AXA Investment Managers Engagement Policy
April 2022

1

Table of Contents

1. Preamble ..................................................................................................................................3
2. Engagement .............................................................................................................................. 5
3. Public Policy Engagement ......................................................................................................8
4. Collaborative Engagements ...................................................................................................9
5. Voting ...................................................................................................................................10
6. Reporting and Transparency ................................................................................................ 112

1. Preamble
At AXA IM, we consider investor engagement as a change process where investors seek to improve investee
companies’ practices with a specific objective in mind. We do this on behalf of our equity and bond holdings,
in listed and non-listed markets.
This can be conducted in a variety of ways but more often than not, it is based around long-term andconstructive dialogue between two parties. We define clear objectives for our engagement, share them withinvestee companies, and systematically track and record the progress of engagement. Where there is little
progress, we will escalate the engagement in an appropriate fashion.
We take an active engagement approach, emphasising direct dialogue with companies on sustainability andgovernance issues that have a material impact on long-term financial performance. We also conductengagement to contribute to the achievement of societal targets such as those defined by the United Nations’SDGs.
We determine our engagement priorities based on our observation of global market developments andemerging ESG practices. Our engagements are linked to our key thematic focus areas and we principally
engage in a proactive fashion.
We use our research and analytical ability to identify issues and companies which most merit engagement.
We engage with a view to a company acknowledging the issue and improving its practices before risksmaterialise and opportunities are lost. Where necessary, we also engage in a reactive fashion following
controversies or breaches of international norms such as the United Nations Global Compact.
We will seek to meet and engage with representatives from all levels of the investee company. This includes
the board, senior management and operational specialists, amongst others.
Some of the key ESG issues which our engagement programme focuses on, but are not limited to include:▪ Climate change▪ Biodiversity▪ Environmental resource and eco-systems▪ Human capital and diversity▪ Public health▪ Labour, customer, supply chain management▪ Human rights▪ Data privacy and security▪ Business ethics▪ Corporate governance and executive pay▪ Controversies and breaches of international norms

3

The engagement we do is also framed by the expectations set in the UK Stewardship Code, the UN-backed
Principles for Responsible Investment (PRI), the Taskforce for Climate-related Financial Disclosure (TCFD) andthe many other industry initiatives which we support. The revised Shareholder Rights Directive (SRD2) also
requires asset managers in the European Union to publicly disclose a shareholder engagement policy.
Whilst some of the engagement mechanisms described below apply more specifically to traditional listed
assets, including equities and fixed income instruments globally, engagement is also part of our Responsible
Investment strategy in the alternative investment sector, including Real Assets and Structured Finance. These
sectors operate in fundamentally different ways and many do not benefit from market norms or benchmarks
enjoyed by traditional listed assets. However, the principles of transparency and performance improvement
act as important drivers of change.
AXA IM Engagement policy is revised annually and is validated by the RI Strategic Committee. Its
implementation is overseen by the ESG Monitoring & Engagement and Corporate Governance committees.
It is complemented by sectorial policies1 which provide additional details on our engagement strategy forcertain sectors and / or themes (incl. climate risks policy, ecosystem protection & deforestation policy, etc.).

1

Our Policies | AXA IM Corporate (axa-im.com)

42. Engagement with Corporates
Engagement is about change and the AXA IM engagement programme is set up with achievable milestones,
deliverables and reporting. We acknowledge changing cultural behaviour rarely happens overnight. Somecompanies might be more willing to listen to us than others. In most cases, it will need several interactions
before reaching any concrete progress.
As a result, at AXA IM we have rolled out a clear process for selecting priorities, defining engagement
objectives and a system for tracking engagement progress, with a range of possible outcomes andescalation points.
Selection of Priorities
We seek to engage companies across our thematics in a constructive manner with identified and achievablegoals. We challenge companies on their strategy and risks, financial and non-financial performance, and theircommitments to strong environmental, social, and governance philosophies. Engagement can be triggered by
the following situations:▪

Proactive: AXA IM will engage in a pro-active fashion on some of the key ESG issues which our engagement
programme focuses on, as listed on page 3.

▪

Reactive: Cases when we need to engage in response to a specific event. These may relate to severe
controversies and violations of international norms and standards such as the OECD Guidelines for MultiNational Enterprises, or UNGC (UN Global Compact) breach, negative news flow or ban list updates.

▪

Opportunistic: We are often invited to attend conferences, roadshows or field-trips. This is an opportunity
to learn more about companies’ actions, policies and performance while at the same time updating themon our areas of focus and scrutiny.

