Climate
ActionReportHere, we summarise the innovations and commitmentsthat lie at the heart of our climate strategy.
We believe as a major global investor, business andemployer, we have a role in generating positive andmeasurable impact in private and listed markets.
For more information and to read our Taskforce for
Climate-related Financial Disclosure report, click here.

03

08

14

04

09

16

07

12

A word from
Marco Morelli

Acting decisively on
climate issues

Tackling climate change
starts from within

2

AXA Investment Managers I Climate Action Report

Enhancing climate
consciousness

Ambitious climatefocused plans for ourinvestments

Holding companies toaccount for climate risk

Investingin nature

Growing ourgreen assets

My AXA IM colleagues and I share an ambition to become the world’s leading responsible investor. We believe in the
power of collective action. Only together, as individuals and as an industry, can we create positive progress for the global
economy, the planet, and the communities in which we live.
The world has begun a decades-long journey towards a more sustainable and equitable economic model. At the heart of thatjourney is climate change – the risks it brings and the opportunities that lie in the global policy response. We want to build
on our momentum to drive the transition.
This report sets out the breadth and scale of the work we have done so far.

A wordfrom
Marco Morelli

Financing the climate transition represents what could be the most significant investment opportunity in a generation andour parent company, AXA Group, is depending on us to place €25bn in verified green investments by 2023. And we recently
announced the milestone of €13bn invested in green, social and sustainability bonds across our portfolios.
Aside from the investment imperative, regulatory change is coming fast, and putting climate centre stage. The UK’s updated
Stewardship Code, the EU’s Sustainable Finance Disclosure Regulation, and the Taskforce on Climate-related Financial
Disclosures, all aim to improve transparency around climate-related financial information.
This focus on climate is making it easier for asset managers, companies and investors to measure and understand theirclimate impact. The focus will only intensify as we head towards the World Climate Summit at COP26 in November 2021.
But to be truly sustainable, we must look beyond this generation to those yet to come. It is with this belief that AXA IM hascommitted to becoming a Net Zero Asset Manager by 2050, or sooner.
This year, our engagement with investee companies expanded to include deforestation and natural ecosystem conversion,
together with our direct investment in forestry which promotes sustainable production and use.
Our commitment to carbon reduction does not solely apply to the money we manage. We have also committed todramatically reduce our carbon emissions by 2025, as we progress in our ambition to become not only the world’s leading
responsible investor but a globally recognised responsible business.
Climate awareness among our employees is critical to our success. Our ESG & Climate Academy empowers our employees
globally to join our collective effort to accelerate the transition to a low carbon world, by equipping them with accessible
resources and expert knowledge.
We are dedicated to raising standards in the fight against climate change. Together with AXA Group we will continue to takethe necessary steps to help shape a more sustainable world in our role as transparent and responsible long-term investors.
It is in this spirit that we commit to build on the work detailed in this report and seek to become a sustainability benchmark
as an asset manager, business, and employer.

Marco Morelli, Executive Chairman, AXA Investment Managers
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AXA Investment Managers I Climate Action Report

Acting decisively on climate issues
Our key commitments
Climate change is a risk to us all. At AXA IM, we are determined to tackle the impact of climate-related risks, and we have made a number of key
commitments to support our ambitions.

We will reduce our own carbon
emissions by at least 25% by2025 as we further our roadmap
to becoming not only the world’s
leading responsible investor, but
a globally responsible business.

We have extended our palm
oil policy to a broader
deforestation and ecosystem
protection policy. Producing
24% of global CO2 emissions,deforestation is a leading causeof global warming and is a key
factor compounding biodiversity
loss.

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AXA Investment Managers I Climate Action Report

We are supporting our parent
company, AXA Group, in its
climate ambitions: through the
Net Zero Asset Owner Alliance– a United Nations-led initiativeof 37 global investors seeking totransition to net zero by 2050.

We will become a Net-Zero
Asset Manager and reachnet-zero greenhouse gas
emissions in our investment
portfolios by 2050, or sooner.

We are making our productrange greener, launching new
carbon-focused strategies
and building our portfolio ofgreen investments.

We will exit all coalinvestments in OECD countries
by 2030, and throughout therest of the world by 2040.

