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17 including renewable energy, water, green transport and telecoms. There will be no investments in coal and oil-sands related projects. |
“2°C” PORTFOLIO ALIGNMENT ANALYSIS. |
Instead of relying exclusively on carbon footprinting (section 4), AXA is exploring ways to measure the positioning of its portfolio versus a 2°C target. AXA is thus currently reviewing and testing Carbon Delta’s “warming potential” methodology on a share of its portfolio (corporate bonds and equities: 45% of AXA’s Gen... |
This warming potential methodology captures multiple climate change related aspects of an issuer’s activities: Scope 1 and Scope 2 emissions (“direct” emissions, as defined by the Greenhouse Gas Protocol) representing the present-day issuer activities, as well as investments in low-carbon technology to capture a forwar... |
The methodology used follows specific steps. Sectoral-level emission budgets are first established, using the emissions intensity levels required for each sector to reach a “2°C” scenario. Then, for every sector, the relationship between sector emissions and warming (temperature) is calculated, resulting in a sector-le... |
As a result, the weighted sum of all warming potential temperatures of a company constitutes the final warming potential of a company. The resulting warming potential is used to compare the climate change trajectory of companies within the same sector. |
This innovative work provides insights into our investments, as the security-specific Warming Potential is expanded into a broad “temperature gauge” for our holdings. However, we cannot yet consider a comprehensive “Portfolio Warming Potential” due to a shortage of portfolio coverage, the experimental nature of the app... |
18. |
SHAREHOLDER ENGAGEMENT. |
AXA’s above divestments are complemented by an active engagement strategy. Indeed, as a shareholder and bondholder, AXA has the possibility to engage with the management of companies in which it invests in order to help catalyse positive change on certain issues. This is undertaken directly by the Group and via AXA IM’... |
• AXA chairs the French Insurance Federation working group on exclusions and divestments. The group’s mission is to encourage debate on divestments and exclusions among French Insurers, and to promote best practices. |
• AXA is a member of the PRI ESG Engagement Advisory Committee. The purpose of this committee is to advise the ESG Engagements department on its general strategic direction, provide feedback on topics to be considered for future PRI-coordinated collaborative engagements and help in promoting the UN PRI agenda. |
• AXA also supports the UN PRI shareholder engagement initiative designed to promote adoption of the TCFD guidelines; a collective engagement initiative on Arctic Drilling, targeting oil & gas companies involved in oil exploration in the Arctic, as well as Arctic Council members ; “Aiming for A”, a major collective sha... |
AXA Investment Managers • To support its engagement work and to use the decision-making powers of the shareholder body at General Meetings to push companies to accelerate strategic planning on climate change, AXA IM has been filing shareholder resolutions to ensure that discussions around climate change are part of the... |
• In its revised Corporate Governance & Voting Policy, AXA IM has highlighted the importance of companies managing the critical issue of climate change. In 2017 they were part of a coalition of investors that filed and voted in favour of identical shareholder resolutions at the General Meeting of 15 key US Oil& Gas and... |
• Human rights in the Oil & gas and Mining sectors: one of AXA IM’s engagement objectives is to encourage companies in these sectors to enhance the implementation of the UN Guiding Principles on Business and Human Rights within their business strategy and operations. They also aim to improve the level of disclosure on ... |
• China National Offshore Oil Corporation (CNOOC): AXA IM actively engaged with the company in relation to the management of social risks, in particular safety issues and human rights impacts of their operations. |
• Mitigating supply chain risks: AXA IM’s engagement activity focus on companies with exposure to agricultural supply chains. It is used to improve the management of risks related to labour practices in agricultural supply chains. This is an issue which can affect the long-term performance of companies particularly in ... |
19. |
PUBLIC POLICY OUTREACH. |
AXA is a member of numerous organisations that support the ESG and climate agenda. |
UN PRI - AXA Group and both of its investment management subsidiaries are members of the United Nations Principles for Responsible Investment (UN PRI). The UN PRI is a major collective initiative that seeks to promote responsible investment among investors and asset managers. Both AXA. |
Investment Managers and AB Global have been UN PRI members since, respectively, 2007 and 2011. The UN PRI are a set of 6 principles which invite signatories to better integrate ESG considerations in their investment decisions and ownership practices. The initiative was launched under the auspices of the United Nations ... |
UN PSI - The UN Principles for Sustainable Insurance is a major international coalition of the insurance industry. The PSI were launched during the "Rio+20" UN conference in 2012. AXA is one of 27 founding signatories. The signatories of these principles commit to integrating environmental, social and governance criter... |
TCFD and “article 173” - AXA co-chaired the global Task Force on Climate Related Financial Disclosures (TCFD), set up by the Financial Stability Board (FSB), and presided by Michael Bloomberg. The TCFD provides guidance on how to disclose climate change risks and opportunities. As we seek to practice what we promote, o... |
20. |
EU High-Level Expert Group on Sustainable Finance - AXA contributed to the EU High Level Expert Group on Sustainable Finance, which developed recommendations on how sustainability could be placed in the European Union's core financial processes, how different participants in the financial system could act on it, and ho... |
United Nations Global Compact - Launched in July 2000 by UN Secretary General, the Global Compact seeks to encourage businesses, UN agencies, the labour market and NGOs to work together to integrate 10 universal principles on human rights, labour, the environment and the fight against corruption. The Global Compact is ... |
ACADEMIC RESEARCH. |
