AXA IM reaches €13bn milestone in green, social and sustainability bonds and unveils a strengthened framework to assess such investments
AXA Investment Managers (AXA IM) announces that it has reached €10 billion in green bond, €2bn in social bond and over €1bn in sustainability bond investments 1 across its portfolios as a result of the rapid expansion and diversification of issuances since 2019.
These investment milestones reflect AXA IM’s responsible investment strategy, as part of its commitment to making a meaningful impact in tackling issues such as climate change, and are also in line with AXA Group’s climate strategy 2 .
AXA IM’s increased exposure to the green, social and sustainability bond (GSSB) market was also largely driven by a record number of issuances following the launch of various sovereign green bonds, the overall diversification of issuers in 2020 and an increase in social and sustainability bond issuance in response to the COVID-19 pandemic.
To further capture the best issuances from these market developments, AXA IM has strengthened its GSSB framework3 to regulate the quality of issuances and communicate to the market its expectations from issuers as the market continues to evolve.
More specifically, the framework has been updated to include AXA IM’s criteria on how it assesses social and sustainability bonds, given the significant growth in the market as a result of the pandemic and the growing area of focus this represents for the business. It demonstrates how AXA IM has strengthened its over-arching assessment of each GSSB bond issuance, particularly in relation to the consistency between an issuer’s own sustainability ambitions in line with its green, social or sustainability bond issuance. In addition, the methodology allows the business to monitor and measure its contribution to the United Nations Sustainable Development Goals (UN SDGs) through these investments.
Commenting on this achievement, Johann Ple, green bond strategy manager at AXA IM, said: “The green, social and sustainability bond (GSSB) market has seen significant growth in recent years. We believe that such growth further highlights the importance of these bonds as credible alternatives to the conventional bonds in the current market, hence why we have strengthened and adapted the way we look at the market to further improve the quality and quantity of green, social and sustainability bonds in our portfolios. Alongside the updates to our framework, the improved governance from ICMA’s Green Bond Principles4 – of which AXA IM is a member – and the work of international non-profit organisations such as the Climate Bonds Initiative5 , which we fully endorse as a business, have also helped to monitor the market and make it more credible.
“Further adding to AXA Group’s commitment to reach 25 billion euros in green investments by 2023, we believe that green, social and sustainability bonds will continue to be an important tool in our impact strategies given the alignment with our wider purpose to act for human progress by investing for what matters and our commitment to tackling climate change through our investments.
“With our strengthened framework and assessment process, we will actively engage with issuers and market participants more broadly to further strengthen this market standard and support the transition towards a low carbon economy.”
- Figures as at end of January 2021.