We will promote climatetransparency and sustainability
awareness within our businessand externally. AXA IM is
dedicated to doing everything
possible to meet the ambitionof a cleaner, more stableenvironment for us all.

We are working in tandem with AXA Group to assess
methodology for Paris- aligned investing and defineachievable targets: AXA Group has committed to a
20% reduction in CO2 emissions from applicable
investments, between 2019 and 2025.

We are educating our staff globally to build
climate awareness, change behaviours
and develop new skills to strengthen theircapability to act for our climate journey.

Acting decisively on climate issues
Progress on climate

Reaching Net ZeroAt AXA IM, we aim to act decisively on climate issues. We have a responsibility
to do so for our clients, employees, stakeholders, and for society.

We have committed to reducing greenhouse gas emissions across all assets
to net zero by 2050 or sooner.

There is a long way to go before we reach ambitious targets. And, given theurgency around climate issues, we are making our plans as we travel. But
the direction is clear and we are gathering speed.

This forms a part of our membership of the Net Zero Asset Managers
Initiative – an industry collaboration that supports global efforts to limit
warming to 1.5°C.

Our strategy is aligned with the framework proposed by the Task Forceon Climate-related Financial Disclosures (TCFD). Its recommendations
specifically state that organisations consider a set of scenarios, including a“2°C or lower” scenario, in reference to the 2015 Paris Agreement.

This means we will be working closely with our parent company, AXA
Group, whose assets we manage, and in partnership with asset-ownerclients on analysis, reporting and changes to investment portfolios.

By 2100, we will face a rise of global temperatures.
Reference scenarios:

Ahead of the COP26 climate change meeting in November 2021
we plan to announce the initial scope of assets to be managed
in line with this target, together with detail of how we expect toachieve this.

3.0° / 3.2°C

We aim to set intermediate targets for 2030 and 2040, todemonstrate our progress towards the 2050 goal. We expect toreview these at least every five years, with a view to ratchetingup the proportion of assets under management (AUM) covered
until 100% of assets are included.

To keep our World
below 2°C, weneed to save...

scenario*

2°C

scenario*

20Gtonne

1.5°C

35Gtonne

scenario*

CO2 emissions by 2030
CO2 emissions by 2030

Sources: Intergovernmental Panel on Climate Change 1.5°c report, AXA IM, 2019
*current countries’ pledges

This is what we are working towards. It is a complex task, requiring aclear focus and commitment. To help us measure our progress, one of
the metrics we are using is the temperature, or warming potential of ourinvestments , which is disclosed in this report.
Over the last year we started or expanded several other key initiatives toaddress it.

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AXA Investment Managers I Climate Action Report

Acting decisively on climate issues
A greener product range
We are adding to our product range to help it achieve our carbon target –and also our clients’ expectations for low-carbon strategies.
New products launched in H1 2021 include:• A low-carbon US high yield bond strategy• A climate-driven credit strategy, focused on capital preservation, climatealignment and credit return
We intend to continue to launch climate-oriented strategies in a targetedmanner in addition to deploying net zero approaches across a range ofexisting strategies in 2021.
In addition, we have further built our portfolio of green investments, as wework towards net zero.
We see green assets as one of three types:
As of the end of 2020
we have
green
bonds

green
thematic equities

green
real assets€26.67bn

invested in such assets.

Finally, we have continued to reinforce our responsible investing (RI)
offering, with a new “ACT” range.
These products invest with a purpose to support the transition to a moresustainable economy. Funds have been assigned thematic ESG targets
and/or objectives linked to the UN Sustainable Development Goals(SDGs). Active stewardship is a key focus for this range, with voting andengagement reporting available at fund level. This range encompasses
sustainable and listed impact funds.

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AXA Investment Managers I Climate Action Report

Tackling climate change starts from within
We believe that the global mission to end climate change starts at home. And for us that means looking at our own
business practices.

Impact philanthropy

Reducing our own carbon footprint

AXA IM’s impact philanthropy focuses on projects witha tangible societal impact across education, healthand climate change/biodiversity. We have grown ourcharitable footprint to include non-governmentalorganisations that specifically align with the Paris
objectives.

