The scientific evidence is clear – global warming is a reality that brings with it risks and uncertainty. We want to help minimize these risks. Which is why AXA is reducing its CO2 emissions to a minimum. We want to achieve net zero emissions in our operations by 2025.
The fight against climate change forms part of our overall strategy – both our corporate strategy and our investment strategy. Our goal is to bring our business in line with the Paris Agreement. Strategic measures we plan to take in order to reduce long-term CO2 emissions include, among other things, a net-zero emissions target for our investments and insurances, green investments (e.g. green bonds and impact funds), support for the transition to low-carbon business models and a complete exit from the coal industry.
Coal is one of the most carbon-intensive energy sources and remains one of the biggest causes of man-made emissions that contribute to increasing the concentration of CO2 in the atmosphere. Scientific studies show that reducing coal dependency is vital if we are to minimize greenhouse gas emissions and limit global warming. In 2015, AXA became the first major insurance company to announce that it would start to gradually pull out of the coal industry. In concrete terms, this means that by 2030 we will no longer have any assets invested in coal companies in OECD or EU countries, nor will we insure them. We will complete our exit from coal worldwide by 2040.
“A 4-degree warmer world is not insurable.”
In line with the Paris Climate Agreement, AXA has set itself the goal of limiting the “global warming potential” of its investments to less than 1.5°C by 2050 compared to pre-industrialization levels. Since 2022, AXA has used the “Implied Temperature Rise” from MSCI ESG Research – a forward-looking metric, expressed in degrees Celsius, designed to show the temperature alignment of companies, portfolios and funds with global temperature goals.
The ITR for the AXA Group trended as follows for 2021 and 2022:
According to the Climate and Biodiversity Report published by AXA, the Implied Temperature Rise for the AXA Group portfolio stands at 2.5%, which is slightly lower than the market average of 2.7°C. However, this figure also shows that concerted efforts are needed to decarbonize the economy as a whole and limit global warming to 1.5°C, as called for by scientists and policymakers in order to limit the risk of climate change impacts.
Since 2019, AXA has been a member of the Net Zero Asset Owner Alliance. The members of this alliance – currently more than 40 institutional investors with around USD 6.6 trillion in assets – have pledged to reduce the CO2 emissions of their investment portfolios to net zero by 2050. They also plan to collaborate to improve measurement methodology and promote the transition to a low-carbon economy. AXA has set a reduction path and an ambitious interim target: to reduce CO2 emissions from its investments by 20 percent between 2019 and 2025. In this way, AXA is already making an important contribution to achieving its net zero target in the next few years.
Being transparent about the impact of our investments is important to us, as is the disclosure of greenhouse gas emissions associated with our investment activities. As part of our commitment to the Montreal Carbon Pledge, AXA has published the CO2 footprint of its investments (equities and government and corporate bonds) every year since 2014. The data is consolidated and analyzed for all AXA country units. The data for AXA Switzerland is also included. The CO2 footprint of our own investments is steadily decreasing, falling by 47 percent between 2014 and 2022. This reduction is mainly due to the exit from fossil fuels and to investments in companies producing renewable energy.
Transition bonds were designed by AXA and Crédit Agricole CIB. They support projects by companies that are carbon-intensive today but are working to make improvements and can play an important role in decarbonizing the economy. AXA’s transition bonds bridge the gap between “already green” projects that are eligible for green bond financing and those that are not but could still make great strides in reducing CO2 emissions. For example, the conversion from heavy fuel oil to liquefied natural gas engines can be financed for shipping companies until they are able to switch to wind or hydrogen-powered ships.