▪

AGM/Voting Driven: Engagement driven by AGM and voting falls under two main possibilities:
1. Engagement through pre-AGM call: Calls with top leadership and/or the Board of investee companies
ahead of the AGM to gain clarity around governance issues and let companies know about our voting
intentions at the upcoming AGM.
2. Voting:•

Voting at company meetings is an important part of how we communicate with investee
companies. This is a fundamental aspect of our fiduciary duty to clients. We vote in a mannerthat is intended to be beneficial to the long-term, sustainable value of the companies in which
we invest. Voting may occasionally also be used as an escalation option if we believe thatengagement on a thematic issue has stalled.

More intense engagement is deployed for a Focus list of companies which is revised at least annually. The list
is extracted from a broad engagement universe put together by the RI Experts teams, based on various
inclusion criteria (e.g. materiality, size of exposures, thematic priorities, etc.) and validated in the ESG
Monitoring & Engagement committee. A specific focus is made sectors which are targeted by AXA IM RI policies(incl. Climate risks policy, Ecosystem Protection & Deforestation policy)2. This is the priority list for which we
expect regular individual engagement meetings, updates and progresses.
2

Our Policies | AXA IM Corporate (axa-im.com)

5Forms of Engagement
We distinguish regular dialogue conducted with investee companies around their sustainability practices(referred to as “sustainability dialogue”) from active engagement with specific, identified objectives (referred
to as “engagement with objectives”).
We consider the former to be key in establishing and developing a constructive relationship with the company,
as well as gaining insights its policies and practices. However, while it may feed into future potential targeted
engagement, this type of dialogue is less intensive and mainly aims at gathering information.
In the case of engagement with objectives, which seek to influence change at investee companies, we definetargeted objectives related to the key ESG issues as described in more details below.

Governance of Engagement
Objective-setting
For the “Engagement with Objectives” category described above, we define objectives for each of thecompanies we engage with, with clear targets, and the timeframe we consider appropriate to see progress
depending on the nature of the objectives. We share these with investee companies at the outset of theengagement, and systematically track and record the progress of engagement as described below. Where
there is little progress, we will escalate the engagement in an appropriate fashion.
We seek to engage companies at the most appropriate level for our engagement objective. This may mean weseek to target higher levels of the corporate hierarchy where we feel it is deemed necessary.
While our belief is that long-running confidential and constructive discussions based on trust is often the mosteffective way to create change over time, we also value transparency and may communicate externally on our
engagement activities in selected cases.

Tracking, Escalation, and Conclusion
AXA IM has established a system for tracking dialogue and engagement progress with investee companies in
traditional asset classes.
Each and every time an interaction with a company is logged, an engagement report is uploaded and madevisible to all AXA IM investment platforms.
Sometimes the engagement stalls and we need to escalate. Escalation of the discussion through other means
and/or at other levels of the hierarchy are options we can utilise in order to progress on our engagement asks.
An escalation strategy is therefore determined for every engagement activity, which may include:oTargeting higher level of the corporate hierarchy;oCollaborating with other investors (including through joint public statements in certain cases);oVoting against resolutions at the AGM, and informing investee companies in advance of the AGM ofsuch votes and of the rationale behind them when possible;o

Co-filing resolutions at the AGM; or6oDivestment.

Where relevant, we will aim to ensure our Public Policy engagement activities will facilitate the achievementof engagement objectives for Corporates, especially when those require changes in regulatory framework.

Three Strikes and You’re Out Mechanism
The Three Strikes and You’re Out Mechanism is a more forceful engagement policy that aims at applying
sufficient pressure to effect timely change within a selection of companies which are considered to bematerially lagging vs peers on a given topic, or failing to meet baseline expectations, representing a higher risk.
Clear objectives are defined for each of those companies, which follow our engagement policies and are
tailored to their activities and communicated to their management at the inception of the engagement. AXA
IM engages regularly with those companies to steer them to achieve progress on those objectives, using
escalation techniques when necessary (e.g. voting against management). If the objectives have not beenachieved after three years, we will divest.
This policy applies to a selection of companies which do not have Net Zero commitments, or which havequantified emissions reduction targets which are deemed not be credible or demanding enough. A similar
approach, although less systematic, may also be taken for engagement on other themes, if the desired
outcome has not been reached.
Oversight by Governance Committees
The deployment and success of the engagement efforts across AXA IM traditional asset classes is overseen by
two Committees:▪

The ESG Monitoring and Engagement Committee
Committee members include representatives of investment platforms, RI Experts teams as well as
Compliance and Risk teams. Meetings are held on a quarterly basis. The Committee will ensure
coordination of engagement actions and regularly review progress achieved on the engagement focus-list.
In particular, proposals to escalate may be discussed with the committee, as well as successes. The
committee will also review controversies impacting holdings and discuss possible decisions. In some cases,
severe controversies will not necessarily translate into an automatic exclusion but will rather call for a
dedicated engagement to assess breadth of the controversy and quality of corporate responses.

