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What are the UN Sustainable Development Goals? |
The 17 Sustainable Development Goals (SDGs) were adopted by the UN General Assembly in 2015 with the target of solving key development and environmental issues by 2030. SDGs have increasingly become a mainstream global standard to assess the ESG impact of business initiatives, including financial services. An increasin... |
This approach is closely in line with the Group’s CR strategy, itself targeting more particularly a selection of 7 SDGs: |
Health and disease prevention. |
Social, inequality and inclusion. |
Climate change and the environment. |
Context Box |
29 AXA GROUP 2019 Climate Report June 2019 2. Strategy. |
The AXA Impact Funds have generated positive and measurable benefits over a range of impact themes in the priority areas of financial inclusion, education and health. For example, some of the impact contributions of Impact Fund 2 include: ❯ investing in impactful businesses in India that have already reached over 4,000... |
Examples of KPIs tracked for Impact Investment Fund II. |
Transforming Rural Economies Indicators. |
Number of beneficiaries 1,333,842. |
Education Indicators. |
Number of Underserved Students 2,151,970. |
Number of Emerging Countries 16. |
Access to Clean Energy Indicators. |
Units of Clean Energy Products distribued 1,202,726. |
Number of Borrowers (Clean Energy Products) 1,297. |
A New Impact Investment Fund to Support Climate and Biodiversity-Related Strategies. |
AXA launched its third Impact Investment Fund during the meeting of the G7 Environment Ministers gathered in Metz, France, in May 2019, with a strong focus on biodiversity protection. |
AXA Impact Fund III will invest up to €200 million of capital to fund credible solutions that deliver intentional and measurable positive outcomes that contribute to the fight against climate change and loss of biodiversity; alongside market-rate financial returns. |
These are inter-related challenges with roots in the ways that Society interacts with the physical environment and natural capital. |
The Fund will invest globally using private assets to catalyze solutions that promote mitigation, adaptation and resilience in relation to the critical environmental challenges of our time. The fund will focus on solutions that promote the conservation of ecosystems, resource efficiency and the protection of vulnerable... |
AXA Impact Fund III is our way of demonstrating that we recognize the need for new capital to meet the social and environmental challenges identified by the UN Sustainable Development Goals (UNSDGs). Our objectives around this fund will be achieved when we are able to demonstrate the following outcomes at scale: ❯ Avoi... |
This means we will invest to conserve, protect and restore natural capital – land based and marine – to preserve their ability to act as natural carbon sinks and high value habitats necessary for conservation and biodiversity. Examples of possible investments under this theme could encompass the protection of land base... |
30 AXA GROUP 2019 Climate Report June 2019 2. Strategy. |
The positive impacts of the investment are clear – protection of high value ecosystems, significant carbon emissions savings through natural sequestration, and measurably improved biodiversity. |
ADDRESSING THE CHALLENGES OF CLIMATE CHANGE & BIODIVERSITY. |
ALIGNING PLANET AND PEOPLE. |
Impact Measurement = Avoided Emissions; Natural Capital Conserved; Habitats Protected; Number of People Reached. |
CONSERVE Ecosystems EVOLVE Resource Efficiency PROTECT Vulnerable communities ● Natural capital protection ● Marine conservation ● Reforestation ● Restoration of natural habitats ● Biodiversity ● Access to clean energy for communities ● Energy efficiency ● Waste management ● Circular economy ● Sustainable consumption ●... |
ESG and Climate-Related Investment and Insurance Exclusions. |
Divestments. |
AXA’s Responsible Investment strategy includes several sector-level divestments. Indeed, certain activities and products are deemed to be inconsistent with our climate strategy and broader CR goals of protecting people over the long term. In this context, AXA has developed specific “sector guidelines” which apply both ... |
These currently include the following sectors: ❯ coal and oil sands: developed below; ❯ “controversial weapons” manufacturers that are banned by international conventions (antipersonnel landmines, cluster munitions/cluster bombs chemical, biological and depleted uranium weapons, nuclear weapons proliferation); ❯ tobacc... |
In 2018, the Group extended its investment restrictions to the XL Group’s assets, representing an extra €660 million divested. |
In total, AXA’s divestments (immediate divestment from equity; fixed income assets are run off) represent approximately €7.15 billion: coal, tobacco, oil sands, controversial weapons and palm oil, in decreasing order of magnitude, and including XL Group assets. |
In addition, AXA also strives to “play collectively” when it makes sense – notably when the commercial playing field is not level. Therefore, for example, AXA supports the “Tobacco-Free Portfolios” and supported the launch of the Tobacco-Free Finance Pledge at the UN General Assembly in September 2018. This initiative,... |
€7.15bn Total divestments |
31 AXA GROUP 2019 Climate Report June 2019 2. Strategy. |
However, coal divestment is also a financial decision. Indeed, 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. As mentioned ... |
Because oil sands are also an extremely carbon-intensive form of energy, and their production can generate significant local environmental pollution, AXA also divested from the main oil sands producers, defined as producers with at least 30% of their reserves based on oil sands. The production volumes of oil sands are ... |
In 2015, AXA was the first global investor to initiate divestment from coal, a decision which was further ramped up in 2017. Ahead of COP21, we signaled that while climate finance is a complex issue, it can nonetheless be tackled. This helped AXA and some peers to overcome paralysis by analysis and shift into “action” ... |
According to the IPCC, limiting atmospheric CO2 concentrations to 450 parts per million (ppm) should provide a 75% chance of avoiding +2°C. Achieving this CO2 concentration threshold requires limiting carbon emissions, in turn requiring burning only 1/3 of existing fossil fuel reserves by 2050, according to the Interna... |
Underwriting Restrictions. |
