As part of an audit conducted in accordance with professional standards applicable in France, the statutory auditor exercises professional judgment throughout the audit and furthermore: ■ identifies and assesses the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be suff icient and appropriate to provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; ■ obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the internal control; ■ evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management in the consolidated financial statements; ■ assesses the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of their audit report. However, future events or conditions may cause the Company to cease to continue as a going concern. If the statutory auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the consolidated financial statements or, if such disclosures are not provided or inadequate, to modify the opinion expressed therein; ■ evaluates the overall presentation of the consolidated financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation; ■ obtains suff icient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. The statutory auditor is responsible for the direction, supervision and performance of the audit of the consolidated financial statements and for the opinion expressed on these consolidated financial statements.
We also provide the Audit Committee with the declaration provided for in Article 6 of Regulation (EU) No. 537-2014, confirming our independence within the meaning of the rules applicable in France such as they are set in particular by Articles L.822-10 to L.822-14 of the French Commercial Code (Code de commerce) and in the French Code of Ethics (Code de déontologie) for Statutory Auditors. Where appropriate, we discuss with the Audit Committee the risks that may reasonably be thought to bear on our independence, and the related safeguards.
6.1 AXA SHARES 378 Trading on Euronext Paris 378 6.2 SHARE CAPITAL 379 Capital ownership 379 Transactions involving AXA’s share capital 381 Fully diluted capital on December 31, 2018 382 Financial authorizations 382 6.3 GENERAL INFORMATION 385 Regulation and Supervision 385 AXA Group Tax Policy 391 Bylaws 394
On December 31, 2018, AXA’s fully paid up and issued share capital amounted to €5,553,059,073.54 divided into 2,424,916,626 ordinary shares, each with a par value of €2.29 and eligible for dividends as of January 1, 2018.
To the best of the Company’s knowledge, the table below summarizes the ownership of its issued outstanding ordinary shares and related voting rights on December 31, 2018: Number of shares
Treasury shares held directly by the Company 41,245,315 1.70% [1.44%] (c)
Treasury shares held by Company subsidiaries (d) 368,439 0.02% [0.01%] (c)
(b) AXA Assurances IARD Mutuelle (11.52% of capital ownership and 19.29% of voting rights) and AXA Assurances Vie Mutuelle (2.88% of capital ownership and 4.87% of voting rights).
(c) These shares will be entitled to vote when they cease to be treasury shares (e.g. upon their sale or other transfer to an unaff iliated third party). (d) Treasury shares as indicated in Note 13 “Shareholders’ equity and minority interests” in Part 5 – “Consolidated Financial Statements” of this Annual Report. (e) Source: Euronext Notice of January 11, 2019.
Treasury shares held directly by the Company 41,245,315 1.70% [41,245,315] (c) [1.44%] (c) 41,395,855 1.71% [41,395,855] (c) [1.45%] (c) 5,463,201 0.23% [5,463,201] (c) [0.19%] (c)
By virtue of the authorization granted by the Shareholders’ Meeting of April 25, 2018, the Board of Directors increased the Company’s share capital through the issue of shares reserved to the Group employees under the Shareplan 2018 program. The shareholders waived their preferential subscription rights so that this off ering could be made exclusively to Group employees (Shareplan 2018).
In countries that met the legal, regulatory and tax requirements to participate in Shareplan, two investment options were off ered to the Group employees in 2018: ■ the traditional plan, off ered in 38 countries; ■ the leveraged plan, off ered in 36 countries.
At the end of the 5- year holding period, the employees can, depending on their country of residence, do any one of the following: (1) receive the cash value of their investment; (2) receive the value of their investment in the form of AXA shares; or (3) transfer their assets invested in the leveraged plan into the traditional plan.
The Shareplan 2018 program was carried out through a capital increase that took place in November 2018. Over 24,000 employees took part in the Shareplan 2018 program, representing over 23% of eligible employees: ■ the total amount invested was approximately €330 million, as follows: • €40 million in the traditional plan, and
On December 31, 2018, AXA employees and agents held 5.19% of the share capital and 6.37% of the voting rights. These shares are owned through Mutual funds (FCPE) or directly either in the form of ordinary shares or ADS.
Exercise of stock options and bond conversions 2,714,459 33,657,414 2,425,149,130 5,553,591,508 2017 Share capital reduction by cancellation of shares (4,247,422) (93,006,551) 2,420,901,708 5,543,864,911
Share capital reduction by cancellation of shares (23,272,226) (531,851,334) 2,420,265,818 5,542,408,723 31/12/2017 Exercise of stock options 4,969,933 73,161,594 2,425,235,751 5,553,789,870 2018 Share capital reduction by cancellation of shares (2,935,769) (63,784,085) 2,422,299,982 5,547,066,959
AXA’s authorizations to issue shares or other types of securities that were valid as of December 31, 2018 are summarized in the tables below: Issues with preferential subscription rights for shareholders
Capitalization of reserves, earnings or premiums – 1 billion (a) 26 months June 26, 2019
Ordinary shares reserved for a specific category of beneficiaries in connection with off erings for employees – 135 million (c) 18 months October 25, 2019
Performance shares (actions de performance) (d) (g) – 0.40% (e) 38 months June 27, 2019
Shares issued in connection with the exercise of stock options – 1% (f) 38 months June 26, 2020
(a) Including the issue of ordinary shares or securities (i) in the event of private investments or through public off ers, (ii) in the event of public exchange off ers initiated by the Company, (iii) in consideration for contributions-in-kind for up to 10% of the Company’s share capital, or (iv) as result of securities issued by subsidiaries of AXA.
Capitalization of reserves, earnings or premiums – 1 billion (a) 26 months June 24, 2021
Performance shares (actions de performance) (d) – 1% (f) 38 months June 24, 2022
(b ) The aggregate nominal value of debt instruments associated with the issue of securities with or without preferential subscription rights may not exceed the global upper limit of €6 billion .
(c) Common and independe nt ceiling. (d ) Existing shares and/or newly issued shares. (e ) Dedicated to retirement. (f ) At the date on which performance shares are granted by the Board of Directors.
STOCK OPTIONS In 2018, by virtue of the authorization granted by the shareholders at the Shareholders’ Meeting of April 26, 2017 (resolution 29), 2,730,217 stock options have been granted, each of which gives the holder a right to acquire an AXA share (either newly issued or existing) at a specified strike price.
PERFORMANCE SHARES In 2018, by virtue of the authorizations granted by the shareholders at the Shareholders’ Meeting of April 27, 2016 (resolutions 19 and 20) respectively 2,979,171 performance shares and 758,076 performance shares dedicated to retirement were granted by the AXA Board of Directors.
AXA is a société anonyme (a public limited company) organized under the laws of France, which is the publicly traded parent company of the AXA Group. The Company’s registered office is located at 25, avenue Matignon, 75008 Paris, France and its telephone number is +33 (0) 1 40 75 57 00. AXA SA was incorporated in 1957 but the origin of its activities goes back to 1852. The Company’s corporate existence will continue, subject to dissolution or prolongation, until December 31, 2059. The Company is registered with the Paris Trade and Companies Register (Registre du commerce et des sociétés) under number 572 093 920. AXA’s legal entity identifier (LEI) is F5WCUMTUM4RKZ1MAIE39.
AXA is engaged in regulated business activities on a global scale through numerous operating subsidiaries. The Group’s principal business activities of (re)insurance and Asset Management are subject to comprehensive regulation and supervision in each of the various jurisdictions where the Group operates. AXA SA, the ultimate parent holding company of the AXA Group, is also subject to extensive regulation as a result of its listing on Euronext Paris and its direct and indirect shareholding in numerous regulated insurance and Asset Management subsidiaries. Given that the AXA Group is headquartered in Paris, France, this supervision is based to a significant extent on European Union directives and regulations and on the French regulatory system. AXA’s principal regulators in France are the Autorité des marchés financiers (the “AMF”), which is the financial markets regulator, and the Autorité de contrôle prudentiel et de résolution (the “ACPR”), which is the insurance and financial services regulator.
The Company’s (re)insurance subsidiaries are subject to regulatory capital requirements in the jurisdictions where they do business, which are designed to monitor capital adequacy and to protect policyholders. While the specific regulatory capital
Solvency II provides for two separate levels of solvency capital requirements: (i) the Minimum Capital Requirement (“MCR”), which is the amount of own funds below which policyholders and beneficiaries are exposed to an unacceptable level of risk should the (re)insurance companies be allowed to continue their operations, and (ii) the SCR, which corresponds to a level of eligible own funds that enables (re)insurance companies to absorb significant losses and that gives reasonable assurance to policyholders and beneficiaries that payments will be made.
AXA continues to regularly review the scope, underlying methodologies and assumptions of the Internal Model, and will adjust its SCR accordingly. In addition, AXA’s Internal Model has been and may be revised from time to time in accordance with applicable regulations. However, any significant change to the Internal Model would be subject to the prior approval of the ACPR which may require adjustments to the level of SCR.
For more information on the Internal Model, please refer to Section 4.2 “Internal control and Risk Management – Internal Model” of this Annual Report. For further information on AXA’s SCR, Internal Model and other Solvency II disclosures, please refer to the AXA Group’s SFCR for the year ended December 31, 2017, available on AXA’s website (www.axa.com). AXA Group’s SFCR for the year ended December 31, 2018 is expected to be published on May 23, 2019, on the same website.
In the event of a failure by a (re)insurance company or an insurance holding company to meet applicable regulatory capital requirements (including the MCR and the SCR, as applicable), insurance regulators generally have broad authority to require or take various regulatory actions, including limiting or prohibiting the issuance of new business, prohibiting payment of dividends or other shareholder distributions, and/or putting a company into rehabilitation or insolvency proceedings. In particular, under the French recovery and resolution framework for the insurance industry, set forth in Order no. 2017-1608 of November 27, 2017 and its various implementing measures (the “French Resolution Framework”), the ACPR has broad resolution powers with respect to insurance groups, insurance holding companies, such as
In addition, there are continuing discussions regarding the development of recovery and resolution frameworks and strategies in the insurance industry, as the FSB, in consultation with the IAIS, is currently developing guidance on effective recovery and resolution tools and strategies for the insurance industry, and the EIOPA is working towards harmonization and strengthening of recovery and resolution frameworks within the EU.
On November 14, 2018, the IAIS issued a public consultation document (the “Consultation”) proposing a holistic approach for assessing and mitigating systemic risk in the insurance sector (the “Holistic Framework”), which combines an activities-based approach for sector-wide risk monitoring and management, and an entity-based approach. The Consultation would evolve the IAIS’s approach to systemic risk by (i) recognizing that such risk may arise from both the collective activities and exposures of insurers at a sector-wide level, as well as from the distress or failure of individual insurers, (ii) addressing cross-sectoral aspects of systemic risk and (iii) moving from an approach where additional policy measures were applied to a small group of insurers to an approach with a proportionate application of an enhanced set of policy measures targeted at exposures and activities in the insurance sector as a whole. The key components of the proposed Holistic Framework comprise, inter alia, an enhanced set of supervisory policy measures (e.g., ongoing supervisory requirements, enhanced macroprudential surveillance, crisis management and recovery planning), an ongoing annual global monitoring exercise by the IAIS (at individual insurer and sector-wide levels), and strengthened supervisory powers of intervention aimed at responding promptly and adequately where a potential systemic risk is detected. The supervisory policy measures included in the Holistic Framework will be integrated in the ICPs and the ComFrame and applied in a proportionate manner. The Holistic Framework and the revised ICPs and ComFrame are scheduled to be adopted in November 2019 for implementation in 2020.
For additional information, see paragraphs “The Group’s or its (re)insurance subsidiaries’ failure to meet their solvency and capital adequacy requirements could have a material adverse eff ect on our business, liquidity, ratings, results of operations and financial position”, “As a holding company, we are dependent on our subsidiaries to cover our operating expenses and dividend payments” and “Our businesses are subject to extensive regulation and regulatory supervision in the various jurisdictions in which we operate” in Section 4.1 “Risk Factors” of this Annual Report.