We have taken a series of steps in the last year to address
our own carbon footprint. This is a long journey, and weare only at the start.

In 2020 we started to use a portion of the fees we levy
on our impact funds – which seek to deliver on specific
UN Sustainable Development Goals (SDGs) – to support
charities working towards the same SDGs.
Our climate change/biodiversity related partners include:• The World Land Trustan international charity that protects
the world’s most biologically significant
and threatened habitats• Ligue pour la Protection des Oiseaux
an association that protects threatenedbirds, coordinates conservation
programmes and manages thereintroduction of endangered species

Our first goal is to cut
emissions by at least25%
by 2025.

At first, we will cut our own carbon emissions, including inareas such as business travel, premises, supply chain anddigital.
As we progress, and depending on the speed of reduction,
we will consider offsetting emissions.
Some of the biggest contributors to AXA IM’s carbon
footprint are the buildings from which we operate. We
currently have 19 globally. We are working with suppliers
to quantify their Scope 1, 2 and 3 emissions to help informour reduction, and if necessary, offsetting, strategy.
We are working towards the greatest possible
sustainability for our business and workforce. This alsoenables us to hold investee companies to account from a
position of strength. We aim to practice what we preach.

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AXA Investment Managers I Climate Action Report

AXA IM’s office space - one of
London’s greenest buildings
In London, we have moved to 22 Bishopsgate,
one of London’s greenest buildings.
We have sought the greatest possible energy
efficiency and blended it with a desire to reduce
environmental impact.
The 22 Bishopsgate building was the first in
the UK to apply for the WELL Building Standard
and has been awarded a BREAAM Excellent
sustainability rating. The building’s energy has
been procured from 100% renewable sources.
The working space itself has green and humancentred spaces and we have made stringent
decisions about the resources we use, recycleand discard – from paper to water.
Over time we will develop a more detailed
framework to cover areas such as food sourcing,to significantly improve our aggregate impact
on the environment.
We intend to use this template approach for
all of our offices. Every time a lease comes up
for renewal, we will seek the most sustainable
possible solution that enables our business tofunction at the greatest commercial output.
As we develop and use more detailed metrics,
we intend to report more on our own physicalfootprint.

Enhancing climate consciousness
Our commitment to making changes within the business does not stop withcorporate steps. Helping our employees to take a more conscious role inpreventing climate change is also essential.
Employees must complete mandatory training on responsible investment throughe-learning modules or live sessions led by our RI experts. We are expanding this in 2021,
with more access to training on ESG and climate issues. Some employee and teamobjectives will now include sustainability components.
We have also instituted profit-sharing agreements linked to environmental considerations.
In our largest team in France, employees have their profit-sharing agreements related topaper consumption and other criteria including:• Reduction of CO2 emissions through the reduction of email volume• Percentage of employees having gone through the climate awareness training
While this scheme currently only applies in our largest office in France, there is scope to rollthis programme out to other bases in the future.

ESG and Climate Academy – building
employee awareness and skills to act
AXA IM have spent more than 20 years delivering responsible
investment solutions for clients and it has become integral to ourbusiness. This has positioned us well to make AXA IM a ESG learning
platform.
In 2019 as part of our efforts to raise awareness about ESG within AXA
IM, employees were trained about responsible investment througha mandatory global e-learning module. This programme was built in
partnership with the AXA Group RI Centre of Expertise and deployedjointly.
ESG will impact our entire value chain and set of skills for the longterm. We wish to strengthen our technical capability at every level
and also respond to the demands of new and existing staff wishing
to upskill in ESG. This year AXA IM launched the ESG and Climate
Academy to educate not only employees but also our clients.
Beyond our traditional RI e-learning the Academy will also offer:• Self-learning modules available to all employees about ESG
fundamentals and Climate change and its impacts in partnershipwith AXA Climate• Interactive sessions of “ESG boosters” to bring key decision
makers and investment professionals up-to-speed on regulations,benchmarks and data, issuers challenges, ESG enriched financial
analysis• Master classes for experts on key topics such as net zero investing• Fast track access to the ESG investing certificate from the CFA