It is inconsistent to commercially support industries that the Group has divested from. Therefore, AXA also restricts insurance coverage for coal and oil sands-related assets (as well as for the other industries mentioned in the previous section, and arctic drilling). |
The exclusions cover the following: ❯ the development of new coal capacity is strictly banned by not providing Construction covers (both Direct Insurance and Facultative Reinsurance) for any new coal plant and new coal mine. This applies whichever the region or client (regardless of our investment exclusion list); ❯ pr... |
In addition to climate-related underwriting restrictions, AXA also bans business with “Controversial weapons” and tobacco manufacturers. More detailed internal rules apply for complex cases such as “mixed risks” packages, etc. These restrictions were initiated in 2011 (controversial weapons) and significantly ramped up... |
Context Box >3Gw >20MT >30% coal development plans coal extracted / year turnover or energy mix from coal. |
Climate-Related Divestments: Coal and Oil Sands AXA was the first mainstream investor to divest from the coal industry in May 2015. This sent a positive signal to markets and regulators and generated a positive influence by contributing to our broader Corporate Responsibility strategy to promote a stronger and safer so... |
AXA's Coal divestment criteria |
32 AXA GROUP 2019 Climate Report June 2019 3. Risk Management. |
The mandate of the Audit Risk and Compliance Committee (“ARCC”) is to strengthen the overall Group’s Risk Management governance. The scope of the ARCC covers all of the Group’s operations and include the Group’s overall risk appetite (including breaches of risk limits), the. |
Own Risk & Solvency Assessment (“ORSA”) and the other Solvency II reports, systemic risk documentation, major findings identified by internal audit, etc. In 2019, the ARCC has been involved in reviewing the governance of AXA’s sustainability disclosures. |
Internal Control and Risk Management. |
AXA’s management of sustainability risks is integrated within a broader risk management framework, as described more extensively in AXA’s 2018 Annual Report. Indeed, as AXA is engaged in Insurance, Reinsurance, Asset Management and Banking business on a global scale, it is exposed to a wide variety of risks, including ... |
MANAGEMENT COMMITTEE. |
AUDIT RISK AND COMPLIANCE COMMITTEE (ARCC) |
Operational Audit Risk & Compliance Committee. |
Solvency II Committee. |
Operational risk, including compliance risk and other material risks (strategic, reputation, emerging) |
Market, credit, liquidity risks Solvency II framework and systemic risk. |
CHIEF EXECUTIVE OFFICER. |
Financial Risk Committee. |
Board of Directors and its Specialized Committees (Audit Committee, Finance Committee, Compensation & Governance Committee) |
33 AXA GROUP 2019 Climate Report June 2019 3. Risk Management. |
Climate Risk Modelling. |
Natural hazards create volatile risks. AXA’s exposure to natural disasters depends on various factors and is often more pronounced in certain geographic areas, including major urban centers, with a high concentration of customers, employees and/or insured property and assets. |
We model these risks using a significant amount of exposure and claims data, combined with state-of-the-art climate science. This risk is then mitigated in accordance with predefined levels of “risk appetite”, third-party reinsurance and other risk-mitigation techniques, notably transferring risks to capital markets. |
Changing weather patterns and climatic conditions, in particular as a result of global warming, have emphasized this uncertainty. The consequences of climate change might significantly impact the insurance and reinsurance industry, including with respect to risk perception, and the need for new insurance products. |
Our strategy is to accelerate the development of our catastrophe risk modelling capacities, based on both external (academic) and internal scientific resources. The link between the “observed” climate change and the frequency and severity of natural disasters is a key challenge for AXA. Catastrophe loss figures show a ... |
However, as the frequency or severity of climaterelated perils is complex to monitor, a distinction must be made between what is very likely (such as mean sea level elevation, provoking coastal floods, threats to biodiversity, population displacement) and what is not, especially wind events or severe floods driven by c... |
Human Rights Risk Management. |
AXA is committed to respect human rights, based on the UN "Ruggie Principles” framework. |
AXA 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 Labor Organization and the Guiding Principles for the implementation of the United Nations “Protect, Respect and Remedy” Frame... |
As a response, AXA 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 define priority areas for Human rights due diligence at AXA. The “Responsibility to respe... |
34 AXA GROUP 2019 Climate Report June 2019 3. Risk Management. |
Shareholder Engagement & Voting. |
AXA’s ESG and climate integration, divestments and green investments strategy is 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 catalyze positive change on certain issues (suc... |
Indeed, AXA joined several shareholder coalitions, notably: ❯ Climate Action 100+, a five-year investor initiative to engage with the world’s largest corporate greenhouse gas emitters to curb emissions, strengthen climaterelated financial disclosures and improve governance on climate change. AXA is the lead investor on... |
Group-Level Organization. |
As described under section 1 (Governance), AXA’s “ESG Footprint Committee” reviews issuers from a pure ESG perspective, and it can decide on specific follow-up actions, such as requests for engagement. The Group’s central Credit Team oversees overseeing AXA’s credit portfolio and assigning Internal Credit Ratings to is... |
Asset Manager-Level Initiatives. |
In addition to Group-level initiatives, AXA IM has a team dedicated to engagement and voting. AXA IM’s Corporate Governance & Voting Policy is found here: https://www. axa-im.com/en/stewardship. Its extensive voting & engagement initiatives are described in its annual Stewardship report. Below is a snapshot of voting &... |
2018 Global Engagement Record 125 Targeted companies ● |
Corporate Governance ● Environmental issues ● Social issues ● Overlapping ESG issues 18% 35% 14% 33% |
Source: AXA IM, for 12 months ending Dec. 31, 2018. |
Source: https://www.axa-im.com/en/content/-/asset_publisher/alpeXKk1gk2N/content/proxy-voting-2018season-key-takeaways-year-to-date/23818. |
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