These regulations are generally designed to safeguard client assets and ensure adequacy of disclosures concerning investment returns, risk characteristics of invested assets in various funds, suitability of investments for client investment objectives and risk tolerance, as well as the identity, regulatory approvals and qualifications of the investment manager. These regulations generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply with such laws and regulations. In such event, the possible sanctions that may be imposed include the suspension of individual employees, limitations on engaging in business for specific periods, the revocation of the registration as an investment adviser, censures and/or fines.
MiFID II and Regulation (EU) No. 600/2014 on markets in financial instruments, as amended (together with MiFID II, and the various regulations promulgated thereunder, the “MiFID II Package”), both adopted in May 2014, entered into force on January 3, 2018. The MiFID II Package, which is designed to better integrate the European Union’s financial markets and increase cross-border investments, market transparency and investor protection, imposes a wide variety of new requirements including with respect to trading/clearing of certain derivatives on organized platforms, regular reporting with respect to derivatives positions and certain other types of financial instruments, enhanced governance and investor protection standards, restrictions and/ or prohibitions on certain types of compensation arrangements or other monetary inducements to firms providing independent investment advice and greater regulation of structured products and other complex financial instruments.
While the reforms introduced by the MiFID II Package significantly impacted EU securities and derivatives markets, the full impact of the wide ranging and complex set of measures included in the MiFID II Package has yet to be determined. The MiFID II Package may also be revised in the future, including as a result of implementing regulations, transposition laws and regulatory guidance enacted or issued in connection therewith, and any such modification or revision may have an adverse impact on our business, results of operations and financial condition.
In France, the EU Data Protection Reform has been transposed b y law No. 2018-493 regarding personal data protection, which entered into force on May 25, 2018, and various implementing measures, including Decree No. 2018-687 of August 1, 2018.
For further information concerning data protection, please see the paragraph “The evolving and complex regulatory environment surrounding data protection and transfer in the European Union could increase our costs and adversely impact our business” in Section 4.1 “Risk Factors” of this Annual Report.
Following invalidation in 2015 of the European Commission’s Safe Harbor Decision by the European Union Court of Justice, which allowed for the transfer of personal information for commercial purposes from companies in the European Union to companies in the United States which had signed up to the
Since 2008, there have been a variety of proposals with respect to executive compensation practices at financial institutions including from the FSB and other regulatory bodies. Certain of these proposals have been embodied in regulation or legislation, while others remain best practice recommendations.
Management and certain employees (such as traders) who can have a potentially significant impact on the nature and duration of risks incurred, (ii) the Company and (iii) shareholders.
In parallel with IFRS 17, the Group will apply IFRS 9 – Financial Instruments first issued on July 24, 2014. The published eff ective date of IFRS 9 was January 1, 2018. However, given the interaction between financial assets and technical insurance liabilities, the IASB issued amendments to IFRS 4 on September 12, 2016, which were adopted by the European Union on November 3, 2017. These amendments allow, under certain criteria, entities issuing insurance contracts within the scope of IFRS 4 to defer the implementation of IFRS 9 until the eff ective date of IFRS 17, but no later than January 1, 2021. The Group was eligible for this temporary exemption and has decided to apply it.
The IDD supersedes the Insurance Mediation Directive and is designed to improve consumer protection by ensuring that all distributors of insurance products operate on a level playing field. The main provisions of the IDD relate to enhanced professional requirements (e.g. continuing training and development for distributors), conduct of business rules, conflicts of interest (relating to fees, commissions and bonuses), increased disclosure and transparency and extensive product governance requirements. It also includes additional requirements for the sale of insurance products with investment elements in order to ensure that policyholders receive a similar level of protection as buyers of retail investment products regulated under MiFID II (e.g., when providing advice, distributors have to assess whether the insurance-based investment product is suitable for the customer).
The IDD entered into force on October 1, 2018, while MiFID II and the PRIIPs Regulation entered into force at the beginning of January 2018.
Finally, financial crime compliance programs of financial institutions (anti-money laundering, anti-corruption and international sanctions compliance) continue to be a major focus of regulatory and law enforcement authorities with increasingly significant penalties imposed for compliance failures. In particular, French Law No. 2016-1691 of December 9, 2016 on transparency, fight against corruption and modernization of the economy, known as “Sapin II”, which entered into force on June 1, 2017, introduces new requirements for all large French companies and corporate groups, such as the Group, including the establishment of internal procedures to prevent and detect acts of corruption and influence peddling committed in France and abroad. “Sapin II” also established a new French anticorruption agency (Agence française anticorruption), which was given strengthened supervisory and enforcement powers.
operates. In addition to the Group Tax Department based in France, all key operational entities/countries/geographic zones have a tax team in charge of ensuring that tax regulations are well understood and satisfied by the entities.
In addition, an International Tax Committee composed of various senior tax executives within AXA tax teams meets every quarter to ensure consistency in approach on some technical topics, as well as agreements on guidelines connected to specific items.
As an international group operating in several countries, the AXA Group is subject to various tax regimes and regulations and takes into account any changes in tax law. AXA is specifically vigilant about the changes that could result in higher tax expenses and payments, higher compliance costs or that may aff ect the AXA Group’s tax liability, return on investments and business operations. In particular, please see the paragraph “Changes in tax laws or uncertainties in the interpretation of certain tax laws may result in adverse consequences to our business and our results of operations” in Section 4.1 “Risk Factors” of this Annual Report.
AXA has no licensed insurance or operating business activities in the countries specifically identified as non-cooperative jurisdictions (1) under French and European rules, except in Panama. In this country, which has been recently identified as such, AXA has been acting locally for several years through two operating companies providing assistance services to local customers or travelers insured by AXA.
Any presence in countries in which AXA operates with tax rates lower than France are driven by business operations. With the recent acquisition of the XL Group, AXA now has a material presence and substance in Bermuda with nearly 200 employees working for AXA XL there. Despite the fact that Bermuda is a low-tax jurisdiction, it is a center of expertise and one of the key location of the worldwide reinsurance market. It is not considered as a non-cooperative jurisdiction according to the French and European laws. This presence is mainly driven by local capital management regulation enabling flexibility on the required capital for reinsurance activities and AXA supports the Economic Substance legislation recently enacted in this country. This situation will in no way change how the AXA Group is managed on the tax side. AXA will remain a French tax resident group and will continue to tax its operations in the various countries where operational profits are made.
The consolidated financial statements are prepared in compliance with IFRS standards (as disclosed in Note 1 “Accounting principles” in Part 5 – “Consolidated Financial Statements” of this Annual Report). Accounting for income taxes recognizes both the current tax consequences of transactions and events and the future tax consequences of the future recovery or settlement of the carrying amount of the entity’s assets and liabilities, as required by IAS 12 (see Note 1.17.1 “Income taxes” in Part 5 – “Consolidated Financial Statements” of this Annual Report).
A geographical split of the key figures is available on the Company’s website (2).
According to these internal standards, CEOs must ensure that staff are fully conversant, and comply with applicable laws, mandatory Codes of Conduct, rules and regulations (including applicable tax laws and regulations) relevant to their area of operations.
This means that local senior management must appreciate the tax implications of the activities in their entity. The main considerations are: ■ compliance with the taxation of employees in the territory in which they are employed; ■ compliance with the taxation of business undertaken in the territory (including levies and sales taxes); and
The local decision to launch a new product must result from a documented approval process that complies with the AXA Group’s standards in terms of product features, pricing, AssetLiability Management and aspects related to legal, compliance, regulatory, accounting and reputation.
Moreover, AXA has established strict policies regarding its cross-border activities and knowledge of its customers, in order to ensure that our products and services are not misused for money laundering or tax evasion purposes and are governed by specific rules according to which cross-border life insurance proposals must be presented to the Group Tax and Compliance Departments for validation (as mentioned in section 34 of the AXA Group Standards).
Pursuant to Article 3 of its Bylaws, AXA’s corporate purpose is generally to: ■ acquire all types of ownership interests in any French or foreign company or business, including insurance companies; ■ acquire, manage and sell all listed or unlisted shares and securities, as well as personal or real estate properties, rights, shares or securities, whether listed or unlisted, that are related to such properties; and
Members of the Board of Directors receive a fixed annual directors’ fee, the maximum overall amount of which is determined by the Shareholders’ Meeting and apportioned by the Board of Directors among its members, pursuant to the rules set forth in the Terms of Reference of the Board of Directors. Notwithstanding the above, the Board’s Terms of Reference provide that no directors’ fee shall be paid to corporate off icers.
In accordance with the Afep-Medef Code and regardless of any statutory obligation of holding shares, the directors, with the exception of directors representing employees, shall personally be shareholders of the Company and own a significant number of shares in the Company; if they do not own such shares at the time they are first appointed, they shall use their directors’ fees to acquire AXA shares. Accordingly, the Board of Directors has set for each Board member, whether an individual or a permanent representative of a legal entity to whom directors’ fees were paid, the objective of holding, within two years aft er first being appointed, a number of shares in the Company, the value of which, on the basis of the closing price of the AXA share on December 31 of the preceding fiscal year, shall correspond to an amount at least equivalent to the gross director’s fees earned in respect of the previous fiscal year. The shares purchased for the purpose of this holding objective will be held in registered form.
The rights of the holders of double voting rights may only be modified or cancelled upon the decision of an Extraordinary Shareholders’ Meeting and after authorization by a special meeting of the holders of these rights.
At least 15 days (or six days in certain cases) prior to the date set for the meeting on first call, and at least 10 days (or four days in certain cases) before any second call, the Company shall send a final notice containing all the information requested b y law by mail to all registered shareholders who have held shares for more than one month prior to the date of this final notice and publish a final notice in a bulletin of legal notices, as well as the BALO.
Sustainable Value Creation 398 AXA’s Corporate Responsibility Strategy 399 CR governance & Stakeholder dialogue 399 Sustainability Risk Assessment 400 AXA XL, our new Commercial lines entity 400 Ratings 401 Reporting certification 401 Reporting methodology 401 7.2 SOCIAL INFORMATION 403 Foreword 403 Workforce at a glance 404 Social challenges outlook 404 Employee relations and work conditions 405 Learning environment and skills management 406 Diversity and Inclusion breeding talent and innovation 408 7.3 CLIMATE CHANGE AND THE ENVIRONMENT 414 AXA’s position on climate change and the environment 414 Investments 414 Insurance 419 Own operations 420 7.4 INCLUSIVE INSURER 424 Business-related societal initiatives 424 Corporate Philanthropy and engagement 427 7.5 BUSINESS BEHAVIOUR 428 Business ethics 428 Responsible data use and data privacy 429 Responsible Procurement 430 Tax policy 430 Report by one of the Statutory Auditors, appointed as an independent third party, on the consolidated non-financial statement included in the Group management report 431 7.6 VIGILANCE PLAN 435 Scope of the Vigilance Plan 435 Protection of Human Rights and the Environment 436 Alert Procedure 438 Stakeholder Involvement 438 Monitoring of the Vigilance Plan 438 Report on eff ective implementation of the Vigilance Plan 438
AXA’s business is to protect people over the long-term, by better understanding, selecting, quantifying and managing risks. We do so by operating at the intersections of economy, finance and society. Insurance creates value along these three dimensions.
■ Climate Change and the environment: AXA reduces its own carbon footprint and leverages its core business of insurance and investment to help better face climate risks.
■ Responsible data and Artificial Intelligence (AI): data and AI can be a force for good, especially when it gives us an opportunity to protect our customers’ risk knowledge data by reinforcing cyber-security. We will notably “give back data” to our customers and society for public good.
The UN SDG framework is also matched with internal expertise. The topics identified are then screened with the help of a “business case” filter which notably ensures AXA invests eff orts on topics on which it can truly have an impact. This process enabled us to identify biodiversity loss and the twin epidemic of obesity and diabetes as key areas for action going forward. While the Group has not developed its sustainability strategy based on the UN SDG framework, and this work is still underway, the following pages highlight correlations between some CR initiatives and certain UN SDGs.
AXA has established a robust governance framework to develop and implement its CR Strategy. Every year, the Board of Directors’ Compensation and Governance Committee examines the Group’s CR strategy. Moreover, the Group Management Committee reviews the CR strategy at least once a year. On a local entity level, a network of “Chief Corporate Responsibility Off icers” is responsible for coordinating the CR strategy and promoting best practices. The CCROs are supported by local CR teams.