8

AXA Investment Managers I Climate Action Report

Ambitious climate-focused plans for our investments
We want to redefine our goals for investing and set
them within a wider global context. Investing to prevent
climate change is an effort for us all, and we want todemonstrate how we’re doing it.
In late 2019, AXA Group, our parent company, announced
an ambitious new phase in its climate strategy – toaccelerate its contribution to a low-carbon and more
resilient economy.
This includes keeping the “warming potential”
of AXA’s investments to below 1.5°C by 2050,
in line with the Paris Agreement, an increasein green investments to €25bn by 2023,
more investment in transition bonds (to help
brown companies go green) and the complete
divestment from coal over time.
We are also supporting our parent company in the Net
Zero Asset Owner Alliance – a United Nations-led initiative
to support institutional portfolios as they transition to net
zero by 2050. A major component of this is the AXA Group
commitment to a 20% reduction in CO2 emissions fromtheir investments, between 2019 and 2025.
As the manager of AXA Group assets – alongsidehundreds of other financial institutions and millions ofindividuals worldwide – we have a pivotal role to play.

Alignment to the UN SDGs
We have continued to align more of our business, andthe products we offer our client base, to the SDGs –particularly those focused on climate: 7 (affordable
and clean energy), 12 (responsible consumption andproduction), 13 (climate action), 14 (life below water) and15 (life on land).
One pillar of this alignment is the AXA IM range of “Act”
funds, many of which seek to support specific SDGs. In
aggregate, this suite of products meets the requirementsof Article 9 of the SFDR regulation¹.
In addition, our impact funds have consistently deliveredagainst their chosen SDGs, as the following KPIs
demonstrate.
For example, since launch,
the funds have helped to avoid

63.6
million tonsof CO2 emissions

Example: Schneider Electric
One of our impact investments is one of Europe’s largest
companies, Schneider Electric.
By virtue of its scale and commitment to best-inclass tech, we believe Schneider can potentially offer
innovation in energy efficiency, and support thesustainable development of smart grids, renewables
etc. - all relevant to climate change goals.
Schneider as a large player should be able to tap
more easily into an increasing global commitment toboosting energy efficiency and tackling important SDGs.

23.8%
Increase inturnover forsustainability
services platform$67.6bn
24%
Schneider
Averageenergy saving
fromdigitisation

Electric
market cap²

¹ When in scope of the AMF Doctrine 2020-03, those funds belong to the first category (“significant and engaging”). The reference to SFDR product categories is provided on the basis of the European Directive (EU) 2019/2088 on thesustainability-related disclosures in the financial services sector (“SFDR Regulation”) and state of knowledge as of 10 March 2021. As of publication date, the SFDR-related regulatory technical standards are not yet finalized andenforced. The product categorization shall be re-assessed once such regulatory technical standards are completed and may evolve.
² Source: AXA IM/Schneider Electric annual report 2019/SE Global Digital Transformation Benefits Report 2019/EPA

9AXA Investment Managers I Climate Action Report

Ambitious climate-focused plans for our investments
Measuring what’s important
At AXA IM, we have a wide, powerful and evolving suite of tools to measure
what is material and important – and to seek value for our clients.
Methods used in measurement are evolving and complex. ESG data relieson these methodologies and they are subject to change. They are moredifficult to use to make investment decisions than traditional financial
information, based on well-known and shared standards.

Warming potential
We have developed a methodology with expert partners to measure thetemperature, or warming potential, of the investments in the strategies andportfolios we manage.
This means any investor
can calculate company
or portfolio-level temperaturesand compare them to the 1.5°c target.
In aggregate, the warming potential of AXA IM’s book of assets has
been stable at 2.8-2.9°C over the last two years. The dashboard below
demonstrates that this compares favourably to a benchmark result of 3.3°C.

Warming
potential [°C]³Carbonfootprint

Green share
[%]

2020

2020

2020

AXA IM

2.9

171

15.6

Weighted benchmarks by AUM

3.3

256

12.4

However, we are still some way off the Paris target and so in 2021 we will
explain in more detail how we will lower the number by 2050, together witha series of interim targets.
³ For more information, see page 55 of AXA IM TCFD

10 AXA Investment Managers I Climate Action Report

Ambitious climate-focused plans for our investments
Green share

Climate value at risk

the benchmark
number isGreen share is an important measure of the way in whichinvestments contribute to the global transition to greener
energy.

