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ESG focus shifting to 'other asset classes' – AXA IM

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GLOBAL - In the environmental, social and corporate governance (ESG) space, the focus is shifting to other asset classes and public policy, according to Matt Christensen, Eurosif's outgoing executive director who has been appointed head of responsible investment at AXA Investment Managers (AXA IM).

"Innovative thinking in the ESG space will probably evolve around fixed income, which is set to become a growth area, as well as alternatives," he told IPE.

"Fixed income is still one of the key asset classes across Europe, but only over the last few years has it been discussed within the ESG frame.

"Real estate is another good asset class for ESG, not just in terms of new real estate, which is easy, but also with regard to retrofits. On top of it there is the age-old issue of tenancy versus ownership."

Christensen said alternatives in general were going to be one of the exciting areas in terms of sustainability.

"They can be anything from specific areas like timber through to microfinance, which has been a huge area of interest, but more recently in India also an area of controversy," he said.

"If done correctly, it has been known as a helpful tool of growth. However, sometimes it is difficult to get the right investment size for institutions such as AXA IM or pension funds. Emerging markets is another important ESG topic for pension funds."

But Christensen said there was always room for equities, the "birthplace" of sustainability investing, to continue to evolve in the ESG space.

"For example," he said, "by finding an appropriate form of engagement or product definition, for which there is going to be a continuing need across different markets."

Another issue Christensen pointed out was the importance of how investment houses tackle and discuss public policy around the sustainable investment agenda.

"At AXA IM, I would like to start an internal discussion about the right way to frame a public policy discussion around the ESG debate so that it is cohesive with the institution and its strategic goals," he said.

"Pension funds have often been noted as an absent voice, but the asset owner community is finally starting to get engaged with how to frame its own voice and articulate a message that is consistent with long-term share-ownership, something that particularly the EU is now seeking post-crisis."

Christensen will start his role at AXA IM effective 2 May. He will be based in Paris and report to Christophe Coquema, a member of AXA IM's management board and head of markets and investment strategy.

AXA IM has been developing its RI Inside strategy - which aims to integrate ESG criteria into all of its platforms' investment decisions and processes and market innovative RI products - since 2005.

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