Investing in companies with the strength to create change

The challenges the world faces are – by now – well understood. And people being what they are, there is no shortage of energy, innovation and radical thinking about how these challenges can be met.

But not all of these ideas are destined to succeed. Even ideas that have a sound scientific basis can fail because there simply isn’t the infrastructure, momentum or funding to get them up to scale. This is why we consider financial and strategic strength to be equally important in our decisions as a company’s environmental or social contribution.

We want to invest in the winners of the transition, the companies that will sustain and support biodiversity, social progress and energy transition into the future based on sound business models and sustainable growth. This gives us the best chance to meet our dual objective of supporting the transition to a more sustainable economy while delivering a positive return for investors.

Looking for opportunities to do good

We invest based on three key investment themes that are underpinned by the global structural shift to a more sustainable economy. Within these broad themes, we have been looking for investable trends that we believe will support long-term investment returns while helping to create positive change. 

Biodiversity – Making agriculture more efficient

Agriculture is the cause of 80% of deforestation and uses 50% of habitable land. However, global food production will have to increase by 50% to meet demand in 2050.

Combined with the growing recognition of the urgent need to preserve ecosystems to combat climate change, this has created opportunities for companies driving innovation throughout the sector.

• Using cameras, sensors, big data and AI in soil analysis and crop treatment to reduce the use of chemicals that can be harmful on the overall ecosystem.
• Replacing diesel-powered tractors with electric alternatives to reduce emissions. Autonomous tractors that can be monitored with smartphones could also increase resource efficiency.
• Regenerative farming practises can restore biodiversity.

Energy Transition – decarbonising the energy sector

Countries with net zero targets together represent 92% of global GDP.¹  Decarbonising the energy sector will be vital to achieving Net Zero, requiring an estimated $5trn per year over the next 30 years.²

Finding viable alternatives to fossil fuels in power generation will be a crucial element to enable the pathway to net zero. For many countries it is also important to achieving energy security and reducing the overall cost of energy for industry and consumers.

• The International Energy Agency’s (IEA) World Energy Outlook 2023 net zero emissions scenario relies on a tripling in global installed capacity of renewables by 2030.³
• Alongside the development of renewable energy sources, we see opportunities for companies providing the technology that helps incorporate renewable energy into the gird and facilitate balanced, efficient and secured distribution of clean energy

Social Progress – tackling obesity

On current trends, 51% of the global population could be overweight or obese by 2035, with the economic impact rising to around $4.3tn annually by 2035.⁴  Investing in the prevention and treatment of obesity helps protect people's health and provides an opportunity to benefit from governments seeking to reduce the cost to healthcare budgets.

• Increasing access to healthy, balanced nutrition and the opportunity to exercise helps prevent obesity.
• Treatments are evolving with the development of novel therapies and bariatric surgery.

Finding sustainable businesses that are making a difference

We combine in-depth impact and financial analysis to identify the companies that we think have the best chance of benefitting from the structural opportunities we see.

Our investment approach for AXA ACT People & Planet Equity Fund

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Source: AXA IM, December 2023. For illustrative purposes only. These are internal guidelines which are subject to change without notice.

In order to achieve the dual target we have several stages in the investment process. The first step is always the sustainability analysis based on alignment with UN SDG targets. Each company is individually analysed by the dedicated in-house sustainability analyst team.

The second step and final investment decisions are made by the portfolio managers, based on their own qualitative assessment of the company and its management. Our focus is structural growth, competitive advantage and proven execution capabilities.

We invest based on the belief that the fund’s financial and non-financial objectives are not just compatible, but inevitably entwined. Making positive contributions to the planet and society relies on companies that can grow and maintain momentum. Similarly, companies that are making a measurable difference have the potential to benefit most from the growing demand from governments and consumers to protect the natural environment, reduce carbon emissions and promote a better life for everyone.

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

Companies shown are for illustrative purposes only as of 30/11/2023 and may no longer be in the portfolio later. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute 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.

The information contained herein is based on the companies’ commitment toward climate transition and is not a reliable indicator of their future financial results.