“On the road to a climate transition plan”

As a global insurer and investor, AXA supports major social and environmental changes. Expanding its commitment to society through inclusive insurance and climate transition is one of the three pillars of its 2024-2026 strategic plan. On the occasion of the publication of two climate reports, Martin Powell, Head of Sustainability of AXA, explains how, through ambitious objectives, the Group is preparing its climate transition plan.

You took over as head of AXA’s sustainable development department one year ago. What are the main ESG challenges facing AXA in the coming years?

In the past, we had to deal with each crisis independently. Today, it is totally different: risks are interconnected and we now live in a polycrisis era, as the AXA Future Risks Report has shown for several years. Global warming is a crisis gas pedal and we need to stop it. A warmer globe means fewer resources such as water. This has already provoked conflicts in some regions. A warmer globe also means a higher sea level and an increased intensity of natural catastrophes. So, what do we do? First, our role is to mitigate climate change to reduce the risks for the population. We are convinced it is not too late, we still can live in a world which is not overheating. Secondly, we have to protect our communities from the already visible effects of climate change. which implies increasingly ambitious risk prevention and stronger commitments to helping society adapt. Mitigation, adaptation and prevention are our key priorities.

Extending inclusive insurance and pursuing its commitment for the climate transition are two objectives of AXA 2024-2026 strategy. Could you detail them and explain how to achieve these goals?

We want to accelerate on the accessibility of the insurance to vulnerable population in emerging markets but also in mature markets. This is the meaning of our new product, launched in May 2024, dedicated to micro-businesses in France. Today, AXA covers 14 million clients with an inclusive product, mainly in emerging markets. Our aim is to reach 20 million customers by 2026 in both emerging countries and European markets. On the climate transition side, we want to trigger the transformation. As an insurer, we are targeting to reach6 billion euros in green premiums between 2024 and 2026, in sectors such as energy, construction or transport. We also have the ambition to keep accelerating as an investor, by financing the transition in the amount of 5 billion euros per year. In addition to financing the transition, AXA also a partner of the transition with its customer: we aim to provide 9,000 climate adaptation solutions & services by 2026 to support them on this journey. We will not make it alone.

Your department has just published two reports: a regulated report and a document titled “Roadmap to a climate transition plan”. Why publishing two climate reports this year?

Transparency is key in a context of growing regulations. First, we have published our Article 29 Report, which is a regulatory reporting under Article 29 of the French Energy-Climate Law. It includes key information such as our alignment with the European taxonomy and our ESG criteria for  governance. To follow our voluntary publication tradition, we wanted to go one step further. This is why we have published our Climate and Biodiversity report titled “A Roadmap to a Climate Transition Plan”. As you may know, with the implementation of the European Corporate Sustainability Reporting Directive (CSRD)*, we intend to publish a Climate Transition Plan in 2025. Our “Roadmap to a Climate Transition Plan” shows the pathway that we will follow to make it a success. As well as highlighting our vision and strategy, you will find great concrete examples of our actions as an insurer and as an investor.

If we had to pick out three key figures from this report, what would they be and why?

First, I think of the warming potential and the implied temperature rise. The first one gives the “temperature” of our government bonds portfolio. In 2023, it has reached 2.1°C, which is 0.4°C below the benchmark**. The second one gives the “temperature” of our listed corporate bond & equities portfolio. It has reached 2.2°C, the same level as the benchmark. Thirdly, I would like to highlight that only 1.5% of our investment portfolio is exposed to fossil fuel energy. On the coal side, we have updated our exposure, based on the Global Oil & Gas Exit List (GOGEL) of Urgewald***. On the oil & gas side, we have added the private assets. Since 2019, our exposure to coal has decreased by 60% and our exposure to oil & gas has decreased by 48%.

This is the last report before the Corporate Sustainability Reporting Directive (CSRD) comes into force, requiring publishing a climate transition plan. How is AXA preparing for this?

AXA is finishing its “double materiality” analysis in the context of corporate sustainability reporting in the EU. It means that we are going to measure the impact that our operations have on society and the environment alongside the impact of society and the environment on our operations. Then, we will evaluate the materiality of the risks and opportunities. This is a big challenge all across the company but we all are going to win with this transparency exercise: more data will be available, we will see more clearly the path we want to follow and we can compare with other companies that are doing the exact same work, and we also welcome that!

* The CSRD sets new European standards and extra-financial reporting requirements. The first companies will have to apply the new rules for the first time in the 2024 financial year, for reports published in 2025.

** Benchmark: MSCI World AC for equities and Ice BofAML Global Broad Market Corporate for corporate debt.

*** Urgewald is a non-profit environmental and human rights organization. For 25 years, it has been fighting against environmental destruction and for the rights of people. Urgewald and more than 50 partners publish the Global Oil & Gas Exit List (GOGEL), a public database that provides a detailed breakdown of the activities of oil and gas companies worldwide. It covers 1,623 companies accounting for 95% of global oil and gas production.