More generally, AXA has developed a culture of stakeholder dialogue by working closely with a number of civil society partners, with a view to strengthen its risk assessment (AXA’s stakeholders being defined as individuals or groups aff ected by its business operations, or who may affect the Group’s performance or the environment in which it operates – such as our clients, shareholders and investors, employees, suppliers, as well as governments and community groups).
As required by the EU Non-Financial Directive, AXA conducted an internal risk assessment to identify its main sustainability risks. These risks were grouped into the following main categories: social risks, human rights risks, environmental risks and risks related to business conduct.
To identify these material risks, a risk assessment methodology was developed by a transversal working group featuring Group Legal, Group Corporate Responsibility, Group HR, Group Risk Management and Group Communications. The teams assessed the materiality of sustainability risks, based on their severity and frequency. These risks were compared to several impacts on AXA’s business, notably financial, employee (e.g. talent attraction), reputation, operational (e.g. business continuity) and environmental impacts.
AXA acquired the XL Group in September 2018, and merged it with existing AXA teams to create AXA XL, a new entity focused on P&C Commercial lines. AXA XL was not included in the Sustainability Risk Assessment described above but is nonetheless gradually integrated into AXA’s policies and processes, including our social and environmental reporting processes (the social and environmental data published in this report integrates XL Group data for the last quarter of 2018). AXA XL applies the Group’s underwriting restrictions (coal, tobacco, etc.). Notable initiatives include the “Ocean Risk Initiative”, launched in 2017 to highlight the implications of ocean-derived risks and develop cross-sectoral solutions that help to build resilience at local, regional and global levels. It is underpinned by thought leadership projects, industry responses to ocean risk, and educational resources for schools. AXA XL has also implemented an environmental management system, and off sets its global travel emissions through the purchase of carbon credits with The Nature Conservancy. Finally, AXA XL employees are encouraged to invest in their local communities through employee volunteering and philanthropy programs. In 2018, over 5,000 employees (out of a total number of 7,500 employees) participated, and over $4 million were donated to communities around the world.
The scope corresponds to legal entities (companies and/or organizations) which AXA owns, as of the end of year, directly or indirectly with at least 50% of the capital or voting rights. This scope is updated annually following potential acquisitions/ mergers or business disposals. 315 active legal entities reported their 2018 social data. Therefore the subsidiaries that were financially consolidated during the reporting year or whose employees were incorporated during the reporting year are included in the 2018 scope (e.g. XL Group).
The indicators cover the period from January 1 to December 31, 2018, unless mentioned otherwise (e.g. XL Group data were included on a pro-rata basis for Q4 2018). The data are collected at December 31 each year as a status report at the date or at the end of the period under consideration. To facilitate their collection and processing, some data may be collected earlier in the year. The data for any remaining months (maximum 6 months) is then estimated in accordance with the assumptions set out in the description of the indicators/pre-established assumptions.
Regarding societal data, please refer to Section 7.4 “Community investment”. Notably, the number of unique volunteers is an estimate based on local entity knowledge of volunteering activities.
Reporting on certain indicators may have limitations due to: ■ the absence of nationally and/or internationally recognized definitions, in particular concerning the diff erent categories of employment contracts; ■ the necessary estimates, the representativeness of the measurements made or the limited availability of external data required for calculations; ■ the practical procedures for collecting and entering this information.
Over the year 2018, AXA has provided in-depth information related to policy and governance of the main risk linked to business behavior. Specific to these, AXA has developed robust internal processes and has implemented necessary policies as well as Key Performance Indicators to measure their eff ectiveness.
(1) Methodology note: The social data communicated here are collected through a reporting process defined by procedures associated with a list of indicators shared with all entities of the AXA Group. This process is updated and communicated to each entity on a yearly basis. These indicators represent the data of 315 active entities of the AXA Group (few entities may pre-consolidate data on a local level). The perimeter is updated annually following potential acquisitions/ mergers or business disposals. These indicators are reported for the period between January 1, 2018 and December 31, 2018, unless mentioned otherwise. Evolutions are measured with ratios between 2017 and 2018 end-of-year data. The data are provided by local correspondents into an IT tool dedicated to the social data reporting process. Consistency checks and quality controls are carried out before and during the data collect process. There are no estimations nor extrapolations made on the data provided. Regarding data published in ratios and percentages: numerator and denominator are realigned for each calculation to exclude entities with empty data points.
AXA continued to recruit in 2018 and hired more than 17,400 employees on open-ended contracts (excluding entries due to mergers and acquisitions), of which more than 4,200 were sales employees.
In accordance with the EU Non-Financial Reporting Directive, the AXA Group has identified three main potential social risks: ■ not maintaining sustainable and responsible employer practices everywhere through an ambitious employer value proposition and continuous social dialogue; ■ insuff icient growth and development opportunities, limited internal and external employability and skills becoming obsolete in a disrupted business environment; ■ not attracting, retaining and managing talents because of inability to build an inclusive and engaging environment.
human resources teams are regularly involved with Corporate Responsibility teams to answer to external stakeholders’ (NonGovernmental Organizations, Rating Agencies, press, etc.) requests regarding the responsibility and sustainability of social practices.
The AXA Group globally, and AXA human resources professionals in particular, are all committed to mitigate those potential social risks.
Maintaining sustainable and responsible employer practices and fostering social dialogue and work conditions are priorities at AXA. Over the past years, AXA, as a mature organization, implemented processes and instances that let the social dialogue and work conditions develop in its diff erent entities globally.
AXA is committed to building an environment where the voices of employees are heard (through employee engagement surveys amongst others), and actions are taken to ensure they remain engaged. AXA is a United National Global Compact signatory and is committed to uphold the right to freedom of association and collective bargaining. Labor-management communications and social dialogue pave the way for the stability required to implement the Group’s business development strategy. Each AXA entity, therefore engages with staff or their representatives for communications on a regular basis. AXA has also set up a European Works Council (EWC), whose extensive role goes beyond regulatory requirements.
In Europe, a first labor agreement was signed at AXA in 1996. In June 2009, a Group EWC agreement (available at www.axa.com) was concluded to guarantee a high level of social dialogue and that cover the majority of Group’s employees. AXA holds two EWC plenary meetings a year – gathering 50 employee representatives from European countries, and chaired by AXA’s CEO – as well as monthly sessions, held by 12 members of the EWC, to stay abreast of labor and economic developments in each country.
AXA is committed to helping its clients and its employees to live a better life, which includes a better life at work and work-life balance.
Work conditions form a significant part of AXA’s overall employee value proposition. It is part of the Group’s responsibility to build an inclusive work environment hence operating as a source of personal fulfillment. AXA has implemented programs on preventing stress at work, and promoting mental health and wellbeing. The Group is also working on building an inclusive workplace environment through the New Way of Working (NWOW) approach: an environment that sustains diff erent forms of flexible work arrangements (teleworking, part-time work, hot desking, desk sharing, flexible hours, compressed work week) and respects the work-life balance. 8 countries have deployed all or part of the NWOW approach across several campuses. As of end 2018, at AXA France, 3,706 employees were practicing teleworking while 2,200 employees were experiencing other aspects of NWOW. In Belgium, 3,155 employees are encouraged to do 2 days teleworking per week. In Spain, at AXA Spain, 63% of employees (more than 1,700 individuals) benefit from a “smart working” model.
Also, in terms of work-life balance, AXA is committed to supporting working parents globally. In January 2017, AXA launched a Global Parental Policy which gives all AXA employees across all countries where AXA operates the same rights and opportunities when expanding their family: a minimum of 16 weeks fully paid maternity/primary parent leave and 4 weeks fully paid paternity/co-parent leave, respectively. The number of maternity/paternity-absence-related days has globally increased by 8% compared to 2016 with a more significant impact on sales population (+17%) compared to 2016. The Global Parent Policy had a major impact in some countries where local benefits were not as generous as in Europe. For illustration, in India, in the AXA Business Services entity, the number of maternity/paternityabsence -related days tripled in 2 years (from 5,100 days in 2016 to 15,600 days in 2018) and in US at AXA Equitable, the number increased by more than 60% over the same period.
In that context, the “Physical security” Group Standard is implemented across AXA since 2014, enabling to create a consistent approach for physical security in all entities, based on the locally identified risks, which are rated by external providers. The framework focuses on the operational procedures to mitigate risks for personnel during working hours, when travelling, or during an expatriation. It also enables to limit the impact of incidents and crises, when they occur. This Standard is applicable in the whole AXA Group and CEOs of entities are accountable for applying it.
All improvements are controlled through evidences and on-site visits from the AXA Group central teams.
This process is tightly linked to AXA’s remuneration policy that aims to support the Group’s long-term business strategy (incorporating AXA’s Dow Jones Sustainability Index “DJSI” results in the calculation of AXA’s Long-Term Incentives for 10% of the grant weight) and to align the interests of its employees and other stakeholders.
The remuneration policy approach is to attract and retain the best skills and talents, to foster employee engagement and to strengthen AXA’s leadership. Besides, benefits form a significant part of AXA’s overall employee value proposition. AXA’s policy is to target benefits coverage at a minimum level of the median of the relevant market. Benefits should include pension, healthcare and protection covers.
• we also note that around 50% of learners on Coursera have more than one certificate; ■ the sharing of a common virtual off -the-shelf learning off er, called “Click & Learn”. AXA Employees can select courses according to the time they can allocate, through more than 600 modules covering Leadership, Management, Workplace and Personal excellence topics. Around 48,000 “Click & Learn” courses have been launched and more than 30,000 are completed; ■ the eff ort made by AXA to develop the skills of the future for its people is a reality, as 50% of digital learning time was spent on hard skills such as Data science (30%), Artificial Intelligence and Machine learning (7%) and other hard skills (14%). More than 10,000 courses, representing 30% of digital learning time was spent on personal development and soft skills topics (communication, interpersonal relationships and resilience, leadership, empathy, dealing with stress, productivity, and others); ■ AXA’s competencies development is now impacting almost all employees. The number of training days of salaried workforce remained stable (327,000 days in 2018 vs. 330,000 days in 2017). However, with 97% of its employees trained at least once a year, it is a very significant increase compared to last year (+13 points compared to 2017); ■ in 2018, more than 25,000 people worldwide downloaded the supporting application and took part to the AXA Learning Games, which consisted of several challenges and events to make AXA’s people more sensitive to learning topics. The time spent on learning during the AXA Learning Games went up by 100% and we saw an impressive increase in time spent on courses that were promoted during the Learning Games. This result confirmed the Group’s hypothesis that proper marketing of our learning off er can have a large impact on the learners.
AXA established Group-wide mobility policies and processes and enabled Group-wide posting of internally and externally available jobs. All vacant jobs are advertised internally, within one global recruitment platform adopted by AXA’s entities representing 80% of AXA’s Full-time equivalents. This makes the mobility opportunities for our employees immediately visible, thereby helping AXA better source the right people for its business needs. International mobility, governed by a globally consistent International Mobility framework and the Centers of Expertise for International Mobility (CEMI), is another important enabler of the organization transformation, as AXA wants to improve the visibility of international off ers and allow fuller access to a culture of trust and achievement through direct exposure to new environments.
To tackle tomorrow’s challenges, AXA aims at setting and enriching an environment and culture, which values diversity and inclusion, for its entire people, whatever their profiles are. AXA’s workforce should reflect the diversity of the world in which AXA operates, and the middle and top management need to play a central role in reaching those objectives. Indeed, the AXA Group is convinced that diversity and inclusion management are key levers to breed talent and innovation within the organization and to remain a top player of the market.
As of end of 2018, women made up over 53.4% of AXA’s sales and non-sales workforce and held 29% of all Executives sales and non-sales positions. Since 2009, AXA has been tracking representation of women among its Top Senior Executives’ population.
The Management Committee assists the Chief Executive Off icer in the operational management of the Group.
The Top Senior Executives are AXA’s most senior leaders accountable for AXA’s long-term strategy, sustainable results and culture. A key strategic initiative has been defined by the Management Committee with the support of the Partners Group: Reach gender parity on Top Senior Executive Population by 2023.
For more information on AXA’s D&I Policy in top management, please refer to www.axa.com.
