AXA’s new climate strategy sets the bar high

The signing of the Paris Agreement in 2015 at the end of COP21 was a historic first: 196 parties embarked on an ambitious course of action to combat climate change, calling on countries to transform their economy to limit the rise of global temperature to well below 2ºC above pre-industrial levels (now generally agreed as +1.5°C). Since then, AXA has engaged in a comprehensive program to reorient its financial flows in line with the Paris agreement, complemented by the launch of a new asset class, a green investment target and further coal restrictions.

A major focal point of the new climate strategy is AXA’s overarching framework to align its investments with the Paris Agreement, committing to a 1.5°C warming potential by 2050. Warming potential is defined as the impact that AXA’s investments may have on the climate, expressed in temperature, as explored in the 2019 Climate Report. Moreover, AXA will publish annual updates.

Another core element of AXA’s new Climate strategy is the reinforcement of its coal exit policy, which broke new ground in 2015 when AXA became the first mainstream investor to divest from the coal industry, then was already reinforced in 2017. The new coal investment policy tightens existing restrictions on coal investment and underwriting, and now includes a commitment to a complete coal exit by 2030 in Europe and the OECD, and 2040 in the rest of the world.

Finally, AXA’s Climate strategy formally launches the concept of the Transition Bond, which is intended to finance companies that are aiming to transition from brown to green, without achieving Green Bond eligibility status. These bonds will play a key role in supporting the energy transition towards a low-carbon society.