AXA IM adds to ACT impact investing range with biodiversity-focused listed equities fund
AXA Investment Managers is expanding its range of impact investing funds with the launch of a new listed equity strategy aimed at preventing biodiversity loss and preserving ecosystems.
The AXA WF ACT Biodiversity Fund will focus on four UN Sustainable Development Goals (UN SDGs), utilising data input from AXA IM’s partner Iceberg Data Lab to assess the environmental impact of companies. It is ESG- integrated and will be categorised as Article 9 according to the EU’s Sustainable Finance Disclosure Regulation (SFDR).
The strategy, which forms part of AXA IM’s ACT range, aims to mitigate biodiversity loss by investing in best-in-class companies offering innovative solutions to address issues such as pollution on land and water, land degradation, fauna and flora protection, and overconsumption.
AXA IM says it has identified four key investment areas which contribute to the preservation or restoration of biodiversity: sustainable materials; land and animal preservation; water ecosystems; and recycling and reduction.
Run by lead portfolio manager Amanda O’Toole, the AXA WF ACT Biodiversity fund will follow AXA IM’s listed active equity investment process through fundamental, bottom-up stock selection – with the investment team using AXA IM’s proprietary ‘Impact Framework’ to analyse companies, focusing principally on their products and services.
The fund applies ESG exclusions (such as white phosphorus, weapons producers, tobacco, defence, UNGC principles, low ESG quality, severe controversies, and human rights violations) and sectoral exclusions (controversial weapons, ecosystem protection and deforestation, soft commodities, and climate risks).
The firm says its new strategy has been specifically designed to have a direct and positive impact on four UN SDGs: clean water and sanitation (SDG 6); responsible consumption and production (SDG 12); life below water (SDG 14); and life on land (SDG 15).
“Our planet’s biodiversity is being lost at an alarming rate, threatening the planet’s future, and human economic activity is the main driver,” says O’Toole. “There is growing recognition that there are economic and human costs associated with biodiversity loss – over time these negative externalities will crystalise as economic costs for companies. AXA IM’s biodiversity strategy identifies and invests in companies that contribute to ecosystem preservation and restoration through their products and services.”
O’Toole, who also runs the AXA ACT Clean Economy Strategy and is the CleanTech thematic specialist within the firm’s global research team, was previously a member of the emerging markets team focussing on energy, utilities, consumer and healthcare. Prior to joining AXA IM in 2011, she was an analyst at Nevsky Capital, covering Europe and then emerging markets.
The new strategy will utilise AXA IM’s partnership with Iceberg Data Lab to develop a biodiversity measurement tool. Iceberg Data Lab delivers science-based metrics that identify the most harmful and material impacts of companies on a bottom-up basis. Its models calculate the environmental impact of companies throughout their value chain and supply chain to end-use.
“This tool allows the investment team to measure how the portfolio impacts biodiversity, and will use the Corporate Biodiversity Footprint, a metric which quantifies the impact of a company across all of their activities,” says the firm.
Hans Stoter, global head of AXA IM Core, says: “We believe companies who address their impact on the planet and contribute to preserving and restoring biodiversity will achieve stronger earnings growth and superior shareholder returns over the long term. The companies we invest in and engage with are ultimately helping to drive the transition to a nature positive economy.”
The fund is classified as an Article 9 product according to the EU SFDR. As part of the impact fund range, five per cent of the management fees paid to the fund will be donated to organisations aimed at developing solutions with a tangible societal impact.
The new strategy further boosts AXA’s ACT fund range, which accounts for some EUR29 billion of AXA IM’s EUR887 billion in assets under management as at the end of December 2021. The firm describes itself as a leading investor in green, social and sustainable markets, managing EUR563 billion of ESG-integrated, sustainable and impact assets.