Total headcount of salaried workforce (open-ended and fixed-term contract) 125,934 emp. +8.1% 116,514 emp. Headcount of salaried workforce with open-ended contract 119,780 emp. +7.3% 111,588 emp.
Headcount of salaried non-sales force 102,843 emp. +7.7% 95,447 emp. All Executives 3,583 emp. 3,255 emp.
Headcount of salaried workforce with fixed-term contract 6,154 emp. 4,926 emp. ■ Non-sales force 4,752 emp. 4,282 emp. ■ Sales force 1,402 emp. 644 emp.
Average FTE of salaried workforce 115,768.5 ft e +8.3% 106,928.6 ft e Average FTE of salaried non-sales force 99,134.4 ft e 91,109.7 ft e
Average FTE of temporary non-salaried staff 8,586.9 ft e 8,399.9 ft e ■ Non salaried temporary staff and contingent workers 5,768.1 ft e 5,784.9 ft e ■ Trainees/Apprentices 2,818.8 ft e 2,615.0 ft e
Average length of service of salaried workforce 10.4 yrs 10.8 yrs ■ Non-sales force 10.7 yrs 11.3 yrs ■ Sales force 8.2 yrs 8.3 yrs
(a) Salaried workforce refers to non-sales and sales force employees with open-ended contracts, unless stated otherwise.
Movements of salaried workforce Net headcount evolution (entries versus departures) 707 emp. -2,176 emp.
Movements of salaried non-sales force Net headcount evolution (entries versus departures) 234 emp. -1,729 emp.
Departures 14,931 emp. -0.7% 15,031 emp. ■ Number of resignations 9,460 emp. 8,332 emp.
Movements of salaried sales force Net headcount evolution (entries versus departures) 473 emp. -447 emp.
Departures 3,895 emp. -0.4% 3,911 emp. ■ Number of resignations 2,913 emp. 2,752 emp. ■ Number of economic/collective layoff s 122 emp. 82 emp. ■ Number of individual layoff s 500 emp. 490 emp. ■ Number of retirements/pre-retirements 264 emp. 240 emp. ■ Number of departures due to external transfers (a) 77 emp. 321 emp. ■ Number of other departures 19 emp. 26 emp.
Net headcount evolution of salaried sales force (entries versus departures) 376 emp. 172 emp. ■ Number of external recruitments 585 emp. 335 emp. ■ Number of fixed-term contracts ended 209 emp. 163 emp.
(1) The XL Group, Kamet and AllianceBernstein businesses only partially reported the movement indicators.
Average number of working days 229.1 days +0.6% 227.7 days Average number of working hours per week 36.8 hrs -0.3% 36.9 hrs
■ Full-time employees 38.6 hrs 38.0 hrs ■ Part-time employees 25.9 hrs 26.6 hrs
Part-time salaried workforce ■ Proportion of part-time salaried non-sales force 10.0 % 11.1 % ■ Proportion of part-time salaried sales force 3.1 % 2.7 %
(1) The XL Group and Kamet entities did not report the labour indicators.
Absenteeism rate of salaried workforce 4.7 % 0,0pt 4.7 % ■ Proportion of absences due to sickness 69.7 % 69.9 % ■ Proportion of absences due to work related accidents 1.9 % 2.0 % ■ Proportion of absences linked to maternity/paternity leave 28.4 % 28.1 %
Absenteeism rate of salaried non-sales force 4.9 % 4.9 % ■ Proportion of absences due to sickness 69.7 % 69.5 % ■ Proportion of absences due to work related accidents 1.7 % 1.9 % ■ Proportion of absences linked to maternity/paternity leave 28.6 % 28.6 %
Compensation cost of salaried workforce (a) 9,275 M€ +9.1% 8,501 M€ ■ Proportion of fixed pay (related to wages) 77.2 % 76.2 % ■ Proportion of variable pay (related to wages) 22.8 % 23.8 %
Annual gross payroll of salaried non-sales force ■ Proportion of fixed pay (related to wages) 83.1 % 83.1 % ■ Proportion of variable pay (related to wages) 16.9 % 16.9 %
Number of training days of salaried workforce 327,011.4 days -1.0% 330,248.7 days ■ Non-sales force 224,034.3 days 226,600.0 days ■ Sales force 102,977.1 days 103,648.7 days
Percentage of salaried workforce having received at least one training course 97.8 % +13.6pts 84.2 %
More specifically, our strategy currently includes the following initiatives: ■ investments: investing in green assets, divesting from certain carbon-intensive industries (coal and oil sands), climaterelated shareholder engagement, climate risk analysis with a long-term view to align investments with a “+2°C” target; ■ insurance: underwriting restrictions on the coal and oil sands industries, “green/sustainable” products in both Property & Casualty and Life & Savings ranges; ■ operations: direct environmental footprint targets covering energy & carbon emissions, water and paper across all three Greenhouse Gas Protocol “scopes”; ■ thought leadership, NGO partnerships, academic research (AXA Research Fund); ■ in 2018, the Group has also decided to start addressing the issue of biodiversity loss through a comprehensive strategy that will be gradually rolled out.
This section describes our Responsible Investment (RI) initiatives in line with the voluntary disclosure requirements of the Taskforce on Climate-related Financial Disclosures (TCFD (1)) and the compulsory framework provided for by the French decree implementing Article 173 VI of the law n°2015-992 of August 15, 2015 for Energy Transition for G reen G rowth Act (which also considers social and governance issues in addition to environmental issues). This is why the text below occasionally extends beyond purely environmental factors. Furthermore, this text is an overview of our full “2019 Climate Risk report”, to be published on www.axa.com in the spring of 2019, based on the TCFD’s general guidance for the financial sector, and supplemental guidance for Insurance companies and asset owners.
AXA’s RI strategy is based on four main pillars: ■ integrating ESG and carbon metrics into investment processes and decision-making, using KPIs and qualitative research across most of our assets; ■ excluding sectors or companies that face acute social, human rights, ethical or environmental challenges. These sector restrictions (which apply both to investments and insurance) currently include: controversial weapons, coal mining/coalbased power generation, oil sands and associated pipelines, palm oil, food commodity derivatives, and tobacco. These policies are disclosed on axa.com; ■ promoting “Green” investments across diff erent asset classes, based on proprietary criteria derived from a recognized market standard. This includes “impact investments” delivering positive environmental or social as well as financial returns which are actively tracked; ■ active stewardship through voting and engagement on a range of ESG or sustainability issues.
Responsible Investment (UN PRI). The Group’s global RI Policy (public on www.axa.com) will be revamped to better reflect our current RI strategy.
AXA tracks its investments’ ESG performance with accuracy by leveraging AXA IM’s “RI Search” tool (and MSCI ESG data at AB), where cross-asset ESG scores and “impact-type” metrics are engineered and stored. They help monitor ESG risks, identify areas of improvement, set targets or guide shareholder engagement. The RI Search tool is also the dedicated recipient to manage ESG scores for non-listed assets, such as buildings properties, commercial real estate loans and infrastructure debt. This analysis process covers AXA’s General Account assets (Sovereign and corporate bonds, equity, property, infrastructure and Commercial Real Estate debt). RI Search is also used to develop dedicated Responsible Investment funds and can guide shareholder engagement targets. AXA IM’s RI team regularly trains portfolio managers in order for them to use RI Search optimally. In 2019, this tool will gradually be replaced by a new more comprehensive “ESG solution engine” enabling a better screening of investment universes, scores & KPI computation and reporting.
Modelling the extent to which investors may be impacted by shift ing market and regulatory trends related to the transition to a low-carbon economy is termed “transition risk”. It can be measured in financial or purely “climate” terms.
■ For equity and corporate bonds assets, AXA uses a framework that models transition risk based on “policy-related” risks arising from regulatory eff orts to curb carbon emissions and comply with the 2015 Paris Agreement to contain global warming below 2°C. Our top down approach first identifies emissions reductions targets by country (according to the “Nationally Determined Contributions”/NDCs of the Paris Agreement), then splits them into sector-level targets based on policy research and eventually into company-level targets based on their individual assets/facilities aft er which a carbon price assumption is applied to any budgetary exceedance of actual carbon intensity. It also factors a separate future “green revenue” estimate derived from an analysis of current green patents filings. This approach enables us to project companies’ potential costs or gains associated with reaching the 2°C scenario per sector and country. These results are translated into a forward-looking set of climate cost and revenue metrics per security, which represents the proportion of a company’s revenues that may decrease or increase due to climate change-related constraints. For our sovereign portfolios, we also use another methodology (developed by another service provider) to approximate a comparable “transition risk” metric based on the allocation of carbon budget by countries supporting various warming scenarios depending on various macroeconomic variables such as GDP growth, population growth and energy eff iciency.
■ In addition to this financial risk indicator, AXA is exploring ways to measure the “temperature” of its investments by positioning its corporate bonds and equity and sovereign debt assets versus the “2°C” target enshrined in the Paris Agreement. This approach captures the climate-related aspects of a company’s activities, including its direct and indirect greenhouse gas emissions, technology developments, and “green revenue” opportunities. This is derived from the carbon intensity alignment of each company relative to the sectoral carbon intensity target needed for each sector to make its contribution to reach the global 2°C target. This produces a “warming potential” per company and sector, and ultimately for AXA’s investments, for which long-term targets may be set. This is likely to become a key dimension of the “climate finance” narrative going forward.
Further explanations will be developed in our full “2019 Climate Risk” report (www.axa.com).
Our physical risk assessment for Real Estate uses “NatCat” models – generally only used to assess the impact of natural catastrophes on insured exposure – combining stochastic events (windstorms, floods, hurricanes) and a geolocalised portfolio of Real assets. Specific “destruction rates”, which factor location, building/infrastructure type and construction materials are then used to determine potential damage rates and derive a loss for each and every building/infrastructure. Again, the results of this innovative work will be disclosed in more detail in our full report.
Moreover, for corporate bonds and equities, we assess the costs of “physical risks” by modeling the expected financial impacts of extreme weather events on companies’ facilities. The physical risk cost estimates factor in vulnerability to business interruption risk and asset damage, based on the exposure of facility locations to extreme weather events.
AXA’s Responsible Investment strategy includes several sectorlevel divestments. Indeed, certain activities and products are deemed to be inconsistent with our climate strategy and broader CR goals of protecting people over the long term. In this context, AXA has developed specific “sector guidelines” which apply both
AXA supports various initiatives related to climate change and environmental protection. These include the following: ■ Climate Finance Leadership Initiative: the CFLI, which was launched in September 2018 by the UN Secretary General, and is presided by Michael Bloomberg, seeks to develop standardized and securitized investments at scale to tackle climate change; ■ Alliance of CEO Climate Leaders: a group of 50 CEOs set up by the World Economic Forum (Davos) to actively engage in global eff orts to create market opportunities for tackling climate change. Its goals are to promote strong climate action including a commitment to reduce carbon emissions, support the TCFD, support low-carbon solutions and finance, and promote adequate regulation. AXA joined in 2018; ■ IDF: AXA’s Chairman presides over the Insurance Development Forum since 2018. The IDF is a public-private partnership that brings together insurers, reinsurers and brokers, together with the World Bank and the United Nations Development Program. By optimising and extending the use of insurance and Risk Management capabilities, the IDF aims to support the G20 “InsuResilience” objective of insuring 400 million more people in emerging countries by 2020 against climaterelated disasters and of improving their climate resilience. The organisation is made up of 500 experts, including specialists from AXA, that focus on i) improving catastrophe risk modelling by developing models in emerging countries where they don’t yet exist as well as enhancing their interoperability; ii) addressing the critical role that the proper legal, regulatory environment and supportive government policies play in closing the protection gap; iii) launching new and improving existing insurance programmes at the sovereign and subsovereign level, building on successful models such as the African, Caribbean and Pacific Islands risk pools; iv) driving new inclusive insurance schemes for individuals in emerging countries aligned with the work of AXA’s Emerging Customers; and v) closing the gap between funding needed for climateresilient infrastructure in emerging countries and insurers’ role as institutional investors with the ability to invest in these assets. The IDF has already catalogued all existing catastrophe models, published a catalogue of laws, regulations and policies that enhance or impede insurance sector resources in an economy and is working on two sovereign insurance pilots in Sri Lanka and Pakistan. Since AXA’s chairmanship, the IDF has also set up a permanent Secretariat in London and co-hosted a seminal event with the Bank of England on infrastructure investment; ■ TCFD: AXA co-presided (2015-2017) the global industry-led Task Force on Climate Related Financial Disclosures (TCFD), set up by the Financial Stability Board (FSB) as well as Michael Bloomberg. The TCFD provides guidance on how to disclose climate change risk and opportunities; ■ EU High-Level Expert Group on Sustainable Finance: a senior AXA executive presided (2016-2018) the EU High Level Expert Group on Sustainable Finance, developing recommendations on sustainable finance which formed the basis for the European Commission’s “Action Plan on Financing Sustainable Growth”.
