AXA Investment Managers (AXA IM) is to sell roughly €177m of assets as part of a policy to divest from companies heavily reliant on coal.
From the end of June, the French asset manager will divest from companies that derive more than half their revenues from “coal-related activities”. This will primarily affect mining and electric utilities companies, the group said.
The move comes nearly two years after its parent company, insurer AXA Group, pledged to divest roughly €500m from coal-related assets.
Andrea Rossi, CEO of AXA IM, said divesting from coal would help the firm’s clients avoid “stranded” assets. Carbon-intensive industries such as coal are widely expected to be challenged as investors and corporations implement measures designed to keep global warming to the 2°C scenario as outlined in the 2015 Paris climate change agreement.
“This decision is consistent with our ambitions for continued and greater ESG integration across AXA IM,” Rossi said. “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.”
The policy will apply to 99.5% of its €717bn of assets under management, AXA IM said. Index funds and funds-of-funds will be exempt, while clients with segregated portfolios can choose to opt out of the policy.
AXA IM expects to sell €165m of fixed income assets and €12m of equities.
The asset manager’s decision reflects that of a number of large asset owners across Europe in recent months.
Norges Bank Investment Management (NBIM), which manages Norway’s giant sovereign wealth fund, has excluded nearly 70 coal companies from its fixed income and equity portfolios following criteria introduced in 2015. Companies with more than 30% of their activities in the coal sector are excluded by NBIM.
FRR, the €37.2bn French pension reserve fund, said in December that it would exclude from its portfolios any companies deriving more than 20% of turnover from thermal coal extraction or coal-fired power generation.
Denmark’s DKK250bn (€33.6bn) PKA has also excluded some coal companies it believed were at risk of having their business disrupted by the shift towards renewable energy.
Switzerland’s BVK, the CHF30.6bn (€28.5bn) pension fund for the canton of Zurich, has excluded coal producers from its global equity portfolios.