Listed companies have the potential to deliver lasting positive impact and positive returns

The time to act is now

Impact investments aim to address the world’s biggest global challenges: climate change, biodiversity and social inequality. 

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We believe that we can deliver significant a positive and measurable impact while generating financial returns by investing in listed equities. As opposed to private equity markets, which focus on local impact, we focus on global leaders with scalable products that can positively affect the lives of millions of people or millions of hectares of land. 

Investing in companies capable of driving broad-based benefits

We analyse companies’ capacity to have a global impact as part of the 'materiality' and 'additionality' components of our five-pillar Impact Assessment Framework. 

• Materiality’ examines the severity of the issues addressed by the company and therefore how important it is to find solutions.
• ‘Additionality’ analyses a company's commitment to offering products that are superior to existing options: more efficient, easier to scale, and more cost-effective.

We would argue that companies that are financially stable, well-managed, and strategically well positioned are best placed to make a long-term, broad-based positive impact.

Competitive edge translates to pricing power, which is key for increasing profitability and cash flows. Cash flows enable a company to invest in research and development and deliver innovative solutions that can scale effectively. These companies are more likely to sustain their operations during financial stress and expand when opportunities arise, resulting in a greater, more reliable, and growing environmental and social impact.

On top of this, companies exposed to the strong structural growth driving energy transition, biodiversity protection and social progress are inherently resilient to cyclicality and geopolitical pressures. Their products and services address critical, often previously unmet needs, offering superior solutions that make them indispensable, non-substitutable, and robust regardless of broader economic conditions.

Regular engagement with company management is central to impact investing, providing another opportunity to enhance company value. Helping companies increase the scale and scope of their impactful products and services and improve access through better pricing and distribution can have a positive financial effect, as well as improving a company’s positive contribution.

For example, while producers of renewable energy equipment – such as solar modules, inverters or batteries – are essential for combating climate change, they lack competitive edge, making them  highly vulnerable to macroeconomic events and increasing competition. These companies have encountered challenges in recent years, which is reflected in their investment performance.

In contrast, a highly specialised power semiconductor company, whose products achieve the highest energy efficiency in the industry can sell their products to all the equipment producers. The competitive differentiation of their product underpins their market leadership, pricing power and ability to continue to invest in R&D, enhancing their overall positive impact. 

Creating impactful and high-quality portfolios

As well as the contribution a company makes, an effective impact investing strategy will consider a company’s place in portfolio construction. Impact portfolios can include companies with growth and defensive characteristics and provide diversification across geographical areas and sectors.

The breadth and depth of analysis needed to identify innovative companies that provide both positive impact and strong financial returns means that a strong analytical resource is central to successful impact investing. It requires teams with global reach in both impact and investment analysis; additionally, the governance and reporting requirements of impact investing take further resources. Large asset management companies with extensive existing analytical resources are better placed to meet this challenge than many smaller, specialised boutique investors. 

Refocusing on the drivers of impact and return

With these ideas in mind, we’ve recently reviewed our own impact investment process to integrate rigorous financial criteria, alongside impact analysis, when selecting companies. At the same time, we strategically increased our allocation to established technology enablers, while reducing exposure to earlier-stage disruptive companies, particularly those with dependencies on raw materials and facing heightened competition and regulatory hurdles.

As a consequence of these enhancements there has been a marked improvement in the performance of our impact portfolios. The AXA People & Planet Equity Fund, for example, has demonstrated remarkable resilience through recent market volatility in 2025, showcasing the strength of our process during both market downturns and sharp recoveries. This robust performance reflects the quality earnings profile of the portfolio, which offers inherent resilience during economic contractions and effectively captures upside when markets rebound.

Past performance is no guarantee of future returns, of course, and the period under consideration is quite short. Additionally, the impact universe excludes a significant number of stocks in the  financial services, communication services, and conventional technology sectors, which have borne the brunt of recent volatility. This can complicate short-term comparisons with broader indices.

But we believe that this demonstrates that impact investing has the potential to not just create positive change but deliver positive long-term returns.