What is multi-asset impact investing?
Impact Investing focuses on financing businesses and projects designed to have an intentional, positive, sustainable - and vitally - measurable effect on society and/or the environment, while simultaneously delivering financial market returns. By integrating positive environmental, social and governance (ESG) criteria, and excluding certain assets, impact investing covers a broad range of complex social and environmental objectives that aim to build a better future. Key to this is the concept of additionality - to qualify as a true impact investment, there is a requirement to prove that the investment achieves something that would not be achieved without it.
Multi-asset impact investing combines both approaches in order to produce an adaptable, responsible investment portfolio that delivers sustainable financial results.
Why consider multi-asset impact investing?
Concerns over the multiple challenges the world is facing, such as climate change and a scarcity of natural resources, are on the rise. As a result, an increasing number of investors are interested in investment vehicles that can help to protect both society and the planet, while generating investment performance. Given these new challenges and complexities, it is vital investors have access to solutions which can help them navigate a highly changeable market environment, and investment in multi-asset could be a key solution.
In a world undergoing significant social and environmental change, a mainstream movement towards responsible investing creates new opportunities. At AXA IM, we strongly believe that investing in green and socially responsible projects and companies can be an excellent way to help deliver long-term sustainable returns. In our view, an active approach to impact investing in sustainably-run, innovative and/or transitioning businesses, can help to achieve consistent, long-term sustainable growth.
In a multi-asset portfolio, we can access fixed income and equity opportunities around the world. In fixed income, we can hold green bonds and transition bonds to finance projects with specific and measurable impact. In equities, we can unearth companies that offer a product or service that helps address the planet’s biggest challenges.
A flexible multi-asset approach has the potential to adjust asset allocation dynamically to better navigate market conditions and the changing macroeconomic environment. Combining this with impact investing presents the possibility to find investment opportunities that are not only good financially, but also good for the planet and good for people.
Our multi-asset impact investing strategy
Our multi-asset impact strategy leverages the breadth and depth of AXA IM’s investment expertise across geographies and asset classes, combined with our proprietary impact approach and ESG research and scoring.
AXA IM listed impact approach
In simple terms, our impact approach is about investing in prosperity for people and prosperity for the planet. We assess investments using our listed impact framework which consists of 5 key pillars:
Investments should be made with an upfront objective of having a specific positive social or environmental outcome.
Invest in companies where the positive outcomes are of material significance to the beneficiaries, the company, or to both.
Decisions on allocating donations are judged on the likely ability to resolve unmet environmental and social needs.
Company's corporate practices, or products and services, may significantly undermine the positive impact it is generating elsewhere.
There needs to be a clear methodology and commitment to measuring and reporting the social and environmental performance of investments.
An integrated framework
This impact framework is integrated into our multi-asset team’s investment process which aims to capture global growth through long-term convictions at both asset allocation and security selection levels. The team then use the flexibility of the strategy to navigate changing market conditions and apply a multi-tiered approach to risk mitigation.
The strategy’s primary goal is to deliver sustainable and attractive returns through an active multi-asset approach, while generating a positive and measurable impact.
To monitor and measure the impact of our investments, we combine ongoing, top-down Environmental, Social and Governance (ESG) research with rigorous, bottom-up security analysis. The tools that we have developed in-house provide qualitative and quantitative indicators to supplement our reporting. In doing so, we are able to measure our portfolio’s positive impact in contributing to the achievement of UN’s Sustainable Development Goals (SDGs), including:
- 1 - No poverty (End poverty in all its forms everywhere)
- 2 - Zero hunger (End hunger, achieve food security and improved nutrition and promote sustainable agriculture)
- 3 - Good health and well-being (Ensure healthy lives and promote well-being for all at all ages)
- 4 - Quality education (Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all)
- 5 - Gender equality (Achieve gender equality and empower all women and girls)
- 6 - Clean water and sanitation (Ensure availability and sustainable management of water and sanitation for all)
- 7 - Affordable and clean energy (Ensure access to affordable, reliable, sustainable and modern energy for all)
- 8 - Decent work and economic growth (Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all)
- 9 - Industry, innovation and infrastructure (Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation)
- 10 - Reduced inequalities (Reduce inequality within and among countries)
- 11 - Sustainable cities and communities (Make cities and human settlements inclusive, safe, resilient and sustainable)
- 12 - Responsible consumption and production (Ensure sustainable consumption and production patterns)
- 13 - Climate action (Take urgent action to combat climate change and its impacts)
- 14 - Life below water (Conserve and sustainably use the oceans, seas and marine resources for sustainable development)
- 15 - Life on land (Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss)
- 16 - Peace, justice and strong institutions (Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels)
The targeting of specific SDGs does not imply the endorsement of the United Nations of AXA Investment Managers, its products or services, or of its planned activities and does not constitute, explicitly or implicitly, a recommendation for an investment strategy.
Our ACT range is designed to enable our clients to take action on global issues such as climate change through their investments. These strategies go beyond ESG integration, either following a process in which investment decisions are driven by ESG themes or seeking out intentional, positive, measurable and sustainable impact.