additional ESG KPI’s, as well as other relevant information such as voting or engagement reporting.

 


*Source: AXA IM as at 30.06.2018 

How does ESG impact our investment teams?

Leveraging our two decades of responsible investing experience, we are integrating ESG analysis into all our investment platforms, providing fund managers with access to proprietary ESG scores and key performance indicators (KPIs) in their front office tools, as well as additional data and research.

The central responsible investing (RI) team focuses on thematic research, corporate governance and shareholder engagement as well as on developing quantitative solutions. 

Across our platforms we have dedicated RI resources working directly with fund managers who continue to be fully empowered and accountable for their process and results.

*AXA IM as at 30/06/18

Fixed income

The fixed income and high yield teams have reinforced their credit analysis team, and each has been trained to incorporate ESG considerations in their analysis of issuers.

Framlington Equities

Framlington Equities has a team of three specialists dedicated to ESG, who support fund managers on a day to day basis in the analysis of companies.

Rosenberg Equities

Rosenberg Equities has a dedicated ESG team, comprising of five ESG specialists.

What is our climate strategy?

As active investment managers, our decisions can affect positive change. We are deeply committed to tackling the impact of climate-related risks and as a large investor we have a key role to play in limiting global warming. Therefore we believe it is our duty to provide the relevant expertise to help our clients better understand climate change and how it may impact their portfolios, and support them in adapting their investment decisions accordingly. As shareholders, it is also our responsibility to engage with companies to encourage them to not only take better care of the environment but help improve public health and working conditions too.

Today our climate change policy, is fully aligned with the framework proposed by the Task Force on Climate-related Financial Disclosures, and is evidenced by our commitment to sector and international initiatives related to the environment such as the UN Principles for Responsible Investment, the Institutional Investors Group on Climate Change and the Carbon Disclosure Project. Our approach to the issue is centered around four pillars, and is supported by a climate taskforce involving participants from the Responsible Investment team, investment teams as well as Risk Management team.

Find out more about Responsible Investing at AXA IM

Responsible Investing (RI) enables clients to align their investments with global megatrends that are changing the investment landscape.