text stringlengths 0 7.73k |
|---|
10. |
Because of the relationship established between interest cover and credit spread, this enables to determine the difference that these costs could have on the credit spread of the issuer. Therefore, details about the default risk of the issuer, the term structure of the bond and the implied cost of a 2ºC scenario are th... |
Although AXA is still in a testing phase of this “Climate VaR” approach, some preliminary results can be shared, below. |
CLIMATE VALUE AT RISK PORTFOLIO ANALYSIS FOR EQUITIES AND CORPORATE BONDS Climate Value at Risk Portfolio Analysis for Equities. |
AXA Group – Equities Portfolio (total €16Bn) |
Scenario Climate VaR Monetary Risk. |
Transition Risks potential costs and revenues (gross before tax and PB) 2°C Scenario. |
Resulting in potential costs -3.7% -$904M. |
Green Technology Opportunities. |
Resulting in potential revenues +3.5% +$841M. |
Weighted Risk Scenario. |
Aggregated Climate VaR -0.3% -$63M. |
We have covered 98% of AXA’s listed equities portfolio with this analysis. The Climate VaR for the AXA Group’s equities portfolio is displayed in the first table above. It is worth noting that the policy risk analysis and technology opportunity analysis results aggregately in a slight downside risk for the equity portf... |
AXA Group – Bonds Portfolio (total €187Bn) |
Scenario Climate VaR Monetary Risk. |
Transition Risks potential costs and revenues 2°C Scenario. |
Resulting in potential costs -0.01% -$24M. |
Green Technology Opportunities. |
Resulting in potential revenues +0.004% +$7M. |
Weighted Risk Scenario |
11. |
Aggregated Climate VaR -0.01% -$18M. |
We have covered 90% of AXA’s corporate bonds portfolio with this analysis. The Climate VaR of the AXA corporate bonds portfolio appears to be close to 0%, reflecting the fact that bonds generally have a lower exposure to climate change risks than equities, mostly due to their pay-out schedule. Sectors contributing to t... |
Physical risks: climate impacts on AXA’s Real Assets portfolio. |
In addition to the above “transition” risks, climate change, and in particular, extreme weather events, may impact “Real assets” such as real estate. This is termed as “physical” risks. In 2016, AXA conducted an analysis on a selection of €15bn of property assets. In 2017, AXA expanded this analysis to cover a broader ... |
Our physical risk assessment uses “NatCat” models – generally used to assess the impact of natural catastrophes on insured exposure – combining stochastic events in Europe (windstorms and floods) and US (hurricanes) and geolocalised portfolio of Real assets. Specific “destruction rates”, which factor location, building... |
Our results, which are based on an internal exploratory methodology, show that both annual average losses, as well as losses generated by flood and windstorm events with a return period of 100 years, remain limited compared to the total asset value. |
AXA directly manages Real Estate portfolio located in 14 countries. Our Risk Management teams have evaluated the financial impact of floods and windstorms on these buildings in a selection of seven countries representing 88% of the portfolio. Some results are detailed in the tables below. |
Floods and windstorm: potential average annual losses of AXA Real Estate Portfolio. |
K€ Germany UK Luxembourg France Switzerland Belgium USA. |
Floods 400 79 * * * * * |
Windstorm 173 233 5 572 317 184 32 |
12. |
Floods and windstorms: potential losses of AXA Real Estate Portfolio potentially occurring once every 100 years. |
K€ Germany UK Luxembourg France Switzerland Belgium USA. |
Floods 6 960 798 * * * * * |
Windstorm 1 946 3 205 52 5 149 5 778 2 598 668. |
For instance, AXA’s real estate exposure in Germany (representing approximatively 10% of AXA’s real estate portfolio) can be impacted by floods and windstorms as follows: • Per year, the loss would reach approximately 400K€ due to floods and 173K€ due to windstorms – which are relatively small figures. |
• Events potentially occurring once every 100 years would cause losses of approximately 7M€ due to floods and 2M€ due to windstorms. |
* As we base our analysis on a market CAT model, some countries, in particular for flood risk, are not covered as they are not in the scope of the model. We are currently working on an internal view of CAT risk and will be able, by 2019, to assess the impact on assets portfolios for a wider scope of European countries... |
Note: AXA’s Insurance (P&C claims) risks are fully modelled, but this is not the scope of this report; it is further developed in AXA’s Annual Financial report in section 4.6 (Risk Factors). |
2.2 INSURANCE. |
Climate risks analysis. |
AXA’s Property & Casualty business is exposed to climate-related natural catastrophe risks such as windstorms, hurricanes, floods. New exposures and changing weather patterns create additional uncertainty on the frequency and severity of natural disasters. Our strategy is to accelerate the development of our catastroph... |
Human rights risks analysis. |
AXA is exposed to Human Rights through its business and operations. The AXA Group is committed to respecting internationally recognized human rights principles as defined by the United Nations Universal Declaration of Human Rights, the core standards of the International Labour Organization and the Guiding Principles f... |
As a response, we have developed a Human Rights policy which is based on an assessment we used to identify the Human rights impacted by the business activities of insurance companies (i.e. insurance, investment, own operations) and to |
13 define priority areas for Human rights due diligence at AXA. The "Responsibility to respect Human rights", as laid down in the Ruggie principles, formed the basis for this assessment. It requires that businesses: • Avoid causing or contributing to adverse Human rights impacts through their own activities, and addres... |
