Axa IM to start naming and shaming companies on ESG
10 Aug 2012
AXA Investment Management (Axa IM) has started to disclose the names of companies it engages with in attempt to improve transparency in the environmental, social and governance (ESG) space.
Shade Duffy, head of corporate governance at Axa IM, said: "Clients want to see that we have the confidence to disclose the companies in our engagements publicly. In the end, it is all about improving the companies our clients hold."
The company's 'against' votes will also be disclosed retroactively. In 2011, Axa IM voted against or abstained on at least one board resolution 795 times, compared with 1,653 votes in favour. The main rationale for votes against and abstentions was the board structure (30%), followed by shareholder interests (23%) and remuneration (18%).
The developments are part of Axa IM's ESG integration process.
The asset manager now has three different ESG offerings, all of which are supported by its own ESG research platform. The first includes pure responsible investment (RI) funds, or thematic strategies driven by proprietary ESG research, with a third-party label and quality assurance through external audit.
The second includes the embedding of ESG into Axa IM's mainstream funds and their portfolio management through ESG scoring at portfolio and security level, and the third is tailored RI solutions, which are customised mandates specific to client ESG factors.
The research platform is based on four different types of research - qualitative, quantitative, thematic and governance. A report on sovereign debt is scheduled for release in September, while a study on ESG in emerging markets is expected to be published in October.
Matt Christensen, global head of responsible investment at Axa IM, said: "Integration of ESG in the investment process is a long-term process. We aim to show the value added as a result of ESG integration."
Duffy added: "ESG in emerging markets often suffers from a lack of information, but this is precisely where we could see a real value added within a short time.
"Impact will be the fourth pillar we will add over time to the already existing pillars in emerging markets of research, voting and engagement."
For the emerging markets research, Axa IM has entered into a partnership with Asian and emerging markets firm Responsible Research, now part of ESG research provider Sustainalytics. This helped create a heat map of low, medium and high ESG risk and resulted in Axa IM starting a dialogue with 15 companies. Christensen expects this to have a tilting effect on the portfolio.
"At the end of year one, we anticipate the tilting of the portfolio," he said. "Year two is about having the core holdings and engaging with the companies in question.
"We also expect to see some change happening within the companies following our engagement. In year three, we will focus on water use or carbon emissions and measure how much the company has improved on these factors."
Axa IM is also focusing in the process of putting together a white paper on the UK equities market. The company reported a 47.4% increase in RI assets in 2011.
Author: Nina Röhrbein