AXA IM intensifies ESG engagement with firms

AXA Investment Managers has ramped up stewardship activity and intensified engagement with investee companies by conducting discussions on environmental, social, governance (ESG) matters.

As a result, the companies the asset manager had engaged with have turned out to be increasingly responsive which led to “meaningful dialogues”.

AXA IM, which conducted 596 engagements with 480 entities last year compared to 283 engagements with 245 entities in 2021, has reported that although climate change remained the largest area of engagement in 2022, biodiversity-linked activity recorded a sharp increase.

The manager also announced an update on the “three strikes and you’re out” engagement policy rollout, for companies identified as “climate laggards”.

“For those that have been insufficiently responsive the use of escalation techniques (such as voting against resolutions or co-filing a resolution) will be considered in 2023, with divestment being the last step,” the firm said.

In 2022, AXA IM adjusted its engagement policy and drew clearer lines between different types of dialogues which included “engagement with objectives”, driven by thematic research, and “sustainability dialogue”, a less intensive approach often led by portfolio managers or credit analysts.

As far as expectations for the 2023 voting season was concerned, the manager said it expected further reinforcement around ESG themes with new recommendations in its voting policy relating to governance of sustainability and the appointment of former chairman and chief executives as non-executive chair as well as tax transparency.

This would include a possibility to vote against boards of companies that have been insufficiently responsive to biodiversity-related engagement requirements.

The companies will continue to be held accountable when there is insufficient progress during thematic engagements, and AXA IM may vote against relevant board members.

In specific cases of escalation as part of the dedicated engagement programme for companies identified as “climate laggards,” co-filing of resolutions may be initiated.

Following this, boards will be held accountable to ensure implementation of previous ESG-related shareholder resolutions that gained significant support and AXA IM will maintain a high-level of support of its ESG-related proposal, adopting a case-by-case approach.

“Against a tumultuous backdrop that has seen misgivings about the case for environmental, social and governance investing in certain parts of the world, we believe it is now more important than ever to influence company behaviour through effective and robust stewardship,” Marco Morelli, executive chairman at AXA IM, said.

“As a responsible asset manager, we see stewardship as a vital mechanism to power a just and green transition, with climate change, biodiversity and mitigating social risks centre stage of our activity in 2022.”