Value at Risk (or VaR) is a common investment conceptthat denotes the potential financial losses in a given
company or portfolio.

tonnes of CO2⁴

At the end of December 2020, our ‘green share’ for listed
assets was⁵
against abenchmark

Climate VaR looks at risk to the value of investments
through a carbon lens. This shows us to what extent theinvestments we manage for our clients are at risk of loss
(or gain) from climate issues.

Carbon footprint
Our investments havea carbon intensity of171

tonnes of CO2
per million of dollarsof revenue

256

This measurement includes Scope 1 and 2 emissions, aswell as business travel emissions for Scope 3.

15.6%(2019: 14%)

12.4%
(2019: 9.5%)

This breaks down as follows:
Sovereign
investments

26.5%

⁴ AXA IM TCFD 2021. Page 56
⁵ For more information, see page 57 of AXA IM TCFD

11

AXA Investment Managers I Climate Action Report

Corporate
bonds

13.1%

Equities

14.8%

For example, a company might face significant regulatory
costs for not transitioning quickly enough – or a project’s
future revenues may be boosted by demand for its low
carbon technologies.

Holding companies to account for climate risk
While setting investment goals aligned with climate change objectives is essential, stewardship and holding company management teams to account is the key to achieving them.

Activeownership

Firm action on negative contributors
to the energy transition

We have continued to build our substantial engagement activity on
climate issues.
When we select securities or assets, we seek an open dialogue to enablechange. Through voting and engagement, we have an opportunity to use our
influence to drive a broader change for the benefit of society and the planet.

We have entrenched our stance on assets and securities we believe to havenegative effects on the climate and energy transition.

In 2020, one third of our UN SDG-aligned engagements with companies
were related specifically to climate action. More than 80% of allengagements were linked to UN SDGs overall. We carried out 319
engagements over the year (2019: 217) and 122 of these were at senior
executive or board level. The breakdown is as follows:



















3.3%

3.3%

11.1%

31%

1.9%

4.0%

0.0%

0.4%

12 AXA Investment Managers I Climate Action Report

We immediately rule out palm oil not certified by the Roundtable on
Sustainable Palm Oil as well as worst practices leading to deforestation.
Indeed as part of our ongoing commitments, we have expanded the role ofour deforestation policy which has heightened exclusion criteria on a range
of issues (see Investing in nature special below for more detail).

Holding companies to account for climate risk
Action on coal stranded assets risk mitigation

AXA’s Coal Engagement
Initiative

In 2017 we implemented an exclusion on coal and oil sand activities, tode-risk our portfolios by reducing exposure to stranded assets. This further
support the goals of the Paris Agreement and the transition to a low-carbon
economy.

In early 2021, AXA IM began a Coal Engagement initiative incollaboration with its parent company, sending letters to issuers whichwere still exposed to coal activities, but below exclusion thresholds.

In 2020, we strengthened two more exclusion criteria:• A new ban on power generation companies with more than 10GW of
installed coal-based power production• Development of coal capacities with a more stringent threshold resulting
in the exclusion of companies with coal power expansion plans ofover 300MW (vs 3000MW previously). In addition, mining companies
developing new coal mining and coal industry partners developing
significant new coal assets are now excluded. This rules out investments
in most new coal projects around the world.
AXA IM also formally committed in 2020 to exit all coal investments inOECD countries by the end of this decade, and throughout the rest of theworld by 2040. This commitment will be implemented over time, using
exclusion but also engagement approaches.

With this engagement initiative, we called on those issuers to alignbusiness activities with this agenda and clearly disclose the progresses
made.
In particular, we expect these companies to implement Science-Based
Carbon Reduction targets and Transition Pathways in line with the Paris
Agreement’s +1.5°c ambition.

Voting record
When we vote we do so with conviction. In 2020, we used our scale to act
on climate-related issues more than ever before.
We voted against management on at least one resolution in 56% of the6,247 meetings attended. This was the first time that figure has been above
50%.
Climate and biodiversity are voting priorities for AXA IM in 2021. We will
push companies to provide transparency on their strategy, investments,
plans and interim targets to meet broader 2050 climate neutrality
objectives⁶.