The Group has signed several NGO partnerships: ■ C40: in October 2018 AXA partnered with C40 to produce a public report on how cities’ understanding of infrastructure interdependencies informs their climate adaptation planning. The aim of the report is to help cities better manage climate risk; ■ UN Habitat: our 2016-2019 partnership with the UN agency for human settlements and sustainable urban development focuses on supporting housing reconstruction aft er disasters and implementing technical assistance at scale, to help communities to “build back better”, and to reduce fatalities and limit economic losses as a result of disasters. These (re) building guidelines will be published by Q2 2019; ■ UNISDR: AXA partnered (2015-2018) with the UN Office for Disaster Risk Reduction to support the “Private Sector Commitment for Disaster Risk Reduction”. These principles cover 5 key areas around the role that the private sector can take to further encourage Disaster Prevention, Resilience and Risk Reduction; ■ CARE: AXA’s partnership (launched in 2009) with CARE International (major international humanitarian agency delivering emergency relief and long-term international development projects) to work on both disaster risk reduction and climate change adaptation (notably better mapping climate refugee dynamics).
Insurance-related ESG risks and opportunities also benefit from a specific governance, notably the Group Underwriting Committee, which defines underwriting restrictions. The Group CR team provides a bridge with the RI-related governance. In addition, a dedicated team with Group Risk Management analyses Emerging Risks via a specific framework, tools and local network. These risks, which oft en relate to long term ESG issues, are monitored and their potential impact assessed within a risk mapping framework (regulatory & legal, environmental, socio & political, economic & financial, medical and technological).
■ -50% marketing and distribution paper consumption (kg/ client) – Scope 3.
In addition, the Group has set a target to source 100% of its electricity consumed (off ice sites and AXA-owned data centers) from renewable energy sources by 2025, in line with our “RE100” commitment (RE100 is a coalition of companies pledging to buy 100% of their electricity from renewable sources).
SCOPE 2 CO2 EMISSIONS AXA’s Scope 2 emissions per FTE decreased by 14% between 2017 and 2018 and by 52% since 2012. This performance is notably related to the purchase of renewable electricity. In order to calculate our CO2 emissions from purchased electricity, AXA uses both market-based (electricity supplier energy mix) and location-based (average country energy mix) approaches. For the entities buying renewable electricity and which have electricity consumption data by technology (such as hydro, solar, wind, biomass and geothermal or others based on power generation mix used by their providers), AXA uses a more precise “marketbased ” approach, thus attributing the corresponding emissions factors to each source type. For entities which do not have information about their energy provider’s energy mix, AXA uses a “location-based” approach (with emissions factors provided by the French Environmental Regulatory body ADEME).
SCOPE 3 CO2 EMISSIONS AXA’s Scope 3 emissions include CO2 emissions from business travel and paper consumption. In 2018, our Scope 3 CO2 emissions per FTE have decreased by 17% compared to 2012 and slightly increased by 4% between 2017 and 2018. To reduce their carbon footprint, some AXA entities also purchased carbon off sets.
AXA’s car fleet consists of sales vehicles and benefits-related vehicles. In 2018, the total distance travelled by the Group’s car fleet has decreased by 16% compared to 2017. Further, in terms of per FTE usage, there has been a decrease of 29% compared to 2012. The Group has implemented car fleet guidelines which
define carbon emission limits for all types of vehicles regardless of employee contributions. The guidelines also feature vehicle security standards and promote employee access to “safe and green driving” courses. In 2018, AXA owned 27% of vehicles emitting equal to or less than 100 g of CO2/km (and 24% in 2017), 41% of vehicles emitting equal or less than 101g and 120g (46% in 2017) and an average emissions rate of 120 g of CO2/km (119 g in 2017). Employees are also incentivized to opt for hybrid or electric cars.
In 2018, AXA also procured 58% of office paper and 41% of marketing and distribution paper from recycled sources.
Power consumption (b) MW h 363,283 344,684 KPI: Power consumption per person k W h/FTE 3,150 2,772 Evolution compared to previous year -12% TRANSPORTATION
Business travel: airplane and train (c) Thousands of km 328,523 336,918 Business travel: AXA vehicle fleet Thousands of km 266,242 223,577 Home/workplace commute (round trip) (d) Thousands of km 932,534 920,155 CO
CO2 emissions: onsite power consumption T. eq CO2 94,756 80,652 CO2 emissions: business travel: airplane and train T. eq CO2 63,494 64,948 CO2 emissions: business travel: AXA vehicle fleet (f) T. eq CO2 31,799 27,287 CO2 emissions: paper T. eq CO2 11,446 13,056 KPI: CO2 emissions resulting from onsite power consumption, paper and business travel (airplane, train, AXA vehicle fleet) per person T. eq CO2/FTE 1,75 1,50 Evolution compared to previous year -14% CO2 emissions: home/workplace commute (g) T. eq CO2 87,116 109,389 WATER
(d) Home/workplace commute estimations are based on an annual online transportation survey, issued to every AXA salaried employee. This data has been collected from survey answers by 15,084 FTEs and then extrapolated. Sites whose response rate was below 5% have been excluded from the data consolidation process. (e) The emissions factors specific to each country used for energy, train and air were revised in 2017. Source: the lnternational Energy Agency (IEA) and ADEME. (f) The AXA vehicle fleet data is collected from entities representing 93,497 FTEs.
(g) Does not include company cars, to avoid double counting with the AXA vehicle fleet data. (h) This data has been collected from entities representing 91,339 FTEs. Some sites are not equipped with water meters, which prevents accurate measurement and excludes them from the reporting scope before extrapolation.
The initiatives described below are in line with the UN SDG #1 (No poverty), #3 (Good health & wellbeing), and #10 (reduced inequalities).
In addition to the green products described in the previous section, AXA develops products with social/societal added value. For example: ■ in France, demand for responsible products from our clients continues to increase. AXA France thus created, in 2015, the “Assurance Citoyenne” label that ensures all insurance contracts benefit clients as well as positively impact society. This label is based on an assessment toolkit built in collaboration with a panel of external stakeholders and audited by an independent third party. Our engagements are communicated through the label’s four key pillars, which are the following: “Trust” (e.g. simple contracts), “Prevention” (e.g. preventive services to minimize the risks our clients are facing), “Environment” (e.g. paperless contract), and “Fairness” (e.g. product accessibility for populations usually excluded from insurance mechanisms). In 2018, AXA France commercialized 52 labeled products and now builds all its new insurance off ers around these engagements. Since 2015, 3.3 million such contracts have been sold; ■ in 2018, AXA France launched the Perspectiv’Allegro off er. This product enables clients to invest in companies that are at the heart of social and environmental challenges, such as climate change, longevity, well-being, or changes in lifestyles. All the underlying funds are evaluated on their financial performance and ESG practices, and include labelled platforms (based on off icial French savings labels). Perspectiv’Allegro accounts for 55% of these funds in Unit-Linked accounts, invested in
equities and debt (including green bonds). The remaining 45% is invested in euros funds which integrate AXA’s responsible investment screening (see 7.3). Finally, a tree is planted in France for each deposit, to promote reforestation.
Women, particularly in emerging countries, are less well insured than men, despite being a powerful force in the economy. In 2014, AXA commissioned a special report, “SheForShield”, which looked at women’s attitudes towards insurance, as well as their needs and expectations. As a result, we developed the “Women in Insurance” initiative aimed at increasing women’s access to insurance products and services that respond to their needs and expectations, in line with our “Payer-to-Partner” vision.
Further, through AXA Research Fund, we are dedicating €1 million to research to better understand and prevent health and entrepreneurial barriers for women.
In 2017, AXA also partnered with “Global Invest Her” (GIH), a platform that makes it easier for women entrepreneurs to access capital and expertise to grow their business; 260 applications were received from 57 countries and 5 women entrepreneurs were included in the mentorship program. Together with Sparknews, a social business start-up specialized in media operations, and Makesense, an international community helping social entrepreneurs solve problems, in 2018, AXA launched “Women in Business for Good”, a media and mentoring
program that highlights and accelerates women businesses addressing social challenges around the world. As part of this collaboration, 100 women entrepreneurs were identified, 6 were chosen to participate in exploration workshops with AXA teams to overcome business challenges, and 3 finalists were selected to partake in a 4 month acceleration program to design and prototype solutions.
The partnership gives us a chance to share our expertise, change and challenge perceptions, and stimulate innovative investment in tech via a mentoring program pairing women entrepreneurs with senior AXA executives. Currently running in Mexico, the US and Nigeria, the program is successfully accelerating womenled businesses, empowering them to develop professionally and co-innovate products with AXA, and become part of our international network.
AXA is leveraging the latest advancements in data science and technology to support populations in emerging markets that are vulnerable to climate change. AXA Global Parametrics creates parametric insurance that triggers payouts based on satellite and other weather data just days aft er a natural disaster or extreme weather event has struck. This allows governments to receive fast funding for emergency response or aff ected populations to receive food or cash distributions which stops them from falling into poverty traps. The weather data can also be used as an early warning system to kickstart contingency planning before an extreme event hits.
■ Africa: AXA Global Parametrics is a lead reinsurer and technical advisor to the African Risk Capacity, a mutual risk pool of African governments that purchase parametric drought insurance. The drought model, that uses satellite rainfall data, allows governments to already anticipate potential droughts in the middle of the relevant crop season; ■ Pacific Islands: The Pacific Catastrophe Risk Insurance Company is a risk pool for Pacific Islands that provides parametric typhoon and earthquake coverage to four governments. AXA Global Parametrics is also a lead reinsurer, having contributed to the $3.5 million payout to Tonga last year aft er it was struck by Cyclone Gita; ■ Caribbean Islands and Central America: AXA Global Parametrics reinsures the Caribbean Catastrophe Risk Insurance Facility which parametrically covers 21 countries in the region against cyclones, earthquakes and excess rainfall. A number of governments struck by disasters last year received payouts within 14 days; ■ Philippines: The World Bank facilitated a major $390 million coverage for the Philippines protecting 25 municipalities against typhoon and earthquake. AXA Global Parametrics is supporting the deal for the second year; ■ Senegal: with support of the West African Development Bank and in partnership with the Senegalese national agriculture insurer and bank as well as the major cotton and maize associations has covered thousands of farmers against drought. The parametric coverage was triggered at the end of 2018 with the President of Senegal himself off ering the payout to the farmers’ cooperative; ■ Cameroon and Côte d’Ivoire: AXA partners with the World Bank Group’s Global Index Insurance Facility to develop parametric drought coverage for cotton and maize farmers. AXA Global Parametrics works with AXA Cameroon and AXA Cote d’Ivoire as well as key cooperatives to build these new products.
In line with our Sustainability Risk Assessment (described under Chapter 7.1), we have identified community involvement and corporate philanthropy as key enablers of AXA’s role as a responsible corporate citizen. As a result, AXA has developed and implemented various policies and initiatives designed to address certain societal concerns, as described below. These can be correlated to the following UN SDGs: #17 “Partnerships for the goals”, #4 “Quality Education” and #10 “Reduced inequalities”.
As a responsible corporate citizen, AXA strives to play a positive role in society, by sharing our business expertise by helping to build better understanding of the risks faced by individuals and society at large, and by building a culture that promotes employee volunteering to support the communities in which we operate. AXA’s Community Investment program promotes “risk research and prevention” and assistance to those who need it most. This approach is included in the Group’s Community Investment Guidelines encouraging AXA entities to focus their community investments on 4 main pillars: health, environment, social inclusion and new technologies and data.
