The metric for assessing climate impact is designed using corporate emissions and other potential investments contributing to the Paris Agreement, the UN commitment to keep global temperatures from rising. below 2 degrees during this century.
Additionally, Mr. Christensen’s team also uses artificial intelligence solutions in its investment decisions around real assets, using the technology to account for climate risks.
According to AXA IM, as ESG integration becomes an industry standard in the coming years, the transition to impact investing, which proactively seeks a positive social or environmental effect, will be inevitable.
Speaking in Sydney, Matt Christensen, global head of responsible investment at AXA IM, said his company hoped to have its temperature gauge launched by the end of the year.
“We’re working on a warming gauge, which allows us to look at overall client portfolios as a group against a benchmark and say: are we on the right track? » said Mr. Christensen.
“There is a lot of fintech innovation in this area, the key is making it work for investors and there are still too many assumptions behind it.”
The company said it has partnered with a fintech that has modeled the carbon budgets that will be needed to meet the Paris Agreement, looking at countries as well as sectors.
The process also includes consideration of the UN Sustainable Development Goals as well as indicators to assess investors’ expectations of companies.
Regarding AXA IM’s use of AI in real asset investing, Christensen said: “There is a whole line of catastrophe insurance that looks at storms, mudslides and we are starting to use this information to do a better job of geolocating the assets we can place. in a physical risk type approach.
“If you think about company supply chains, what are their exposures to future storms? Which companies are most exposed, and better understand: have they taken into account the risk linked to climate change for their physical assets?
“These are all fintech solutions. We’re just at the beginning of trying to model with them and make decisions.
The asset manager believes that institutional investors can use the United Nations Sustainable Development Goals (SDGs) as the next step in responsible investing from ESG screening.
Isabelle Scemama, AXA IM Managing Director, Real Assets, added that the SDGs will be important for asset managers in her sector, who will face challenges to continue generating profits as real estate returns slow.
“Energy intensity per square meter must improve by an average of 30% by 2030 to be on track to meet the global climate ambitions set out in the Paris Agreement.
“The UN SDGs on climate will provide useful guidance, and asset managers will need to engage closely with tenants and take direct action to ensure these assets remain viable and continue to generate value. »
Mr Christensen added that climate reporting will need to be adapted to make it acceptable to investors.
“We say that this portfolio, for example, saved 15,000 tonnes of CO2 equivalent emissions. Well, what does that really mean? he said.
“We’re trying to cut some costs, which means we’ve taken 3,000 cars off the road. I think that’s the narrative that the industry is looking to create to create these noble but very difficult ideas to process in the human brain.