AXA has been supporting public academic research since 2007 via the AXA Research Fund. Since 2007, AXA has dedicated €180M to the funding of academic research. A significant proportion of the funding supports research on environment and climate change. Examples of projects supported by the AXA Research Fund: Could a Cl... |
ESG-RELATED INVESTMENT PRODUCTS AND COMMUNICATIONS TOWARDS CLIENTS. |
AXA Investment Managers products, based on RI Search |
21. |
As described in section 2, RI Search is an internal tool which provides AXA IM fund managers proprietary ESG scoring at both portfolio and security level to help in investment decision making. RI Search integrates our ESG fundamental and quantitative research, and is available to 100% of our funds managers. It provides... |
AXA IM offers various ESG options to its clients by granting them access to a broad spectrum of asset classes and thematic funds, being through Core Responsible Investment Funds (such as AXA Trésor court terme, Label Euro Obligations, Label Europe Actions, AXA Eurozone RI, all classified under the ISR Label – 13 funds ... |
AXA IM is a pioneer of the Green Bonds market, by integrating this asset class into its bond management as early as 2012. Over the last few years, AXA IM has thus supported the growth of this market by managing significant assets. |
AXA WF Planet Bonds was launched in November 2015, and gives investors access to the green bond market. AXA IM’s approach integrates environmental analysis with the views of the bond manager: analysis of the environmental quality of each project, ESG quality analysis of the issuer, fundamental analysis of the character... |
AXA IM – ESG integration-related communications to clients AXA IM plays an active role in promoting acceptance and implementation of ESG issues within the investment industry. Initiatives include: assisting insurance clients to integrate ESG issues into their day-to-day activities e.g. through |
22 demonstrations of the RI Search Tool; tailored training programmes for clients on ESG issues; participation in seminars and other public forums where ESG issues are discussed; explanatory notes with regards to Article 173 requirements; educational document for clients with regards to the French Energy Transition Law... |
ESG INTEGRATION INTO INSURANCE BUSINESS. |
When appropriate, the Group’s underwriters integrate environmental and social risks, including human rights concerns, as well as more general ethical concerns in their product development processes and policies. This is notably undertaken via applying the Group underwriting guidelines for P&C commercial lines which req... |
Climate-related insurance exclusions: coal and oil sands. |
As we believe it makes no sense to commercially support industries which we have decided to divest from, the commitment to divest from coal and oil sands is also reflected in our insurance business: • AXA no longer supports the development of new coal capacity by ending Construction covers for any new coal plant and ne... |
• AXA no longer supports the operations of existing coal by ending Property covers for existing coal plants when these are included in coal-only insurance policies. |
• AXA no longer insures the oil sands industry (extraction and associated pipelines). |
• In addition, AXA does not underwrite upstream oil & gas exploration business in arctic regions. |
Underwriting restrictions also apply to our other investment exclusions. Green Products. |
AXA has developed a range of green insurance products. These include, for example, motor insurance encouraging low emissions vehicles, home insurance with environmental appliances upgrades, SME covers favouring "green" buildings or car fleets, the promotion of renewable energies via adapted policies covering the equipm... |
Parametric insurance. |
AXA has developed a partnership with the World Bank to expand the availability of innovative climate index (“parameter”) insurance solutions. The insured’s losses are correlated to an index, (e.g.: rainfall in millimetres), and a set amount is paid out if that index is reached. AXA already offers parametric insurance i... |
Assurance citoyenne: ESG scoring and labelling of retail insurance products |
23. |
AXA France, through the implementation of its “Assurance citoyenne” programme, developed a successful customerfacing label which aims at signalling the sustainable added-value of our insurance products. AXA France elaborated a set of criteria, which are scored, to better define sustainable insurance products. A product... |
• PREVENTION, e.g.: pricing incentives that help customers identify and prevent or reduce risks. |
• ENVIRONMENT, e.g.: paperless contract, products offering incentives or pricing benefits when covering buildings using material which are environmentally friendly. |
• FAIRNESS, e.g.: accessibility of the product to usually excluded populations from insurance. |
In 2017, AXA France also launched a new responsible Unit-linked offer called “AGIPI Gestion Pilotée Option ESG”. Most of the funds within this offer are evaluated according to their ESG performance using a market-based tool. |
24 4) ESG AND CLIMATE-RELATED METRICS AND TARGETS. |
CARBON FOOTPRINTING. |
In addition to the ESG metrics described in section 2, AXA tracks carbon-related KPIs. Indeed, AXA signed the “Montreal Carbon Pledge”, committing to assess and disclose the carbon intensity of its investments. Methodology The carbon footprint is calculated as follows: • Equities and Corporate Bonds: “direct” CO2 emiss... |
• Sovereign debt: CO2 tonnes / $M of GDP. |
• Real estate: CO2 kg per square meter. |
2017 results The 2017 analysis, which covers 82% of AXA’s General Account assets (equities, corporate fixed income and sovereign debt), shows the following results. |
Note: we have recently added Real Estate-related emissions, but these results are not aggregated in the overall average carbon intensity KPI, owing to its different calculation basis (Kg CO2 / sq.M vs T.CO2 / M$). The breakdown per sector and asset class is as follows. |
25. |
Historical analysis The 2017 results show a decreasing average carbon intensity since 2015. |
Our analysis shows that this downward trend is the result of different factors, including methodology-driven, as follows: • 2014-2015: the carbon intensity decline (6% annualized) is due to a drop in the carbon intensity of our Corporate bonds and equities, and in particular related to a reduced exposure to the Utiliti... |
• 2015-2016: this carbon intensity decline (-13% annualized) is caused primarily by a drop in the Sovereign debt’s carbon intensity (in particular Belgium, Italy and France), while Equities and Corporate Debt declined slightly. However, this is largely due to a reporting effect, not actual annual declines. Indeed, ther... |
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