In 2018, 71% of the €25.8 million donated by AXA business entities and the Group (including the AXA Research Fund) were dedicated to community projects addressing these themes. In addition, AXA also provided support for other good causes, including road safety, education and humanitarian aid.
As an extension of its activities, AXA also financially supports several NGOs notably on climate change (CARE) and resilient cities (UN Habitat and C40) as well as cultural institutions to preserve and protect cultural heritage.
As the program tackling child obesity in Mexico (mentioned in our previous Annual Report) was not implemented due to local circumstances, the partnership with UNICEF was terminated.
In 2018, for its 10th anniversary, the AXA Research Fund announced a renewed commitment of €50M over the next five years during an event bringing together grantees, academic partners, public decision makers and AXA management and employees.
Every year, AXA entities organize a “CR Week” for employees to volunteer time in favor of the community and increasingly putting the AXA Hearts in Action Program at the forefront. In 2018, more than 36,000 volunteering acts during this event, representing 67,000 hours in support of local communities.
In addition, in 2018 through the ‘AXA Expérience Solidaire’ skillbased volunteering program (AXA Hearts in Action France), 47 employees performed volunteering missions at partner charities. In total, the salary expenditures paid over the 60,000 hours dedicated to these skill-based volunteering missions represent the equivalent of a €4.5 million donation.
AXA is committed to conducting its business according to the high ethical principles. This commitment is designed to ensure compliance with laws and regulations in the various jurisdictions where we operate, to earn the continued trust of our clients, shareholders, employees and business partners, but also frequently extends beyond legal obligations on a range of topics about which AXA has strong convictions.
The Group’s insurance, banking and Asset Management operations are subject to an increasing number of legislative and regulatory initiatives designed to increase customer protection in the financial services sector. In the European Union, initiatives related to financial service include the Insurance Distribution Directive, MiFID II and the regulation on Key Information Documents for Packaged Retail and Insurance based Investment Products (PRIIPs regulations).
AXA has implemented a Group Data Privacy Policy with the following objectives: ■ to ensure that AXA entities adequately protect the personal and sensitive data of customers and other persons obtained during their business activities; ■ to minimize the risk of AXA entities breaching applicable data privacy and protection laws (e.g. EU General Data Protection Regulation – GDPR).
AXA has created a Data Privacy team at Group level and a network of over 100 Data Privacy Off icers (DPOs) whose mandate is to ensure that personal and sensitive data is protected across the Group.
In addition to our data privacy policies, AXA has developed cybersecurity capabilities. Indeed, security is a business imperative. A key success factor for AXA’s “payer to partner” strategy is that customers trust AXA to keep them and their data safe and secure. While social unrest, terrorism, disruptive technologies, unpredictable natural disasters, cyber risk and misuse of information are a reality, it is critical for AXA to remain operational in case of crisis, to protect its customers’ data, employees, reputation, and assets. Security at AXA is managed by Group Security and based on three disciplines: Information Security, Operational Resilience and Physical Security & Safety. Data hacking, identity theft , and trading of sensitive information are daily threats, in a context where cyber criminals are becoming more and more professional. AXA has developed and strengthened its capabilities to protect, detect and react to cyber threats. AXA employees have a key role to play and are fully part of our Security strategy, and Group Security implements worldwide Security awareness campaigns and training.
In addition to protecting data, AXA can leverage it to address certain societal issues, for example as follows: ■ Give Data Back – AXA has created the “Give data back” website in 2017, one of the first concrete illustrations of our “Payer to Partner” strategy. Its objective is to share information with our customers and non-customers to better protect their homes by understanding and preventing the two most frequent risks (water damage and theft ). We opted for data sharing by publicizing the anonymized analysis and consolidation of our claims and policy data for seven European countries (Germany, Belgium, Spain, France, UK, Italy and Switzerland) on these risks. In Mexico, we also share our data about car accidents and identify the most dangerous roadways to alert drivers where they should take precautions to avoid accidents. Since 2017, the website counted 190,000 unique visitors. In Singapore, the website was adapted for its users to better manage and understand motor-related risks. It was launched in conjunction with the AXA Mobility Survey 2018 which seeks to understand public sentiment and perceptions of road safety, and in particular, opinions regarding the more vulnerable road users like the elderly. By sharing these insights and data with society, we hope to not only encourage safer road habits but also to help people in Singapore to understand real risks on the road.
■ Responsible AI – AXA is one of the founding member (2018) of the French association Impact AI (artificial intelligence), where we are contributed to the creation of an online library of tools for a responsible use of Artificial Intelligence within the working group “Responsible AI”. The library includes trainings, technical and governance tools. Impact AI is a “think and do tank” composed of companies, consulting firms, startups, schools and actors working on Responsible AI with 5 programs of actions, such as analyzing the perception of AI and the development of a “trusted AI”, sharing tools for a responsible use of AI, helping people adapt to the digital era, and creating partnerships to foster responsible AI among all types of actors (companies, schools, associations, etc.).
AXA is a major buyer of products and services, both for its internal operating needs and for services to its insured customers. As part of our Sustainability Risk Assessment, we have identified “responsible procurement” as an important topic for AXA. AXA’s responsible procurement strategy is based on three pillars: ■ responsible buyer: AXA strives to ensure that our supplychain practices are fair. Each AXA buyer is required to sign and adhere to the Group’s Code of Ethics, which promotes fairness, neutrality, confidentiality and transparency. The Code aims to ensure that financial, operational and reputational risks linked to suppliers selection are mitigated; ■ responsible suppliers: AXA ensures that its suppliers follow responsible practices by requiring them to sign our “Corporate Responsibility Clause” which includes complying with the principles of the International Labor Organization (prohibiting the resort to child/forced labor, promoting employee health & safety and freedom of expression, and non-discrimination).
In addition, AXA implemented a CR Risk assessment of its suppliers based on a third party platform (Ecovadis) and a risk categorization. Suppliers are classified into procurement risk categories and evaluated against five CR criteria (environment, social, product & services end-use impact, suppliers’ supply chain, and business integrity), then evaluated using the EcoVadis platform scores. An awareness training pack is available for all the procurement community via a network of AXA CR “Champions”; ■ responsible goods and products: AXA encourages the procurement of environmentally and socially friendly products and services wherever relevant.
Detailed information on our responsible procurement policy and standard is elaborated in AXA’s Group Procurement Guidelines. The document is used for supplier selection and management purposes.
Both as a multinational company and as a provider of investments and savings products, the AXA Group follows a responsible and transparent approach on tax issues. Please refer to Chapter 6 for further information on AXA’s tax policy.
This is a free translation into English of the Statutory Auditor’s report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.
THE ENTITY’S RESPONSIBILITY Pursuant to legal and regulatory requirements, the Board of Directors is responsible for preparing the Statement, including a presentation of the business model, a description of the principal non-financial risks, a presentation of the policies implemented considering those risks and the outcomes of said policies, including key performance indicators.
The Statement has been prepared in accordance with the entity’s procedures (hereinaft er the “Guidelines”), the main elements of which are available on request from the Company’s head off ice.
Our procedures allowed us to assess the compliance of the Statement with regulatory provisions and the fairness of the Information: ■ we obtained an understanding of all the consolidated entities’ activities, the description of the social and environmental risks associated with their activities and, where applicable, the impact of these activities on compliance with human rights and anti-corruption and tax evasion legislation, as well as the resulting policies and their outcomes; ■ we assessed the suitability of the Guidelines with respect to their relevance, completeness, reliability, objectivity and understandability, with due consideration of industry best practices, where appropriate; ■ we verified that the Statement includes each category of social and environmental information set out in Article L. 225-102-1 III, as well as information regarding compliance with human rights and anti-corruption and tax evasion legislation;
• substantive tests, using sampling techniques, in order to verify the proper application of the definitions and procedures and reconcile the data with the supporting documents. This work was carried out on a selection of contributing entities, which are AXA Belgium, AXA Bank Belgium, AXA France VIE, AXA France IARD, AXA Partners Holding SA, 1001 Vies Habitat, AXA Investment Managers Paris, AXA Konzern AG, AXA Business Services, AXA Insurance DAC , AXA Assicurazioni S.p .A, AXA ITALIA Servizi S.c .p .A , AXA MPS Ass.Vita S.p .A , AXA MPS Ass. Danni S.p .A , AXA Partners CLP Operaciones S. de R.L.de C.V., AXA Assistance Mexico S.A. de C.V., AXA Seguros S.A. de C.V., AXA Assurance Maroc, AXA France IARD Maroc, AXA France Vie Maroc, Philippine AXA Life Insurance Corporation, Charter Ping An Insurance Corp, AXA Versicherungen AG and AXA Services Switzerland AG, and covers between 18% and 77% of the consolidated data relating to the key performance indicators and outcomes selected for these tests; ■ we referred to documentary sources and conducted interviews to corroborate the qualitative information (measures and outcomes) that we considered to be the most important; ■ we assessed the overall consistency of the Statement based on our knowledge of all the consolidated entities.
We believe that the work carried out, based on our professional judgement, is suff icient to provide a basis for our limited assurance conclusion; a higher level of assurance would have required us to carry out more extensive procedures.
MEANS AND RESSOURCES Our work was carried out by a team of 10 people between September 2018 and March 2019 and took a total of 8 weeks.
CONCLUSION Based on our work, nothing has come to our attention that causes us to believe that the non-financial statement is not in accordance with the applicable regulatory provisions and that the Information, taken as a whole, is not presented fairly in accordance with the Guidelines.
QUANTITATIVE INFORMATION (AMONG WHICH KEY PERFORMANCE INDICATORS): ■ environment: energy consumption, distance covered by business travel and vehicle fleet, CO2 emission by scope, water consumption, off ice and marketing paper consumption, waste production, “green” investments; ■ human resources: headcounts and distribution, number of external recruitments, number of resignations, number of dismissals, annual gross payroll (fixed and variable), number of training days, absenteeism rate; ■ human rights: number of emerging customers, number of entities which adhered to “Binding Corporate Rules”; ■ social: number of Stakeholder Advisory Panels, cash donations for community investment projects, number of employees who participated to volunteering acts, total hours contributed to volunteering acts; ■ corruption and tax evasion: tax expense of the consolidated financial statements.
AXA Group is committed to promoting and protecting internationally-recognized human rights, fundamental freedoms, health and safety, as well as the environment in the course of its business activities.
To comply with the requirements of French law (1), AXA has adopted a vigilance plan (the “Vigilance Plan”) that sets out how AXA has established and implemented safeguards to identify and prevent serious violations of human rights and environmental abuses, and submits its report on the implementation of the Vigilance Plan over the year 2018.
(1) Law No. 2017-399 of March 27, 2017 relating to the duty of vigilance of parent companies and instructing companies (“devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre”) and Article L. 225-102-4 of the French Commercial Code.
The Vigilance Plan applies to AXA Group companies and their respective activities, including intra-group activities and operations, and all AXA employees, worldwide.
The Vigilance Plan extends to the activities of service providers and suppliers to AXA Group companies with whom there is an established business relationship.
AXA is committed to protecting AXA employees’ human rights, specifically the principles of freedom of association, the right to just and favourable working conditions, and non-discrimination, through: ■ AXA Compliance & Ethics Guide, available on the AXA Group’s website, with which employees need to annually certify compliance; ■ promoting the 10 guiding principles of the UN’s Global Compact, of which principles 1 & 2 relate to human rights and principles 3 to 6 to labour standards, and encouraging reporting of breaches to the compliance function; ■ setting ambitious Diversity and Inclusion (D&I) targets and initiatives.
See further details in Section 7.2 “Social Information – Employee relations and work conditions – Secured and processed work conditions” of this Annual Report.
AXA was the first insurance group to have adopted privacyrelated Binding Corporate Rules, available on the AXA Group’s website, to define processing principles and actions (e.g. trainings, governance, responsibilities) to ensure data protection and the responsible transfer of data. The Binding Corporate Rules are the result of consultations with European data protection authorities, and constitute an internationally approved data privacy contractual framework for the treatment of customer, employee and other stakeholder Personal Data that multinationals such as AXA encounter and collect in the course of their business activities.