13

⁶ 2050 long-term strategy. European Commission
AXA Investment Managers I Climate Action ReportInvesting in nature
Biodiversity loss is a special focus for AXA IM because it has a symbiotic
relationship with climate. One cannot be protected without the other.
The loss of biodiversity affects the businesses we invest in, and all
economic activity ultimately depends on services provided by nature.
A failure to address biodiversity issues will jeopardise many business
operations, representing an investment risk for the investors supportingthese companies.
Biodiversity also acts as a great natural protection against extreme climate
events. Mangroves and barrier reefs, for instance, protect seashores against
storms and floods. Their destruction exposes companies to more climaterelated physical risks.
An IPCC report published in 2018⁷ highlighted that nations would have totarget a 1.5°c scenario rather than a 2°c scenario to avoid unprecedented
damages for biodiversity, human beings and the economy. This requires
reducing carbon emissions by 45% by 2030 compared to 2010 levels, before
achieving carbon neutrality by 2050.

New Ecosystem Protection
and Deforestation policy
Deforestation is one of leading causes of global warming and a driving
component of biodiversity loss.
This year, AXA IM has decided to extend its Palm Oil policy with a morecomprehensive approach to Ecosystem Protection and Deforestation.
Given the importance of forests’ flora and fauna to the planet’s ecosystem,by curbing deforestation, it means we can help conserve water and wood
resources, better prevent flooding, control soil erosion and preserve
natural habitats.
We think investment in companies involved in deforestation and natural
ecosystem conversion should be avoided when bad business practices areclearly identified. This policy defines a set of rules and procedures which
aim to address this principle.
WE EXCLUDE

At AXA IM we have reinforced our efforts to better integrate biodiversity
considerations in our research, engagement and investment processes
with the conviction that biodiversity loss represents a risk to investment
returns. Beyond financial considerations, biodiversity underpins most SDGs.

Companies flagged by
the exclusion criteria
for Palm Oil Producers

We are building the tools and metrics to measure biodiversity performance.
In 2020, we focused on:• Selecting a new research provider to help us measure how
investments impact biodiversity. This will help us focus on companies
with the greatest impact and further feed our engagement discussions.
• Engaging with commodity traders. Six businesses control around 60%
of all soy exports from Brazil – a key locus for deforestation risks. In
collaboration with other investors, we encouraged traders to increase
efforts on no-deforestation commitments, traceability and reporting,seeing positive results from these discussions.

WE EXCLUDE

Companies flagged by
the exclusion criteria
for Palm Oil Producers

14 AXA Investment Managers I Climate Action ReportCompanies flagged by theexclusion criteria for Cattle,
Timber and Soy industries

WE CAN GIVE RISE TO AN ENGAGEMENT CAMPAIGN WITH
This engagement’s outcomes may lead to further exclusions should outcome disappoint

Remaining Companies
if still presenting a riskof potential negative
impacts on Forests

⁷ https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_High_Res.pdf

Palm Oil
Policy2014

Commodity traders, due
to their highconcentration andcentral role namely on
soy market

Companies exposed to new
emerging biodiversity topics(land use, regenerative
agriculture, water, pollution,
waste, etc.)

Ecosystem
Protection &Deforestation
Policy2021

Investing in nature
AXA IM values forests as an asset class and is actively
pursuing its sustainable forest investments, encouraging
direct investments in forestry operations that are certified
by internationally recognised standards such as the WWFrecommended Forest Stewardship Council (FSC) which
demonstrate a credible path towards certification.

Focus on investments in forests
AXA IM actively pursues a rigorous policy as part ofits forest investments in selecting its assets, its forest
management partners, and in adapting management
practices to meet these global challenges.
AXA IM Real Assets owns forests in France and Finland,
managing more than 58,000 hectares on behalf of its
clients.
Sustainable forest management: Our commitment
Our commitment covers the ownership, management,
wood production and societal use of our forests.
• Preserve forests for the future while allowing
the production of wood, respecting ecosystems,
maintaining biodiversity, soils and water.
• Certify forest and management practices within
two years of acquisition by Forest StewardshipCouncil (FSC) and/or in countries with lower risk
the Programme for the Endorsement of Forest
Certification (PEFC).
• Promote the use of wood as a material that offers areal capacity to reduce emissions as an alternative tohigh-emission materials such as concrete or steel.
• Encouraging the regeneration of natural habitatand integration of greater levels of biodiversity into
silvicultural practice.
• Using parts of our forests for the broader development
and understanding of forests and nature.

