AXA Investment Managers (AXA IM) conducted 681 climate change-related engagements with 503 entities in 2023, mainly focused on Europe and North America, representing a 14% increase in engagements compared with 2022, including 298 engagements with objectives.
Furthermore, 200 of the total engagements were conducted either at board or C-suite level, notes the investment manager’s 2023 Stewardship Report, which showcases the importance of stewardship in the company’s responsible investment strategy, a key pillar of its new strategic plan.
As well, climate change, the report notes, remained the main theme of engagement, representing 37% of the overall engagements, compared with 28% in 2022. This substantial increase was largely driven by higher frequency sustainability dialogues conducted by portfolio managers and credit research analysts, for which climate change represented 46% of engagements.
Along with human capital (17%), corporate governance was the second-most targeted theme, reflecting the strongly held belief that sound governance structure is a pre-requisite to successful integration of environmental and social issues.
And 38% of the company’s climate change-related engagements with objectives also addressed corporate governance issues, with a focus on board oversight of climate risks and climate-related management incentives, and 16% of overall engagements were linked to biodiversity, with deforestation remaining a priority.
The company, the report points out, increasingly tackled the just transition theme in its engagements and dialogues, while expanding and enriching human rights engagement discussions with tech companies through collaboration with other investors and organizations.
As well, the asset manager continued its climate laggards engagement initiative as part of its “Three strikes and you’re out” policy, supporting concrete improvement from several companies it engaged with.
Notably, two companies set new formal net-zero ambitions, while many others improved their targets, policies and reporting. For the other companies, the asset manager used escalation techniques, including voting against the board, publicly pre-disclosing voting intentions and rationale, and co-filing a shareholder resolution.
During 2023, the company, the report shares, voted on a total of 54,782 proposals at 4,856 meetings, representing 97.6 % of the meetings that could be voted at.
And last year, the asset manager started recording all votes influenced by dialogue and engagement, demonstrating, the report shares, “the application of one of the overarching principles of its voting policy, which entails voting in a highly informed manner that considers the context and characteristics of the companies”.
Overall, on the total number of votes influenced by engagement, pre-AGM dialogue with investees had a positive impact on 47% of the votes. Although most of the dialogues influencing votes were linked to corporate governance-related issues (such as executive pay-related issues, board composition and shareholder rights), 61% of votes used specifically as engagement escalation were linked to climate issues.
The company’s average opposition rate was 15.1%, with at least one vote against cast in 62% of the meetings voted on. The highest level of opposition remained for board issues (38% of votes against), followed by executive remuneration (27% of votes against).
Going forward, the asset manager promises in 2024 to continue to focus on expanding its engagement and voting efforts across areas believed to be most material for investors.
“Investment does not have to be a binary choice between sustainability and strong financial performance over the long-term,” adds Marco Morelli, the asset manager’s executive chairman. “Clients need clarity on responsible investing, and they also want to see their assets perform. Proper consideration of ESG [environmental, social and governance] factors is additive to performance, which is why a robust and measurable stewardship and engagement strategy is fundamental to our approach.”