Part of AXA’s sites benefit from environmental certificates such as BREEAM, LEED, HQE. Please refer to Section 7.3 “Climate Change and the Environment – Own Operations – 2018 performance overview – Power consumption” of this Annual Report for further details on AXA’s certifications.
Please refer to Section 7.3 “Climate Change and the Environment” of this Annual Report for further details on the strategy, policy, targets and results.
Please refer to Section 7.3 “Climate Change and the Environment – Investments” of this Annual Report for detailed information about AXA’s responsible investment governance, policy, targets and results.
As a business partner, AXA works with service providers and suppliers including professional service firms and advisers as well as companies providing technical and maintenance services.
It is essential for AXA to dialogue on the Vigilance Plan with the French employee representatives, and to further promote dialogue over this Vigilance Plan with its employees, shareholders, investors, business partners as well as public institutions, international organisations and community groups.
Please refer to Section 7.1 “Introduction – CR governance & stakeholder dialogue” of this Annual Report for further details about the stakeholder dialogue implemented by AXA.
One of the first steps in implementing the Vigilance Plan was the presentation to Group entities in France or abroad of the new French regulations on the duty of vigilance of parent companies and instructing companies, along with the penalties incurred for non-compliance with the resulting legal obligations.
This reporting process enabled the Group entities to carry out an internal risk assessment and to identify areas where improvement was necessary to implement the Vigilance Plan at their level. At Group level, the conclusions drawn from this reporting enabled the identification of a few entities whose internal practices and policies were not in strict compliance, on certain points, with the Vigilance Plan. To remedy this discrepancy, the entities at issue determined, in association with the Group, the appropriate corrective actions to implement locally, e.g.: establishing a system for human rights and environmental audits of local service providers, inserting CR clauses in certain commercial contracts, or amending local reporting policies to cover human rights and/or environmental matters.
At entity level, most alert procedures currently apply to serious violations relating to financial, banking and accounting matters, fight against corruption, data theft , discrimination, workplace harassment and the protection of health, hygiene and security at work and more generally, violation of laws, regulations and standards of the AXA Group.
In 2018, entities were reminded that they were required to set up a human rights and environmental alert procedure or to extend the scope of their alert procedure in accordance with local regulations. At the date of this Annual Report, a few entities are still adapting the scope of their alert procedure in order for it to cover the protection of human rights and of the environment.
The AXA Group selected its panel of main suppliers in 2018 using an approach based on an analysis of supplier risk by purchasing category and volume. Most of the main suppliers were evaluated, inter alia, thanks to the specialised evaluation platform EcoVadis. With the assessment, the Group ascertained that very few of its main suppliers had been identified as deficient. EcoVadis has sent to the said suppliers a corrective action plan. The main suppliers belonging to the panel of the AXA Group may be assessed through EcoV adis every two years.
Most contracts concluded or renewed in 2018 included a “Corporate Responsibility clause” or “CR clause”, requiring Group suppliers to be socially and environmentally responsible and to abide by International Labour Organization standards.
The AXA Group also wanted to share its Vigilance Plan with the international organisation CARE, with which it has a longstanding partnership, in the interests of addressing key social and/or environmental issues such as disaster risk reduction, or climate change and financial inclusiveness, to identify areas for progress.
For more information about CARE, please refer to Section 7.3 “Climate Change and the Environment – Investments – Climate and ESG “outreach” and engagement – Outreach, memberships and partnerships” of this Annual Report.
APPENDIX IV GROUP EMBEDDED VALUE AND SOLVENCY II OWN FUNDS 474
The AXA Group’s Internal Control Over Financial Reporting (ICOFR) is a process designed under the supervision of the Group Chief Financial Off icer (CFO) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Consolidated Financial Statements.
The IFC program is based on the Group Internal Control Standard and the Group Internal Control Policy, which include additional specific requirements for the IFC framework.
(a.2) IFC GOVERNANCE Management, including the Group Chief Executive Off icer (CEO), is responsible for establishing and maintaining adequate ICOFR.
The IFC program is steered by the Group IFC Committee chaired by the Group CFO sponsoring the program, with Group CRO responsible for Group Internal Control function and involves the Planning Budgets Results Central (PBRC) department and other relevant AXA departments . The IFC program and the conclusion of management as to the eff ectiveness of AXA Group’s ICOFR are also reviewed by AXA’s Audit Committee.
(a.3) IFC PRINCIPLES AXA Group’s ICOFR includes policies and procedures that provide reasonable assurance that: ■ the maintenance of records accurately and fairly reflect the transactions and dispositions of Group assets; ■ the transactions are recorded as necessary to permit the preparation of financial statements in accordance with the applicable generally accepted accounting principles; ■ the receipts and expenditures are being made only in accordance with the authorization of management and directors of the Group; and
In order to assess the eff ectiveness of ICOFR, financial reporting risks are initially identified at Group level with a focus on identifying those risks that may result in a material misstatement of Consolidated Financial Statements not being prevented or detected in a timely manner. This top-down and risk-based approach enables to identify in-scope entities and processes.
This internal certification process across all in-scope entities is designed to assist AXA’s management in its evaluation of AXA Group’s ICOFR and to support its conclusion as to the eff ectiveness of AXA Group’s ICOFR.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be eff ective may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of eff ectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or if the degree of compliance with the policies or procedures deteriorates.
I Report of the Statutory Auditors on internal control over financial reporting
Net financial charges, which include interest and similar charges net of income from loans and investments, amounted to €919 million, compared to €744 million in 2017, an increase of €175 million taking into account the issuance of €2 billion in subordinated debt and foreign exchange hedging costs as part of the acquisition of XL Group.
Operating expenses amounted to €441 million, compared to €443 million in 2017, taking into account the continuation of the cost savings program, partly off set by the priority given to Innovation.
At December 31, 2018, total assets amounted to €79,033 million, versus €73,065 million at December 31, 2017.
Investments in subsidiaries, net of valuation allowances, totaled €71,317 million, versus €62,373 million at year-end 2017, representing an increase of €8,944 million, reflecting: ■ €12,995 million related to the acquisition of XL Group shares; ■ €1,028 million in capital increases, of which €620 million for XL Group (financing of debt repayment);
Tax receivables amounted to €27 million, a reduction of €379 million, of which €369 million related to the refund of the 3% tax on dividends paid to shareholders.
Other receivables at €255 million, have declined by €454 million given the lack of dividend receivables compared to €514 million at year end-2017.
Total Amount VAT included of invoices concerned (euros) 28,452,033 757,656 11,323,001 3,471,091 5,829,683 21,381,430
Percentage of revenue VAT included of the period 14.81% 0.39% 5.89% 1.81% 3.03% 11.13%
Total Amount VAT included of invoices concerned (euros) 76,303,661 36,726,186 19,068,539 3,424,447 10,479,765 69,698,937
Percentage of the total amount VAT included period purchases (euros) 0.10% 0.45% 0.00% 0.00% 0.01% 0.46%
Total Amount VAT included of invoices concerned (euros) 180,929,088 376,618,799 16,094,452 3,301,882 2,801,366 398,816,500
Percentage of the total amount VAT included period purchases (euros) 31.21% 64.96% 2.78% 0.57% 0.48% 68.79%
Payment delay used for these calculation is French legal delay (30 days aft er the invoice issuing day). No invoice out of these disclosures due to receivables or payables due to litigation or not accounted.
In 2018, The Company did not acquire any significant equity interests within the meaning of Article L.233-6 of the French Commercial Code.
Subordinated debt 12,885 10,667 Financial debt 19,522 13,230 Operating payables Tax payables 4 1
Profit on ordinary activities before tax (VI = III + IV + V) 2,593 3,788
1 - Closing balance sheet summary a) Capital - Ordinary shares (in Euro million) 5,593 5,557 5,554 5,554 5,553 b) Ordinary shares (numbers in million) 2,442 2,426 2,425 2,425 2,425 c) Bonds convertible into ordinary shares (numbers in million) 7 7 7 - 2 - Income statement summary (in Euro million)
a) Gross revenues before sales tax 3,394 2,709 3,608 5,287 4,161 b) Pre-tax income from continuing operations, before depreciation, amortization and releases 1,785 1,079 252 3,799 2,610 d) Net aft er-tax income aft er depreciation, amortization and releases 2,392 1,747 432 4,958 307 3 - Per share data (in Euro)
Purchase of fixed assets ■ Intangible assets - - ■ Tangible fixed assets - - ■ Financial assets 14,956 2,041
Change in: ■ operating receivables (841) 136 ■ operating payables (14) 209 ■ cash and cash equivalent 555 (1,004)
5 Old Broad Street - EC2N 1AD - LONDON - Royaume-Uni - - AXA PARTNERS HOLDINGS SA 152,000 21,419 100.00% 158,280
O’Hara House, One Bermudiana Road - Hamilton Bermuda HM 08 - - 395 -70, Shindaebang-dong, Dongjak-gu - SEOUL - Corée du Sud - - AXA GLOBAL RE (ex AXA GLOBAL P&C ) 196,723 63,497 95.74% 490,268 25, Boulevard du Souverain - 1170 BRUXELLES - Belgique - - 120 -122, avenue Hassan II - 21000 CASABLANCA - Maroc - - -
Cœur Défense - Tour B - La Défense 4 - 100 Esplanade du Général de Gaulle - 92932 PARIS LA DEFENSE - - -
A. DETAILED INFORMATION CONCERNING SUBSIDIARIES AND INVESTMENTS ACCOUNTING FOR IN EXCESS OF 1% OF AXA’S SHAREHOLDERS’ EQUITY
AXA LIFE INSURANCE COMPANY 677,719 2,292,946 78.01% 2,384,259 NBF Platinium Tower 1-17-3 Shirokane - Minato-ku - - -
Guild House, Guild Street, IFSC, Dublin - Irlande - - AXA LIFE INVESTMENT SERVICES 120,000 (115,245) 100.00% 120,000 Guild House, Guild Street, IFSC, Dublin - Irlande - - -
AXA SERVICES SAS (ex AXA TECHNOLOGY SERVICES) 38,893 109,431 99.92% 236,406 Les collines de l’Arche - 76 route de la Demi Lune - - 5 Old Broad Street - LONDON EC2N 1AD - Angleterre - - -
AXA PARTNERS HOLDINGS LTD (ex GENWORTH FINANCIAL EUROPEAN GROUP HOLDINGS LTD)
Building 11 Chiswick, 566 Chiswick High Road, Chiswick, London, W4 5XR - Angleterre
(a) For Insurance companies: gross written premiums. For real estate companies: rental revenues. For holding companies: dividends. For financial services companies: gross banking revenues.
The significant account movements are presented in the tables in these notes.
In accordance to regulation CRC 2008-15, repealed and replaced by regulation ANC n°2014-03 chapter “titre VI, chapitre II, section 4 Plans d’options d’achat ou de souscription d’actions et plans d’attribution d’actions gratuites aux salariés” (especially Articles 624-15 and 624-16) and chapters “titre IX, chapitre IV, section 5 Comptes financiers” (especially Article 945-50) treasury shares are recorded in “Marketable securities”. At December 31, 2018 41,24 5,315 shares were allocated to hedging purposes, representing €987 million.
Find below a summary of options and performances or units shares granted in 2018 and 2017 to members of the Management Committee paid by the Company: (in Euro)
INCOME The income statement distinguishes between ordinary operations and capital operations: ■ ordinary operations include dividends, revenues from other investments, financial expenses, operating expenses and income from transactions in marketable securities;
■ capital operations include gains or losses on the disposal of investments in subsidiaries and aff iliates and portfolio management investments, impairment charges and reversals in respect of these securities and related receivables, gains and losses arising from exchange rate movements, charges and reversals of provisions for risks and charges, and exceptional income and expense.
Employee benefit liability was reviewed and a valuation was carried out, in accordance with the Recommendation ANC n° 2013-02, so as to measure any additional adjustment necessary to ensure the coverage of defined post-retirement benefit obligations and for accounting purpose. The method 1, as defined by this Recommendation has been applied: past service costs are recognized in profit and loss over the vesting period and the expected return on asset is used in developing the net periodic pension cost. Pursuant to this review, the employee benefit liability recognized was nil as at December 31, 2018. Additional information on employees’ defined benefit obligations is provided in Note 26.2 of consolidated financial statements.
