Responsible investing
Draw upon our long-term, global, approach to responsible and sustainable investing
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+20 years
of experience in responsible and impact investing
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US$672bn
Asset Under Management (AUM) integrating ESG criteria
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>8,800
issuers rated according to ESG criteria
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100%
of our core portfolio managers have access to ESG research and scores
Source: AXA Investment Managers, as of 31.03.2021.
What is responsible investing?
At AXA IM, we define responsible investing (RI) as an investment process that incorporates environmental, social and governance (ESG) factors into its approach. RI enables clients to align their investments with global megatrends that are changing the investment landscape. Issues such as increasing regulation, the growing need for risk mitigation and a heightened social conscience can be more effectively addressed by integrating ESG factors into the investment process.
Why is responsible investing important?
ESG can allow firms to foster a meaningful change in the global economy, and in the communities in which we live and work. We believe that ESG analysis leads to more effective investment solutions that address global challenges and create sustainable value for our clients.
The integration of ESG factors is used to enhance traditional financial analysis by identifying potential risks and opportunities beyond technical valuations, providing data on issues such as potential reputational risk or identifying firms which are adapting to meet new market challenges. It is important to note that the main objective of ESG integration remains financial performance.
Is there a difference between socially responsible investing and ESG integration?
Socially responsible investing (SRI) and ESG are often treated as one in the same, however, there are some key differences between the two and the impact they have on the investment process.
Environmental, social and governance (ESG)
ESG refers to the practices of an investment that may have a material impact on the performance of that investment. The integration of ESG factors is used to enhance traditional financial analysis by identifying potential risks and opportunities beyond technical valuations. The main objective of ESG integration remains financial performance.
Socially responsible investing (SRI)
SRI goes one step further than ESG by actively eliminating or selecting investments according to specific social/sustainable guidelines. The underlying motive could be religion, personal values or political beliefs. SRI strategies use ESG factors to shape the objectives of the strategy and/or apply negative or positive screens on the investment universe.
Responsible investment is a young industry that lacks widely-acknowledged and precise norms, guidelines and definitions. So far, there is an understanding that responsible investment is a generic term that refers to a wide range of approaches that integrate environmental, social and governance (ESG) criteria in the investment process. Responsible investment can take on a variety of forms and should help to identify and to mitigate investment risks.
What does ESG mean at AXA Investment Managers?
As a responsible investor we want to manage ESG risks and opportunities when investing on behalf of our clients, and we have identified certain sectors we will not invest in above a specified threshold. Consequently, sectorial exclusions on controversial weapons, palm oil, soft commodities and coal are applied across all assets.
Going beyond this, we apply our ESG standards to our responsible investing (RI) and ESG integrated open ended funds, which will also be available to institutional clients on an opt-in basis.
These standards help us to manage ESG risks and focus on material issues such as climate change, health and social capital, while also considering severe controversies as well as low ESG quality.
As a result of these ESG standards, the following sectors and areas are excluded from our RI and ESG integrated funds:
- Tobacco
- White phosphorus weapons
- Severe breaches of United Nations Global Compact (UNGC) principles
- Low ESG quality companies
The AXA IM ESG standards form one dimension of our ESG integration approach, which also include ESG corporate analysis and scoring, and common views on thematic engagement and voting.
Our approach and offering
ESG at AXA Investment Managers is developed using input from teams across the business and we maintain a three-tiered approach to responsible and impact investing: ESG embedded, ESG integrated and sustainable investing
Our framework and scoring methodology
ESG integration has seen rapid growth over the past few years, and this section looks at how we at AXA Investment Managers approach this change and our five-step approach to our scoring methodology.
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