Warning: members of the public are being contacted by people claiming to work for AXA Investment Managers UK Limited.  Find out more information and what to do by clicking here.

Environmental

Putting ESG to work: A case study in the telecoms sector

  • 26 March 2021
  • 5 min read

The global policy and regulatory environment is changing fast, pushing companies towards more sustainable practices and encouraging investors to change too. Environmental, social and governance (ESG) factors have become a fundamental route to assess corporate health. But as more companies seek to address ESG, how can investors make meaningful assessments about their relative progress?

At AXA IM we have more than 20 years’ experience of building responsible investment strategies1 and have set up detailed methods that inform and guide our fixed income managers.

In some areas that is straightforward: investments in energy companies require deep knowledge of how climate change and associated regulations will affect business models. But we also see ESG having powerful effects in sectors that at first glance do not lie on the front line.

This article will examine how AXA IM analysts handle certain ESG issues, challenges and opportunities in the telecommunications sector, and how their work can potentially bring value to investors.

Making ESG sector specific

Telecoms companies face the same problem as many others when it comes to ESG analysis – there is a huge range of potential inputs and criteria that make up the full picture, but harmonization of data across players, and how they report it, remains quite low. Our first step is to look top down at the fundamental drivers and specificities of the sector in question, and then to examine how those apply to key ESG issues.

One example of this in telecoms is in the exponential rise in connectivity needs and data traffic, that will be further exacerbated by the rollout of 5G. According to GSMA, the mobile communications industry association, the 5G era could result in a potential rise in traffic data of up to 1,000 times. Factoring in the infrastructure to cope with it, this could lead to the consumption of two to three times as much energy2 . According to France-based think tank The Shift Project and depending on different assumptions for traffic growth and energy efficiency, the digital industry could emit up to 5% to 6% of the world’s carbon emissions by 2025, or even more in certain scenarios.

  • [1] AXA IM was given its first first RI mandate in 1998 with the goal of supporting sustainable job creation in France.
  • [2] GSM Association
Read the full article
Download article (545.72 KB)
Responsible Investing

Our responsible investing approach

We actively invest for the long-term prosperity of our clients and to secure a sustainable future for the planet

Find out more
Are you a financial advisor, institutional, or other professional investor?

This section is for professional investors only. You need to confirm that you have the required investment knowledge and experience to view this content. This includes understanding the risks associated with investment products, and any other required qualifications according to the rules of your jurisdiction.

    Not for Retail distribution

    This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.

    This promotional communication does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee that forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    Before making an investment, investors should read the relevant Prospectus and the Key Investor Information Document / scheme documents, which provide full product details including investment charges and risks. The information contained herein is not a substitute for those documents or for professional external advice.

    The products or strategies discussed in this document may not be registered nor available in your jurisdiction. Please check the countries of registration with the asset manager, or on the web site https://www.axa-im.com/en/registration-map, where a fund registration map is available. In particular units of the funds may not be offered, sold or delivered to U.S. Persons within the meaning of Regulation S of the U.S. Securities Act of 1933. The tax treatment relating to the holding, acquisition or disposal of shares or units in the fund depends on each investor’s tax status or treatment and may be subject to change. Any potential investor is strongly encouraged to seek advice from its own tax advisors.

    Past performance is not a guide to current or future performance, and any performance or return data displayed does not take into account commissions and costs incurred when issuing or redeeming units. The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. Exchange-rate fluctuations may also affect the value of their investment. Due to this and the initial charge that is usually made, an investment is not usually suitable as a short term holding.

    Risk Warning

    The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested.