AXA IM continued to strengthen its engagement activities in 2023

• 681 engagements with 503 entities in 2023, representing a 14% increase from 2022
• Climate change remained the largest area of engagement in 2023
• Corporate governance remained key focus
• Enhancements of Engagement Report at portfolio level, bolstering commitment to transparency.

“Investment does not have to be a binary choice between sustainability and strong financial performance over the long-term. Clients need clarity on responsible investing and they also want to see their assets perform. Our 2023 Stewardship Report sets out how we work to meet both of these goals.

We believe that proper consideration of ESG factors is additive to performance, which is why a robust and measurable stewardship and engagement strategy is fundamental to our approach. I am confident that by maintaining the emphasis on transparency, commitment to a more sustainable future, and engagement with likeminded stakeholders, we will strengthen our ability to deliver sustainable long-term performance for our clients,” said Marco Morelli, Executive Chairman at AXA IM.

AXA Investment Managers (AXA IM) today announces the release of its 2023 Stewardship Report¹ , showcasing the importance of stewardship in its responsible investment strategy, a key pillar of its new strategic plan.

In the context of its integrated stewardship approach² , which allows the information gained during engagement to be fed into investment-decision making, AXA IM conducted 681 engagements with 503 entities, representing a 14% increase in engagements compared to 2022, including 298 engagements with objectives. Furthermore, 200 of the total engagements were conducted either at board or C-suite level.

As detailed in AXA IM’s 2023 Stewardship Report:

• Climate change remained the main theme of engagement, representing 37% of the overall engagements, compared to 28% in 2022. This substantial increase was largely driven by higher frequency sustainability dialogues conducted by portfolio managers and credit research analysts, for which climate change represented 46% of engagements, illustrating the integration of climate considerations throughout the investment process, in line with AXA IM’s net zero commitment.
• Along with Human capital (17%), corporate governance was the second most targeted theme, reflecting the strongly held belief that sound governance structure is a pre-requisite to successful integration of environmental and social issues. 38% of our climate change-related engagements with objectives also addressed corporate governance issues, with a focus on board oversight of climate risks and climate-related management incentives.
• 16% of overall engagements were linked to biodiversity, with deforestation remaining a priority.  Additionally, in September 2023, AXA IM was one of the launch investors in Nature Action 100, a collaborative programme seeking to engage policymakers and companies in key sectors in reversing nature and biodiversity loss by 2030.
• AXA IM increasingly tackled the just transition theme in its engagements and dialogues, whilst expanding and enriching Human Rights engagement discussions with tech companies through collaboration with other investors and organisations. Moreover, AXA IM co-founded an investor coalition³  to address and engage on mental health and well-being risks related to technology companies' products and services.
• AXA IM continued its climate laggards engagement initiative as part of its “Three strikes and you’re out” policy, supporting concrete improvement from several companies it engaged with. Two companies set new formal net zero ambitions whilst many improved their targets, policies and reporting. For the other companies, AXA IM used escalation techniques, including voting against the Board, publicly pre-disclosing voting intentions and rationale, and co-filing a shareholder resolution.
• During 2023, AXA IM voted on a total of 54,782 proposals at 4,856 meetings, representing 97.6 % of the meetings that could be voted at.
• Last year, AXA IM started recording all votes influenced by dialogue and engagement, demonstrating the application of one of the overarching principles of its voting policy, which entails voting in a highly informed manner that considers the context and characteristics of the companies.
• Overall, on the total number of votes influenced by engagement, pre-AGM dialogue with investees had a positive impact on 47% of the votes.
• Although most of the dialogues influencing votes were linked to corporate governance-related issues (executive pay-related issues; board composition; shareholder rights), 61% of votes used specifically as engagement escalation were linked to climate issues.
• Average opposition rate was 15.1%, with at least one vote against cast in 62% of the meetings voted on. The highest level of opposition remained for board issues (38% of votes against), followed by executive remuneration (27% of votes against).

Building on progress in 2024, and expectations for the voting season

AXA IM will continue to focus on expanding its engagement and voting efforts across areas believed to be most material for investors, including:

• Bolstering its commitment to transparency and following the recent enhancements to its disclosure approach for its engagement activities at portfolio level, this year, AXA IM will release an enhanced version of its Engagement Report at portfolio level, providing additional qualitative information to clients on the content of discussions, the level of progress and the objectives.
• Corporate governance remains a key focus with follow up on key updates to AXA IM’s policy⁴  and principles with action, including on Climate lobbying, Virtual AGMs, and Executive pay fairness. Furthermore, as of 2024, the wider workforce experience will be further considered when voting on executive pay proposals.
• This year, to provide the highest level of transparency to all its stakeholders, AXA IM has started to disclose the rationale for all votes against ESG-related shareholder proposals.
• As an investor active in real assets, private markets and fund selection, AXA IM will also aim to  create sustainable value by encouraging the managers and partners it work with to adopt best practices when it comes to integrating sustainability in their strategy, transparently explaining the specific characteristics of engagement in alternative asset classes. 
• In 2024, policy advocacy will continue to remain an area of focus, with the aim of supporting progress on net zero objectives by resolving implementation barriers, and creating the conditions required to achieve net zero objectives within the financial sector, as well as within the real economy. A key priority in 2024 for AXA IM will be to continue to promote a framework that supports effective stewardship in different asset classes, addressing issues which could impede the effectiveness and influence of shareholder engagement and voting in the European Union and the UK. 

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To read the AXA IM 2023 Stewardship report, please click here.

Notes to editors

‘Engagement with objectives’ and ‘sustainability dialogues’:

Since 2022, AXA IM has distinguished between ‘engagement with objectives’ and ‘sustainability dialogues’.

• The former seeks to influence change at investee companies, by defining specific objectives related to the key ESG issues at stake for the targeted company and is most often led by the Responsible Investment Research and the Corporate Governance Research teams, often with the participation of fixed income and/or equity teams.
• The latter, often led by investment teams, aims to have a better understanding of the sustainability-related risk profile of a position held in portfolios, potentially feeding into future targeted engagement.