Global asset management firm AXA Investment Managers (AXA IM) announced the introduction of a strengthened voting policy aimed at urging portfolio companies to consider environmental and social issues. Key features of the new policy include a timeline to divest from climate laggards that fail to make sufficient progress, and requirements for senior management incentive pay to ESG and climate elements.
AXA IM discussed the new policies with the release of its 2021 Stewardship Report, highlighting the firm’s engagement, voting and stewardship activities over the past year, and its plans and priorities going forward. The report indicated that climate issues made up more than a third of AXA IM’s engagements in 2021, with other major engagement areas of focus including corporate governance, human capital, and resources and ecosystems, with 80% of engagements during the year linked to the UN SDGs.
For 2022, AXA IM identified priority engagement areas including climate, biodiversity, Just Transition, and human rights.
AXA IM’s new policy introduces a “three strikes and you’re out” rule for climate laggards, under which the firm will actively engage over three years with companies from a focus list of those considered material from a portfolio and climate perspective, after which time AXA IM will divest is specific objectives are not reached.
AXA IM’s 2022 voting policy also promotes the integration of ESG elements in companies’ pay policies, pushing companies to add “tangible, relevant, meaningful key performance indicators” aligned with sustainable business strategies in executive remuneration plans. AXA IM has stated that companies exposed to climate issues must have executive remuneration aligned to climate strategy objectives, as well as requiring net zero strategies including short, medium and ling-term emissions reduction targets, and that it may vote against management, board chairmen and CEOs at companies that don’t meet these requirements.
Backing up its enhanced engagement focus, AXA IM recently announced a series of appointments to its Corporate Governance & Stewardship team, including Héloïse Courault as Senior Corporate Governance and Stewardship Analyst, Alexandre Prost as Senior Corporate Governance and Stewardship Analyst, and Constance Caillet as Corporate Governance and Stewardship Analyst.
Marco Morelli, Executive Chairman at AXA IM said:
“Stewardship is one of the main tools we have to effect change, and engagement is at the forefront our approach as a leading responsible investor. 2021 was a pivotal year during which we engaged meaningfully with hundreds of companies on a range of critical issues, but also introduced tougher policies designed to set clear red lines for issuers acting too slowly or without credible plans to achieve net zero by 2050. Already this year in 2022, we have continued this approach with our new voting policy, which encourages boards to adopt clear ESG commitments and targets, and the introduction of our ‘three strikes and you’re out’ escalation policy for climate laggards.”