AXA Investment Managers (AXA IM) will from next year adopt different investment and engagement approaches to companies with a high impact on the climate depending on the extent to which they are working to address this, with a view to divest from climate laggards.
In an announcement today, the French investor – who as of March 2021 had €869bn assets under management – said it will from 2022 “apply a stronger climate lens to its investment decisions” and place high-impact companies into four different categories: climate leaders, transition leaders, transition laggards and or climate laggards.
Those placed in the final group, which AXA IM has defined as “companies that are not taking climate change seriously […] and composed of companies that are material in AXA IM’s portfolios and whose impact on climate is also high”, will be subjected to engagement with clear and defined objectives. AXA will monitor any action taken until 2025 and divest if progress on their Net Zero path is not substantial.
Of the capital to be potentially divested from climate laggards, AXA IM said it will look to invest it in climate and transition leaders.
“If we don’t see progress and strong commitments from companies, we need to be brave and bold in our investment decisions and be ready to divest. We must give companies the time to adjust but we must also adopt a no-compromise approach with investee companies that don’t take climate change seriously,” said Marco Morelli, Executive Chairman of AXA IM.
The second laggard category, transition laggards, consists of companies “that are climate aware but are slower to embark on a tangible transition journey”. AXA will continue to invest and engage with these companies to encourage them to accelerate their transition, notable through votes at AGMs, it said.
On more immediate divestments, in 2022 it will exclude oil and gas extraction activities carried out in the Artic Monitoring and Assessment Programme (AMAP) region. “This will mean divesting from companies that are deriving more than 10% of their production from this region.”
Today’s news follows Europe's largest public sector pension fund, ABP, announcing last month that it will divest from fossil fuel producers due seeing “insufficient opportunity” for them as a shareholder to push for the necessary, significant acceleration of the energy transition at the companies.