15 AXA Investment Managers I Climate Action Report

Growing our green assets
In order to help meet our climate objectives, we are investing in more green
assets.
Underlying our climate-aware investment strategy, AXA IM green assets
under management now stand at €26.67bn.

Listed Equity
1.25€26.6751%
billion in

44% Green investments

Real assets
13.47
Real Estate Equity
CRE Debt
Infra Debt
Infra Equity

7.51
1.47
3.37
1.12

Green, Social and Sustainability bonds
We have nearly doubled our holding in this asset class compared with last year.
It is a growing sector – but it lacks clear definitions. At AXA IM, we believethat the use of proceeds of a green bond should reflect the issuer’s efforts
towards improving its overall environmental strategy and alignment with
the Paris Agreement.
Social bond issuers should also have a clear ambition to deliver positive
outcomes.
So, AXA IM has developed its own assessment frameworks for green,social and sustainability bonds, made up of four pillars:• The environmental, social and governance (ESG) quality and strategy of
the issuer

16 AXA Investment Managers I Climate Action Report

Our investment and climate professionals are selective. They will only consider securities
that support the most relevant and impactful green and social projects – and exclude
possible misuse of funds, risks of unethical practices and greenwashing.
Since 2014 our experts have reviewed more than 800 potentially eligible bonds andhave excluded around one in five.
In particular, they look for evidence of direct contributions to, or alignment with, the UN
SDGs.

5%

Green Bonds
9.36
Social Bonds
1.89
Sustainability Bonds 0.69

• The management of proceeds• Impact reporting

This is a 49.6% increase from last year’s total of €17.82bn – and all threeof the main asset types we hold for our clients have seen growth, none
more so than in green and sustainable bonds.

Sustainable bonds
11.95• The use of proceeds and the process for project selection

The strong contribution to affordable and clean energy (SDG 7), decent work andeconomic growth (SDG 8) and sustainable cities and communities (SDG 11) is explainedby the importance of renewable energy projects, green buildings and low-carbon
transportation projects – which directly contribute to SDG 11 – within our green bondinvestments.
The clear alignment with good health and well-being (SDG 3), industry, innovationand infrastructure (SDG 9), sustainable cities and communities (SDG 11) and climate
action (SDG 13) is due to the same reasons, with renewable energy and low-carbon
transportation projects aligning with SDGs 3, 9, 11 and 13.
Contribution and Alignment to the United Nations Sustainable Development Goals
25%
20%
15%
10%
5%
0%




Growing our green assets
Our green, social and sustainable bond investments: examples explained
Mexican Government

Crédit Agricole

This sustainability bond is in line with the
Mexican Government’s socio-economic
development plans, consistent with theGovernment’s top priority of poverty
reduction. The country has established a 2030
agenda for sustainable development, with theState budget mapped against the Sustainable
Development Goals. Areas of financing will
focus around:

The social ambitions of the Crédit Agricole(CA) bond are set around social cohesion andinclusion, access to finance and essential
services. CA did not create forward-looking
targets related to social impact financing
but is working on social KPIs with its local
branches to define such targets. Proceeds will
be focused on:• Access to healthcare: hospitals andmedical equipment, health programs,
health professional support• Access to education: schools andeducational equipment, scholarships• Food security: subsidies to subsistence
farmers, agricultural insurance• Access to finance: digital payment systems,bank branches in isolated areas• Employment generation: employment
training• Sustainable water management: water
treatment• Biodiversity conservation• Renewable energy

Relevant KPIs for the bond include thenumber of loans, of people employed andof beneficiaries. Proceeds will be managed
by both an internal tracking system and an
external verification process. CA has alreadyidentified a €20bn portfolio of eligible social
expenditures, making it a strong candidate to
become a regular social bond issuer.

