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TARGET WARMING TREND 1°C. |
Time frame to implement current NDCs which represent 1/3 of the emissions reduction needed (UNEP) |
IPCC predicted world temperature by 2040 at current warming rate. |
Deadline to achieve carbon neutrality (Article 4: Paris Agreement) |
Target date to mitigate warming (Article 2: Paris Agreement); end of the global carbon budget 2018 2030 1°C 3.2°C 2°C. |
The Road to 2 Degrees 2100 2nd half of this century. |
Methodology Box. |
The Paris Agreement binds parties to limit warming to well below 2°C compared to preindustrial levels by 2100. The vast majority of current NDCs have 2020 to 2030 as their stated compliance period. NDCs expressed to 2050 are scaled back to 2030 in our modelling. The 2018 UNEP Gap Report estimates that implementing the ... |
Source: Carbon Tracker. |
An Emissions Pathway for the World. |
In 2018, human-induced warming already reached a global average of about 1°C above pre-industrial levels(1). The world’s emissions curve must peak before 2050 and follow a downward trend to reach carbon neutrality by the second half of this century. Carbon neutrality or “net zero” emissions involves striking a balance ... |
(1) IPCC, 2018, p. 45. |
Key Climate Dates for the World Economy 2100 Warming Projections Emissions and expected warming based on pledges and current policies. |
COP21 & the Paris Agreement |
08 AXA GROUP 2019 Climate Report June 2019. |
The science and political ambition show there is a need for strong collective action to fight climate change. |
Climate change is a medium to long-term risk, with a complex quantification of impacts on our activities. AXA’s strategy is not only to adapt, but also to take advantage of our expertise to provide solutions. Indeed, we are well equipped to contribute to the understanding of climate change through our risk management e... |
The following pages describe these efforts in greater detail. |
(1) https://group.axa.com/en/newsroom/news/how-to-support-the-transition-towards-the-protection-of-biodiversity. |
AXA’s Activities in a Changing Climate Context. |
AXA’s Activities in a Changing Climate Context |
09 AXA GROUP 2019 Climate Report June 2019 1. Governance. |
AXA’s Approach to Responsible Investment (RI) |
AXA defines RI as the integration of Environmental, Social and Governance (ESG) considerations into investment processes, including ownership practices. |
Our conviction is that ESG integration may impact long-term investment performance by offering an enhanced understanding of risk drivers. This conviction is derived from academic research and empirical market data. It is also a way to strive for alignment between our investments and broader Corporate Responsibility com... |
The process of ESG integration is coordinated centrally, with an active input from our asset managers that include ESG metrics in their investment analysis across asset classes and regions. |
The AXA Group as well as its two Asset Management entities (AXA IM and AB Global(1)) are signatories of the UN-backed principles for Responsible Investment (UN PRI). |
(1) Following the IPO of AXA US in 2018 and subsequent sell-downs of AXA Group’s ownership interest, AXA Equitable Holdings and AllianceBernstein will cease to be included in the scope of the Group’s TFCD reporting from 2019 onwards. |
(1) Following the IPO of AXA US in 2018 and subsequent sell-downs of AXA Group’s ownership interest, AXA Equitable Holdings and AllianceBernstein will cease to be included in the scope of the Group’s TFCD reporting from 2019 onwards. |
ESG & Climate Governance. |
Group Investment Committee. |
ESG Footprint Committee ❯ Review the issuers and sectors challenged from an ESG perspective. |
❯ The Committee votes for: divestment, engagement or credit review, investment still allowed. |
RI Center of Expertise ❯ Empowered expert group presenting their recommendation to the RIC ❯ Monitor local implementation of RI policy ❯ Coordinate investment initiatives. |
Group Asset Managers (AXA IM, Alliance Bernstein) ❯ Participate in RIC and give guidance on RI Policy ❯ Provide ESG research ❯ Report annually on RI progress ❯ Take lead in supporting specific RI initiative. |
Local Chief Investment Officers ❯ Build entity-level RI action plans ❯ Review investment mandates. |
Group Corporate Responsibility ❯ Monitor RI trends ❯ Propose RI themes for study ❯ Manage relationship with NGOs. |