The scope of the assessment thus included AXA's Human rights impacts in relation to its employees, clients, investments and suppliers, and covers every AXA entity. |
The basis for the identification of Human rights was the International Bill of Human rights consisting of the Universal Declaration of Human rights (UDHR); the International Covenant on Civil and Political Rights (ICCPR); and the International Covenant on Economic, Social and Cultural Rights (ICESR). |
A list of various human rights-related issues was analysed to determine whether AXA could have adverse impacts on human rights and have the ability to protect or mitigate possible violations of these rights. For each Human right it was determined whether it was relevant for each of the business activities conducted by ... |
See further information in AXA Group’s Human Rights Policy: https://www.AXA.com/en/about-us/our-commitment-tohuman-rights, as well as in our 2017 Report (https://www-AXA-com.cdn.AXA-contento-118412.eu/www-AXAcom%2F1f282cf3-0564-450d-9b05-a3926f2df432_AXA_relevant_human_rights_2017.pdf). |
This policy is also fully developed in section 7.6 “Vigilance Plan” of AXA Group’s 2017 Annual Report: https://www.AXAaxa.com/en/newsroom/publications |
14 3) RISK MANAGEMENT: INTEGRATION OF ESG AND CLIMATE-RELATED RISKS AND OPPORTUNITIES. |
In addition to measuring ESG and climate metrics, AXA actually factors some of these risks and opportunities into its investments and insurance-related processes. This is undertaken notably via focused exclusions, “green” and “impact” investments, shareholder engagement, public policy outreach, academic research, inves... |
SECTOR EXCLUSIONS. |
AXA’s Responsible Investment strategy includes several sector-level divestments. Indeed, certain activities and products are inconsistent with our corporate responsibility goals of protecting people over the long term. In this context, AXA has developed specific sector guidelines and business restrictions, which apply ... |
• Tobacco manufacturers, whose products are the cause of long term non-communicable diseases, which conflicts with our role as one of the world’s largest health insurers. |
• Palm oil producers which do not adhere to this industry’s best sustainability practices (notably regarding deforestation, land and labour rights). |
• Soft commodity derivatives which may be responsible for inflating the price of basic food commodities. |
• Coal and oil sands: see “One Planet Summit” section below. |
These policies are disclosed publicly on https://www.axa.com/en/about-us/responsible-investment “ONE PLANET SUMMIT” 2017: A NEW CLIMATE AMBITION. |
In 2015, AXA stated that investors and insurers have a key role to play in the fight against climate change, and proved it through strong action: AXA was the first global investor to initiate divestment from coal, and the first to phase out the insurance coverage of coal clients. We also adopted ambitious green investm... |
Green investments In 2015, AXA had committed to reach €3bn in green investments by 2020. We have reached that target in 2017 and have decided to set the bar higher to reach €12bn in green investments by 2020, using a broader set of asset classes as well as growing our underlying commitment in each of these asset classe... |
15. |
This doubles the recommendations by Christiana Figueres, one of the main architects of the COP21, to dedicate 1% of institutional investments to green assets. |
This investment includes notably green infrastructures, green bonds, property and commercial real-estate loans with stringent environmental standards. AXA’s definition of “green” infrastructure is derived from accepted and demanding market-based approaches. In addition, in the case of Real Estate and Commercial Real Es... |
• For Infrastructures, AXA also relies on the Climate Bonds Initiative, with a focus on renewables, water treatment, and clean transport. |
• The “Green Impact” investments gather assets invested in our Impact Funds targeting climate impacts. |
• For Property assets, our strict definition is limited to assets with a high level of environmental certification (minimum level “Excellent” or “Gold”) and a minimum Energy Performance Certificate (EPC) rating of “B”. |
• For CRE debt, we use a strict definition of “green” as well as for loans backing buildings with a high level of environmental certification (minimum level Excellent or Gold). Here, we do not reference the EPC as it is not influenced by the debt holder. |
Expanded coal divestment Carbon emissions will require significant curbing in order to reduce the risk of climate change, which may place business constraints on carbon-intensive industries, leaving some assets “stranded”, which in turn may lead to reduced valuations. Current valuation models may not account for such r... |
• Energy mix and revenue mix criteria do not enable to address companies that are actively developing new coalbased power capacity. Hence, we now also divest from companies with coal-based power “expansion plans” exceeding 3 Gigawatts (GW). Such companies are building new coal plants that are locking economies into coa... |
16 power for decades, which clearly contradicts the COP21 "Paris Agreement". This new approach captures “real” climate impact, beyond pure financial risks. It is also more forward-looking. |
• Mining companies with annual coal production over 20 Million Tons. |
Oil sands divestment Because oil sands are also an extremely carbon-intensive form of energy and a serious cause of local environmental pollution, AXA also decided to end its investments from the main oil sands producers, defined as producers with at least 30% of their reserves based on oil sands. The production volume... |
Emerging countries AXA and the IFC, a member of the World Bank Group focused on the private sector, announced the launch of a $500m partnership supporting an infrastructure fund that will notably finance green infrastructures in emerging countries, |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.