AXA Investment Managers (AXA IM) has launched a climate-driven credit strategy to help institutional investors achieve their long-term climate and financial objectives.
The strategy will seek to mitigate against both the physical and transition risks associated with climate change and integrate specific climate-related objectives in line with investor requirements, such as the Task Force on Climate-related Financial Disclosures (TCFD), while not compromising portfolio-level risk and return characteristics.
Created around three core objectives of capital preservation, climate alignment and credit return, the new strategy aims to provide a maturity-based approach to considering climate-risk, with clear objectives over a short, medium and long-term time horizon.
The strategy will invest in climate solutions, investments and projects that are required to meet the goal of net zero by 2050, as well as heavily decarbonising issuers to drive the transition. Through this dual approach, the strategy will provide clients with a clear framework to target alignment with the goals of the Paris Agreement.
The strategy forms part of AXA IM’s sustainable investing offering, a subset of the firm’s ACT fund range[1], and is classified as Article 9 under the EU Sustainable Finance Disclosure Regulation (SFDR). It will also utilise the proven experience in credit analysis and selection of AXA IM’s London-based Buy & Maintain team, which currently manages assets worth GBP18.2 billion.
Sebastien Proffit, Head of Portfolio Solutions, Fixed Income at AXA Investment Managers, says: “Institutional investors are increasingly looking for tailored solutions that can help protect portfolios against climate related risks, fulfil regulatory obligations and meet financial objectives while also contributing to the transition to a lower carbon world.
“While our strategy will deliver an immediate reduction in carbon emissions, its ultimate purpose is to utilise our proven credit investing and trading expertise to provide investors with a clear pathway to net-zero, helping them achieve both their financial and climate goals.”
John Stainsby, Head Of Core Client Group UK at AXA Investment Managers, says: “There has never been a better time to implement a climate-driven strategy – we have more data and a greater understanding on how climate-risks can impact client portfolios coupled with a broader opportunity set and enormous political, regulatory and investor momentum.
“Our Buy & Maintain strategy has a natural alignment with the time horizon over which climate change risks can materialise and we believe it will, coupled with our broader track record across risk-mitigation, engagement policies and commitments as a Net Zero asset manager, appeal to investors seeking to integrate climate objectives into their credit portfolios.”
Core to AXA IM’s approach is the ability to maximise value by monitoring and mitigating against costs from turnover and transactions, an area which it believes is particularly pertinent for investors looking to implement more climate-aware strategies due to the time horizon over which climate-related risks may arise.
The strategy will provide clients with ongoing reporting around a dashboard of carbon related metrics including, carbon emissions intensity, absolute carbon emissions, forward looking emissions, and temperature alignment.
Stainsby adds: “At AXA IM, we believe the global economy has entered a ‘decade of transition’ towards a more sustainable, de-carbonised model. We want to accelerate this transition, both as a provider of sustainable investment solutions and as a globally sustainable business.”