Responsible Investment Committee ❯ Define, launch, implement and follow up on RI strategy ❯ Chaired by Group CIO + investment teams members, Corporate Responsibility, Risk Management, internal asset managers |
10 AXA GROUP 2019 Climate Report June 2019. |
Investments. |
AXA created a Group-level Responsible Investment Committee (RIC), chaired by the Group Chief Investment Officer, and including representatives from AXA Asset Management entities, Corporate Responsibility, Risk Management and Communications. The RIC reports to the Group Investment Committee, chaired by the Group Chief F... |
AXA’s RI policy is supported by the RI Center of Expertise, a transversal working group from AXA’s local investment teams interacting with the CR network and the Group’s Asset Management entities. AXA IM has also developed a dedicated RI Governance involving all its central management teams and investment platforms. |
Insurance Underwriting. |
Insurance-related ESG risks also benefit from a specific governance, notably the Group Underwriting Committee, which defines underwriting restrictions, including CRrelated. The Group CR team provides a bridge with the RI-related governance. In addition, a 1. Governance dedicated team with Group Risk Management analyses... |
Corporate Responsibility. |
AXA has established a robust governance framework to develop and implement its CR Strategy, including its climate, ESG, investment and underwriting dimensions. Every year, the Board of Directors’ Compensation and Governance Committee examines the Group’s CR strategy and reports to the Board of Directors on this matter.... |
AXA also leverages its Stakeholder Advisory Panel(1) to better evaluate future topics of interest. Indeed, in 2014, AXA created a Stakeholder Advisory Panel to advance the company’s role as an insurer in building a stronger, safer and more sustainable society. Twice a year, it gathers senior external and influential fi... |
In 2019, as required by the new EU “Non-Financial Directive”, AXA conducted an internal risk assessment to identify its main sustainability risks, grouped into the following main categories: social risks, human rights risks, environmental risks and risks related to business conduct. This process is further described in... |
More generally, AXA has developed a culture of stakeholder dialogue by working closely with a number of civil society partners, with a view to strengthening its understanding of evolving sustainability issues. |
Risk Committee. |
The Group’s Audit Risk & Compliance Committee, with input from different teams (notably audit, compliance, Legal, financial risk management, P&C risk management, communications) assessed the governance and development process of AXA’s 2019 Climate Report. See section 3 “Risk Management”. |
(1) www.axa.com/en/about-us/stakeholder-advisory-panel. |
11 AXA GROUP 2019 Climate Report June 2019. |
ESG Integration: Preliminary Investment Universe Identification and Internal Credit Rating. |
The group credit research team assigns an internal credit rating (“ICR”) and manages issuer eligibility for investments. |
The ICRs cover more than 80% of AXA Group’s credit portfolio. For the remaining part, ratings from external Credit Rating agencies are taken into account. When performing a credit review and assigning an ICR, the credit research team assesses several credit factors related to an issuer’s business and financial profiles... |
Non-Financial Corporates. |
FINANCIAL FACTORS ❯ Profitability ❯ Cash flow coverage ❯ Leverage. |
BUSINESS FACTORS ❯ Industry ❯ Market position ❯ Strategy ❯ ESG & transparency. |
Financial Corporates. |
FINANCIAL FACTORS ❯ Solvency & leverage ❯ Asset quality ❯ Profitability ❯ Liquidity & funding. |
BUSINESS FACTORS ❯ Operating environment ❯ Market position ❯ Strategy & risk appetite ❯ Support ❯ ESG & transparency 2. Strategy. |
Responsible Investment Strategy. |
AXA’s RI strategy is based on four main pillars: ❯ Integrating ESG and carbon metrics into investment processes and decisionmaking, using KPIs and qualitative research across most of our assets. This includes the implementation of ESG “minimum standards” rules to review and potentially exclude underperforming issuers f... |
AXA created a Group-level Responsible Investment Committee, chaired by the Group Chief Investment Officer, and including representatives from AXA Asset Management entities, Corporate Responsibility, Risk Management and Communications. |
EACH OF THESE PILLARS IS DEVELOPED IN THE FOLLOWING PAGES |
12 AXA GROUP 2019 Climate Report June 2019 2. Strategy. |
