Paris-headquartered AXA Investment Managers (AXA IM) has unveiled plans to divest from companies that derive more than half of their revenues from coal-related activities, effective 30 June 2017.
Mining and electric utilities companies are targeted in particular by the measure.
The coal policy will apply to €714bn (i.e. 99.5%) of assets under management at AXA IM, excluding any funds in the ‘funds of funds’ or ‘index funds’ categories.
In total, AXA IM will be divesting around €165m of fixed income portfolios and €12m of equities portfolios. All portfolio managers will be working closely with AXA IM’s responsible investment team to ensure that all funds are in line with the coal policy and all clients impacted have a smooth transition in their portfolios.
The firm will let clients in segregated mandates to choose whether they wish to apply the policy or not.
AXA IM believes that divesting from coal helps contribute to the global transition to a low carbon economy consistent with the +2°C scenario proposed by the Intergovernmental panel on climate change (IPCC).
The policy goes along other guidelines implemented in AXA IM’s responsible investing policy regarding palm oil and forestry, soft commodities derivatives as well as controversial weapons.
Also last year AXA group has exited tobacco investments but the decision was not automatically applied to the investment products offered by AXA IM.
Andrea Rossi, CEO of AXA IM, commented: “As a responsible investor and active steward of our clients’ assets, we strongly believe that divesting from coal can help to de-risk portfolios over the long term by decreasing exposure to assets that are likely to become ‘stranded’ in the future as the world moves to be in line with the +2°C scenario.
“This decision is consistent with our ambitions for continued and greater ESG integration across AXA IM. It is also in line with our belief that asset managers have an important role to play in helping the global transition to a low carbon economy. We want to engage with our clients, increasing awareness about the potential long-term risks related to the production and consumption of coal at current levels and encouraging investors to fully consider the long-term benefits of low carbon portfolios.
“AXA IM has also worked closely with AXA Group on this topic who is recognised as a market leader on the climate change issue and announced its €0.5 billion divestment from coal in May 2015.”
Matt Christensen, global head of Responsible Investment at AXA IM, added: “AXA IM has been committed to responsible investment for nearly 20 years. We have seen growing interest from clients in ESG and coal in particular and have been actively engaging with them on this. In taking the decision to divest from coal, we have put our clients’ long term needs and goals at the heart of our thinking to ensure that we are aligned with global megatrends that mean a growing awareness of the risks posed by climate change and what that means in terms of particular asset classes, companies, sectors and regions.
“We believe that following COP21, the ratification of the Paris Agreement and growing momentum for fossil fuel divestment globally, now is the right time for AXA IM to make this move sending a strong message to the rest of our industry.”