AXA, the global insurance giant, has committed to divest any coal company shares it holds before the end of the year in another major announcement by a big investor that it is dumping coal because of environmental concerns. The amount of AXA’s coal holdings is understood to be worth approximately €500m.
In a keynote announcement today at Climate Finance Day in Paris, Henri de Castries, Chairman and CEO, said the insurer would also triple its green investment to €3bn by 2020 and include ESG criteria as part of the investment process in the management of its general account portfolios worth hundreds of billions of euros by the end of this year.
De Castries said the company was also allying itself with France’s sovereign wealth fund, La Caisse des Dépôts, by signing the Montreal Carbon pledge. The Pledge commits investors to measure and disclose the carbon footprint of investment portfolios annually. It aims to attract $1trn of portfolio commitment in time for the crunch UN Climate Change Conference in Paris in December this year.
Also signing the Montreal pledge today was BNP Paribas Investment Partners, at €548bn the seventh largest asset manager in Europe. “As a responsible investor, we have a key role to play in helping to tackle climate change,” said the firm’s CEO Philippe Marchessaux.De Castries noted that AXA has an €800bn balance sheet and €600bn in assets managed for third parties, underlining the weight of its commitment: “If we think we can live in a +2 degree world we fool ourselves: it’s like playing Russian roulette with five bullets in the barrel. It’s a bad risk. The facts are undeniable, but they are not shared enough. One of our roles as insurers is to spread the word more, and act.
“Insurance companies are like pianos, they try to play pleasant music with many keys: assets, liabilities, the P&L account, economic activity, our broader CSR work and our presence in mature and emerging countries. We hope what we are doing will incentivize other players to join the effort. It’s one step on the journey.”
De Castries warned, however, that well intentioned regulations were creating bad outcomes in terms investments to fight climate change: “We want to invest more in sustainable infrastructure, especially in the developing world, and into environmentally friendly business models. But these investments have a risk. As long-term investors we should be able to handle this with our long-term risk premium.
“But, part of regulation has taken a too short-term approach, and is leading to misallocation of savings. My message is it would be great if regulation enabled an increase of leverage and better use of balance sheets at financial institutions to take more educated risks for more long-term sustainable investments. If we don’t we will compound the issue of climate change. If we do, then together we can prove Woody Allen wrong when he says life is hard and then you die.”
Will investors be part of the solution to climate change, or part of the problem?
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