The allocation of proceeds will be reviewed
by an independent third party, and will be
managed on a dynamic basis, with a surplus
of eligible expenditures in the pool.
The Mexican government is committed
to report annually on the social andenvironmental benefits of its sustainability
bond. Relevant KPIs have been identified foreach eligible category.

17 AXA Investment Managers I Climate Action Report• Employment generation through SME
financing• Access to healthcare• Affordable housing

Many of these securities sit within traditional portfolios but, as
highlighted earlier, we are launching more bespoke products tomeet our clients’ needs for low carbon investments.
One such product is a climate-aware, cashflow-driven investment solution.
This seeks to deliver the income that pension schemes and other asset
owners require, derived from:• Bond issuers that currently have low greenhouse gas emissions and/or
positively contribute to climate change mitigation; and /or• Those with a high current level of emissions but with a robust andcredible future decarbonisation plan. These companies are particularly
important in achieving net zero emissions by 2050.

Leading the Transition: Transition Bonds
AXA IM has been a key player in calling for debt securities that help
companies go green. These transition bonds are used by companies solely
to finance their transition to a low- or lower-carbon economic model.
In 2020, AXA IM invested €100 million in transition bonds issued by Groupe
BPCE – a French banking group.
This investment will help BPCE refinance its own loans, which have highemissions reduction potential across transport, power, midstream gas,
mining and metals, and building materials.

Growing our green assets
Green real assets

Listed Equity

Our €13.47bn in real estate, forestry and infrastructure make up asignificant and growing proportion of AXA IM’s assets under management.

The €1.25bn Listed Equity comprises the two “green” equity funds
managed by AXA IM.

This time last year we reported €9.88bn in green real assets – and this riseis playing a material role in helping our parent company achieve its goal of€25bn in green assets.

For AXA IM, the key is to be explicit and transparent in what types ofcategories investee companies fall into and be able to clearly explain why
they belong in an impact investment portfolio.

As in public markets, we have stringent classifications for assets to belabelled “green” in the absence of widely accepted, market standard
definitions.

Within the green equity funds, we aim to identify and track a range ofimpact metrics or key performance indicators across five categories:• products and services• research and development• operations• corporate social responsibility initiatives

1. Real Estate

A 62-storey City of London flagship development. EPC rated
A+, BREEAM Excellent and WiredScore Platinum. 100% ofelectricity is from renewable sources and 100% of natural
gas is offset. In construction, 98% of construction waste wasdiverted from landfill.

2. Forest
A 7,000 hectare, PEFC-certified forest in Finland. In 2020,
stored a gross total of 7.6Mt of CO2. The total annual carbon
impact is 9,700 tCO2 positive. This considers the emissions
from harvest, transportation and wood processing
operations.

3. Infrastructure
A 49% share in a European rolling stock company. Its fleet
is more than 150 electric locomotives that can each pull a
train carrying the equivalent of over 70 heavy vehicles. They
also deliver an 80% reduction in CO2 emissions compared toroad freight.

18 AXA Investment Managers I Climate Action Report• negative externalities
Our assessment framework is designed to analyse companies so we canidentify opportunities for a range of impact investing strategies in listed assets.

“

Climate action is critical for human progress. From alignment with the UN
Sustainable Development Goals, investing and engaging for change, toaction on deforestation, we are committed to tackling the climate-relatedrisks that threaten the future of the planet.
As a responsible, active and long-term investor, we are well placed to play
our part in financing the transition to a greener, more sustainable world.
We believe the innovations, initiatives and policies outlined in this reportwill enable our clients and our people to make a meaningful contribution
to this global endeavour.

”

Marco Morelli, Executive Chairman, AXA Investment Managers

19 AXA Investment Managers I Climate Action ReportThis document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA
Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or apersonalized recommendation to buy or sell securities. It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, basedon available data at a specific date. All information in this document is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision
based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document. Furthermore, due to the subjective nature of these opinions and analysis, these data,
projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. Any reproduction of this information, in whole or inpart is, unless otherwise authorised by AXA IM, prohibited.
Design & Production: Internal Design Agency (IDA) | 2-010782 / 2021 Photo Credit: Gettyimages

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