■ Interest rate swaps: these transactions are recognized by applying the accrued interest method. A distinction is made in the income statement and balance sheet between income from the principal transaction, which is the subject of the swap, and the net income from the swap transaction. The nominal value of the swaps serving as bases for interest rate swaps is recognized off -balance sheet; ■ Derivative products qualifying as hedges against foreign exchange risk (exchange rate or currency swaps, currency futures) are recognized off -balance sheet as a reciprocal liability and receivable commitment. For currency options, the premium paid on acquisition is recognized as an asset on the balance sheet in the ‘cash instruments’ account. When the option is exercised, the premium is recorded in the income statement. The same is true when the option is not exercised at term.
Other shareholders’ equity includes the undated deeply subordinated debts (TSS), amounted to €4,032 million, compared to €4,640 million in 2017, taking into account the $750 million (or €569 million) repayment of TSS.
(a) The net increase of €10,834 million is mainly related to the acquisition of XL Group shares for €12,995 million. (b) A decrease of €2,999 million primarily due to the repayment of $2 billion (€1,729 million) in loans granted to the US operations and the repayment of a €925 million loan granted to AXA Mediterranean Holding.
(a) Net impairments allowance by €1,869 million of which €1,449 million on AXA Equitable Holdings, Inc. remaining shares and €467 million on AXA Partners Holdings Limited shares.
Other debt issue expenses 125 81 8 36 3.7. Unrealized foreign exchange losses
Unrealized foreign exchange losses amounted to €3,133 million, including €2,829 million related to the deferred recognition of foreign exchange losses in line with statutory hedge accounting principles, more than off set by unrealized gains on investments in subsidiaries. This item also reflects unrealized losses on assets and liabilities denominated in foreign currencies attributable to the eff ects of their revaluation at the closing exchange rate. The increase of €124 million compared with 2017 is mainly due to favorable impact of the US dollar on debts, following the AXA Equitable Holdings, Inc.’ s securities disposal.
Subordinated debt stood at €12,885 million compared to €10,667 million in 2017, up €2,218 million, mainly reflecting the issuance of €2 billion in subordinated debt and an unfavorable foreign exchange rate impact of €176 million.
Financial debt amounted to €19,522 million, compared to €13,230 million at December 31, 2017, an increase of €6,292 million, reflecting the increase in loans granted by Group entities to manage the company cash position, as a way to upstream to the company cash related to the pre-Initial Public Off ering reorganization transactions and as a contribution to the financing of the acquisition of XL Group.
December 31, 2018 Less than 1 year 1 to 5 years
Other payables, including tax and social payables (b) 278 278 -
The Company had 3 employees and 2 executive off icers at the balance sheet date.
Interest rate swaps 31,685 631 Cross Currency swaps (long term) 10,328 (380) Foreign Exchange swaps (short term) 16,521 (212)
Foreign Exchange Options 10,695 Equity options - 261 Index options - 156
(a) External and internal debts. (b) Both eligible and not eligible derivatives to hedge accounting.
(2) A 10% depreciation of the Euro leads to a 5.9% improvement in the fair value of debt, a -103.2% deterioration in the fair value of derivatives and a -1.2% deterioration in the fair value of loans.
None of the transactions operated by related parties, that are still outstanding at year end or that occurred during the course of the year, account for the distinctive characteristics of transactions to be disclosed in accordance with the ANC regulations n° 2014-03 (article 831-3).
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at December 31, 2018 and of the results of its operations for the year then ended in accordance with French accounting principles.
AUDIT FRAMEWORK We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is suff icient and appropriate to provide a basis for our opinion.
INDEPENDENCE We conducted our audit engagement in compliance with independence rules applicable to us, for the period from January 1, 2018 to the date of our report and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) no. 537/2014 or in the French Code of Ethics (Code de déontologie) for Statutory Auditors.
– verify the accuracy of the value in use calculated, – confirm that the value in use, which is based on projected cash flows, has been adjusted to account for debts; ■ with respect to the participation in AXA Equitable Holdings Inc., assess the data, assumptions and methodologies with respect to the assessment performed by management to determine the value in use and the resulting impairment.
Verification of the management report and of the other documents provided to the shareholders
REPORT ON CORPORATE GOVERNANCE We attest that the Board of Directors report on corporate governance sets out the information required by Articles L. 225-37-3 and L. 225-37-4 of the French Commercial Code (Code de commerce).
Concerning the information considered by your Company as likely to have an impact in the event of a public cash or exchange off er, provided in accordance with the requirements of Article L. 225-37-5 of the French Commercial Code (Code de commerce), we have verified its consistency with the underlying documents provided to us. Based on this work, we attest the accuracy and the fair presentation of this information.
APPOINTMENT OF STATUTORY AUDITORS We were appointed as statutory auditors of AXA SA at the Shareholders’ Meetings held on February 28, 1989 for PricewaterhouseCoopers Audit and on June 8, 1994 for Mazars. At December 31, 2018, PricewaterhouseCoopers Audit and Mazars were in the thirty and in the twenty-fift h consecutive year of total uninterrupted engagement, respectively.
The financial statements were approved by the Board of Directors of AXA SA.
As specified in Article L. 823-10-1 of the French Commercial Code (Code de commerce), our statutory audit does not include assurance on the viability of the Company or the quality of management of the aff airs of the Company.
As part of an audit conducted in accordance with professional standards applicable in France, the statutory auditor exercises professional judgment throughout the audit and furthermore: ■ identifies and assesses the risks of material misstatement of the financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be suff icient and appropriate to provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; ■ obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the internal control; ■ evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and the related disclosures made by management in the financial statements;
We also provide the Audit Committee with the declaration provided for in Article 6 of Regulation (EU) no. 537/2014, confirming our independence within the meaning of the rules applicable in France such as they are set in particular by Articles L. 822-10 to L. 822-14 of the French Commercial Code (Code de commerce) and in the French Code of Ethics (Code de déontologie) for statutory auditors. Where appropriate, we discuss with the Audit Committee the risks that may reasonably be thought to bear on our independence, and the related safeguards.
APPENDICES A APPENDIX IV GROUP EMBEDDED VALUE AND SOLVENCY II OWN FUNDS
The split by geographies is detailed below: ■ France (insurance and banking activities, and holdings); ■ Europe, consisting of: • Switzerland (insurance activities),
• Asia - Direct, consisting of: • AXA Global Direct Japan,
• Asia Holding; ■ AXA XL, consisting of: • XL Group (insurance activities and holdings) as acquired on September 12, 2018,
Underlying Earnings correspond to Adjusted Earnings without the following elements net of policyholder participation, deferred acquisition costs, VBI, taxes and minority interests: ■ realized gains and losses and change in impairment valuation allowances (on assets not designated under fair value option or trading assets); and
Earnings per share (EPS) represent AXA’s consolidated earnings (net of financial charges related to undated subordinated debt and preferred shares recorded through shareholders’ equity - Group share, and mandatory exchangeable bonds recorded through shareholders’ equity - Minority interests and financial debt), divided by the weighted average number of outstanding ordinary shares.
Surplus derived from a Solvency II balance sheet. It is defined as the excess of market value of assets over best estimate liabilities and Risk Margin as per Solvency II regulation.
The Solvency II ratio is estimated primarily using AXA’s internal model calibrated based on an adverse 1/200 years shock and assuming equivalence for AXA Equitable Holdings, Inc. in the US. For further information on AXA’s internal model and Solvency II
LIFE & SAVINGS NET INFLOWS Life & Savings Net Inflows are defined as the collected premiums (including risk premiums, fees and revenues), net of surrenders, maturities, claims paid and other benefits paid. This definition is applicable to all Life and Savings products as well as Life-like Health products, with the exception of Mutual Funds products.
NBV (NEW BUSINESS VALUE) The value of newly issued contracts during the current year. It consists of the present value of future profits aft er the costs of acquiring business, less (i) an allowance for the time value of financial option and guarantees, (ii) cost of capital and nonfinancial risks. AXA calculates this value net of tax.
MARGIN ANALYSIS The M argin A nalysis is presented on an underlying earnings basis.
Underlying net technical margin includes the following components: ■ mortality and morbidity margin: the diff erence between income or earned premiums for assuming risk and the cost of benefits and claims charges directly linked to the claims experience or its anticipation (death or disability); ■ surrender margin: the diff erence between the benefit reserve and the surrender value paid to the policyholder in the event of early contract termination; ■ GMxB (Variable Annuity guarantees) active financial risk management: the net result from GMxB lines corresponding to explicit charges related to these types of guarantees less cost of hedging. It also includes the unhedged business result; ■ policyholder bonuses if the policyholders participate in the risk margin; ■ ceded reinsurance results; ■ other changes in claims and insurance reserves: all the reserve strengthening or release coming from changes in valuation assumptions, claims experience, additional reserves for mortality risk and other technical impacts such as premium deficiencies net of derivatives if any; and
There are certain material diff erences between the detailed line-by-line presentation in the Statement of Income and the components of Life & Savings Margin Analysis as set out below: ■ for insurance contracts and investment contracts with Discretionary Participation Features (DPF): • gross premiums (net of deposits), fees and other revenues are allocated in the Margin Analysis based on the nature of the revenue between “Fees & Revenues” and “Net Technical Margin”,
• policyholders’ interest in participating contracts is reflected as a change in insurance benefits in the Statement of Income. In the Margin Analysis, it is allocated to the related margin, i.e. primarily “Investment Margin” and “Net Technical Margin”,
The following references to the sections of this Annual Report correspond to the components of the Board of Directors’ report as approved by the Board of Directors of the Company.
Sections Pages 1. Trends/Earnings/Financial position and key performance indicators 14 to 19; 32 to 97 and 446 to 473 2. Use of financial instruments by the Company when relevant for assessing its assets and liabilities, financial position, and profits and losses 3. Description of major risk factors and uncertainties 164 to 180 and 195 to 214 4. Internal control and risk management procedures 181 to 194 5. Acquisition of significant equity interests in companies headquartered in France 448 6. Events subsequent to fiscal year end/Outlook 95 to 97 and 369 7. Dividend distributions over the last three years 16 to 17 8. Information on market and liquidity risks (interest rate, exchange rate and stock price fluctuation risk)
9. Purchase and sale of the Company’s own shares 380 10. Transactions involving Company stock completed by corporate off icers 151 13. Adjustment of the rights of holders of securities with a claim on the capital of the Company n/a 14. Extra-financial performance statement 398 to 434 15. Financial risks related to climate change 170 and 414 to 423 16. Research and development activities 427 17. Terms of payment 448 19. Corporate governance report 481
Pages 1. Responsible persons 1.1 Indication of responsible persons 445 1.2 Statement by responsible persons 445 2. Statutory Auditors 2.1 Names and addresses of the auditors 365 2.2 Resignation, removal or re-appointment of auditors 365 3. Selected financial information 3.1 Historical financial information 15 to 17 3.2 Financial information for interim periods n/a 5. Information about the issuer 5.1 History and development of the issuer 5.1.1 Legal and commercial names 385 ; 394 5.1.2 Place and number of registration 385 5.1.3 Date of incorporation and length of life 385 5.1.4 Registered off ice, legal form, applicable law, country of incorporation, address and phone number of its registered off ice 5.1.5 Important events in the development of the issuer’s business 20 to 21 ; 37 to 44 ; 96; 97; 369 5.2.1 Principal investments completed 37 to 44 5.2.2 Principal investments in progress 37 to 44 5.2.3 Principal investments contemplated 37 to 44 6. Business overview 6.1 Principal activities 6.1.1 Nature of the operations and main activities 22 to 30 and 45 to 48 6.1.2 New products and/or services 22 to 30 6.4 Degree of dependence on patents or licenses, industrial, commercial or financial contracts or new manufacturing process n/a 6.5 Basis for statements made by the issuer regarding its competitive position 14 and 33 to 36
APPENDIX VIII EUROPEAN COMMISSION REGULATION (EC) NO. 809/2004 OF APRIL 29, 2004 - CROSS-REFERENCE TABLE
Report of the Statutory Auditors on the corporate governance report 471 to 472