The ESG & transparency factor is not markedly different from the other credit factors considered when forming a credit opinion and assigning an internal rating. It can also be a key rating driver and in some cases an overriding factor. It should be noted that the credit research team assesses the materiality of ESG fac... |
ESG & transparency factors can also differ from other factors in terms of time horizon. Although it can be material within our usual rating horizon (around two years) and thus impact the ICR like any other factor, ESG/ transparency factors can also have a longer horizon before they potentially materialize. In such case... |
The AXA Group is also a member of the UN PRI’s Advisory Committee on Credit Ratings (“ESG integration in credit”), aiming to enhance the transparent and systematic integration of ESG factors in credit risk analysis. |
ESG Integration: Tools and Methodology. |
This tool provides access to a wide range of quantitative and qualitative extra-financial data and analysis on ESG factors across asset classes, wich is used both for AXA's General Accounts assets and third party assets, where appropriate. Its breadth enables asset management teams (portfolio managers, fund managers an... |
This platform, which provides ESG scores and analyses based on the ESG framework per asset class described below, is fed by information collected from the major expert sources in ESG analysis. The RI front office tool covers 7,200+ companies, 100% of the MSCI World Index, ESG data on 150 governments worldwide, and qual... |
By combining fundamental and quantitative analysis with specialist external research and a range of analytical tools, the RI front office tool enables research across a variety of ESG factors, such as carbon footprint, greenhouse gas emissions, company training budgets, employee turnover and executive remuneration poli... |
The AXA IM RI front office tool allows AXA IM fund managers to: ❯ assess in a more holistic manner the financial risk of their investments; ❯ measure a portfolio’s carbon footprint or pick companies according to their carbon intensity; ❯ integrate new factors of performance and stock picking into investment process; ❯ ... |
The complete range of functionalities in AXA IM’s RI front office tool includes investment universe screening analyses, ESG portfolio footprints, carbon data calculations, sector screening, and company-specific ratings, research and analysis. |
AXA's RI tools combine fundamental and quantitative analysis and covers a variety of ESG factors, such as carbon footprint, greenhouse gas emissions, company training budgets, employee turnover and executive remuneration policies. |
AXA tracks its investments’ ESG performance in detail by leveraging AXA IM’s tools. AXA IM launched a proprietary RI scoring tool in 2007, and a dedicated front-office tool in 2017. |
of the Group's Credit Portfolio covered by an internal credit rating80% companies covered by AXA's ESG research 7,200 |
13 AXA GROUP 2019 Climate Report June 2019 2. Strategy. |
AXA IM’s RI Front Office Tool has a complete range of functionalities, enabling portfolio managers to utilize it during the different phases of the investment decision-making process. |
14 AXA GROUP 2019 Climate Report June 2019 2. Strategy. |
The ESG methodology is adapted to different asset classes by applying a different framework on corporate issuers, sovereign issuers and real assets. |
❯ Corporates issuers (equity and debt): the ESG assessment consists in focusing on the most material and impactful key ESG issues at sector level, with a thorough selection of best data sources and most detailed ESG criteria. E, S and G factors are weighted differently in the overall ESG scores engineering depending on... |
❯ Sovereign issuers: AXA’s ESG scoring framework for countries is based on public data sources such as the World Bank, the OECD, and the UN. It currently covers more than 100 countries, consisting of a spectrum of mature and emerging economies. This approach places the notion of sustainable development at the heart of ... |
❯ Real Assets: AXA’s ESG scoring frameworks for Real Assets covers 3 asset classes: direct property, commercial real estate loans and infrastructure debt. The ESG scoring for these assets is based on dedicated proprietary questionnaires. The overall asset ESG score is a combination of various sources of ESG risks asses... |
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