ESG integration is a long term trend, says Axa IM

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Investors’ interest in responsible investing is increasing as environmental, social and governance (ESG) criteria integration becomes a growing long term trend, according to a report published by Axa IM.

The firm has found out that the volume of “core” responsible investment assets it managed has grown by 22% in 2014 to reach €6bn. Other figures show that the AXA IM’s responsible investment team has voted at 4,208 annual general meetings and engaged with 56 companies on a broad range of issues from board diversity through to remuneration and health and safety.

Axa IM’s proprietary platform, RI Search, has evaluated more than 4,500 companies and Axa IM now has €82bn in ESG integrated assets under management.

Matt Christensen, global head of Responsible Investment at Axa IM, commented: “We believe that responsible investing can help deliver superior risk-adjusted returns for our clients. In 2014, we continued to expand our offering in order to offer investors the opportunity to select the level of ESG integration which best fits their needs and objectives.”

Last year Axa IM created a dedicated team to impact investing that combines alternative asset management expertise, operational due diligence and impact assessment in its approach.

“The current impact programme, at €200m deployed in 2014, represents one of the largest institutional investor impact funds in the market. This first fund has focused on delivering competitive financial returns while demonstrating social impacts in the financial inclusion, health and education sectors,” the firm said.

Christensen declared : “While the impact investing market is still in its relative infancy, much progress has been made to enhance its credibility such as the setting up of standards like IRIS (Impact Reporting and Investment Standards) or labels such as GIIRS (Global Impact Investing Rating System).

“Research shows the impact investing market is predicted to grow up to US$1trn by 2020 or 1% of global assets and we’ve been very encouraged by the progress our impact investing strategy has made to date and the attention it’s getting from investors.”

Axa IM has also integrated ESG into high yield credit portfolio after being attributed a mandate by a French public service pension body, the Erafp.

Commenting on the mandate, Christensen said: “We are finally seeing more interest from investors in how ESG factors can be properly integrated into the spectrum of potential strategies that the fixed income asset class offers.

“The Erafp mandate demonstrates the evolution of ESG integration and the type of demand we’re seeing from clients across the globe who want fully integrated ESG solutions to meet their specific requirements.”

Christensen concluded: “2014 was a busy year and we expect awareness of and interest in ESG integration to only increase. A key moment for the evolution and professionalisation of carbon measurement for the asset management industry will be the United Nations Climate Change Conference in Paris later this year.

“Ahead of this, we are working with other players in the financial services industry in order to develop improved means to measure Scope 3 carbon emissions. We look forward to engaging with clients and the wider industry on this important topic.”

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