▪

The Corporate Governance Committee
Committee members are drawn from investment teams, RI Experts teams, Compliance and Middle Office.
Its over-arching role is to oversee AXA IM’s corporate governance, stewardship and voting activities inrelation to investee companies and ensure clients’ rights and obligations are exercised in line with goodpractice standards. It is the body in charge of updating the Corporate Governance and Voting Policy as wellas the Engagement Policy while making sure they are consistent with market developments. Evolution ofthematic voting policy is closely tied to the engagement work that is undertaken.

73. Public Policy Engagement
As the Sustainable Finance regulatory agenda intensifies, we work with regulatory authorities andpolicymakers to ensure that public policy supports an investment environment which takes seriously
sustainability and responsible investment issues. In particular our public engagement aims to contribute toensuring the regulatory framework under development promotes effective comparability, transparency
and robustness in the ESG approaches developed by the financial sector.
In addition, AXA IM is an active member of several industry initiatives – at global and local levels – which
pursue the same objective. Involvement with policymakers and industry groups is a key part of our active
ownership and stewardship strategy.

8

4. Collaborative Engagements
While most of our engagement is based solely on our own efforts, we also believe that collaborating with otherlikeminded investors and stakeholders can help us to achieve our goals. Indeed, using a collective voice is a
powerful engagement tool.
In most cases, we think collaborative initiatives should serve to bolster and not replace individual engagement.
This explains our decision to use a well-thought combination of the two.
We adopt a selective approach when deciding which collaborative initiatives we will participate in or support,
focusing on topics and groups where we believe our involvement will have a material impact.
Since 2019, we have been contributing to/or supporting a number of initiatives, such as: Climate Action 100+,30% Investor Club, Access to Medicine Index, Climate Bonds Initiative etc. We seek to take a leadership role asoften as possible.

95. Voting
At AXA IM we consider voting to be a crucial aspect of being an active shareholder. It is an important part ofthe investment process and an opportunity to influence the company. Our voting and engagement activities
are closely aligned. We regularly engage companies before and after the vote.
AXA IM has established a Corporate Governance Committee which is responsible for overseeing theimplementation of AXA IM’s Corporate Governance & Voting Policy to the companies in which we are invested
on our clients’ behalf. The Committee’s role is to ensure that our votes are pragmatic and take account of theinvestment perspectives and particular circumstances of relevant companies.
We vote against items at annual meetings where we consider that the specific proposals are not in the bestinterests of our clients. These include wide-ranging concerns such as suitability of individual directors, board
oversight of key risks and strategy, executive pay, dividend and capital related issues and diversity as well astransparency and reporting. We also vote against proposals as a method to escalate our engagement when it
is not sufficiently progressing, especially as related to our key thematic.
While local best practice codes may adopt different approaches, we expect all companies to seek to closelyalign with our core global governance principles which set out the fundamentals of corporate governance. AXA
IM considers these principles in conjunction with our region-specific policies in our voting and engagement
activity, with all companies globally.
AXA IM publicly discloses its voting. It is updated on a quarterly basis and we provide the rationale for why wevoted against management. These reports are accessible on our website.
Our voting policy can be found here, or via the Stewardship page on our website.

106. Reporting and Transparency
At AXA IM, we are committed to providing transparency and regular reporting on active ownership, bothinternally and externally.
Every engagement is recorded following the event. We ensure that our engagement activities and theirprogresses are available across asset classes. The concentration of engagement reports on a dedicatedplatform is key to provide our internal stakeholders and our clients a fund-specific reporting on engagement.
For external stakeholders and clients, we report on our engagement activities through:-Engagement reports at fund level for ESG and RI open funds, available on AXA IM Fund Center. These
reports are also available on demand for dedicated funds / mandates ; and-An annual Active Ownership & Stewardship Report. It is published annually on the AXA IM website.
The intention of this report is to demonstrate the evolution and impact of our engagement programmethrough our activities during the current year.

Lastly, we also have a dedicated Active Ownership section within the Responsible Investment Part of the AXA
IM website.

Issued by AXA INVESTMENT MANAGERS PARIS, a company incorporated under the laws of France, having its
registered office located at Tour Majunga, 6 place de la Pyramide, 92800 Puteaux, registered with the
Nanterre Trade and Companies Register under number 353 534 506, and a Portfolio Management Company,
holder of AMF approval no. GP 92-08, issued on 7 April 1992.
In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.

12