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1、AXA GROUPIn line with Frances Article 29 and recommendations from the Task Force on Climate-related Financial Disclosures and the Taskforce on Nature-Related Financial Disclosures(Beta v0.1)JUNE 2022Climate and Biodiversity Report Accelerating TransitionEditorial 01Cross interview:Frdric de Courtois
2、 and George Stansfi eld 02Executive Summary 04Report structure 07Context 081.1 AXAs key climate&biodiversity commitments put in context 081.2 The science and politics of climate change 101.3 International climate action framework 111.4 UN Convention on Biological Diversity,(COP15),the COP21 for biod
3、iversity?121.5 EU Sustainability Finance Strategy 121.6“Just Transition”getting very real 14Governance 152.1 Board Oversight 152.2“Role in Society Steering Committee”(RISSC)152.3 Investments 162.4 Insurance 162.5 Remuneration 172.6 ESG Acceleration Team 17Strategy 183.1 AXAs Sustainability Strategy
4、183.2 Climate change 193.3 Biodiversity 223.4 ESG Integration 253.5 Training and capacity building 42Metrics and Targets 444.1 AXA For Progress Index 444.2 Climate Metrics 454.3 Green Investments 574.4 Biodiversity Metrics 594.5 Direct environmental footprint management 62Risk Management 635.1 Intro
5、duction 635.2 Climate risk assessment and stress tests 645.3 Climate-related health insurance impact 665.4 Climate-related impact on AXAs own operations 675.5 Climate-related physical risks impact on the real estate investment portfolio 685.6 Climate-related physical property(re)insurance impact 705
6、.7 Climate-related liability risks 75Other information 776.1 Sustainability Ratings 776.2 Sustainability-related memberships 776.3 Academic Research 786.4 Independent limited assurance report(PwC)796.5 Disclaimer 81 3.4.5.6.1.2.AXA GROUP 2022 Climate and Biodiversity Report June 202201AXA GROUP 2022
7、 Climate and Biodiversity Report June 2022Covid-19 and the war in the Ukraine are stark reminders that with an interconnected and globalized economy,come interconnected risks.To add to this complex situation is climate change,where climate-related perils can cross political borders and cause complex
8、 and compound impacts to human societies and their natural and built environments.The urgency to act on climate change continues to increase.Since AXAs last Climate Report,the IPCC published its latest report which concludes that there is no time to lose;we must accelerate the energy transition.Whil
9、e there have been some reductions in emissions,globally,they continue to increase,and the physical impacts of climate change are already being observed.The longer mitigation action is delayed,the less feasible some strategies may become.It is also imperative to increase adaptation eff orts,to reduce
10、 risk and increase resilience.While short term measures are required to respond to these immediate crises,there is an even more important role for coordinated,long-term action.The costs of transitionTo acknowledge that Europe is experiencing an energy crisis is not to be an apologist for inaction.Ra
11、ther,it is necessary and responsible observation that the global economy is still heavily dependent on fossil fuels:for energy generation,heating of homes and offices,for mobility,and industrial processes,among other things.There are costs associated with every energy choice we make,and we are at th
12、e beginning of a process whereby immediate transition risks and longer-term physical risks must be balanced carefully.Beyond current price increases,choosing“business as usual”fossil fuels may have less of an immediate impact to consumers and businesses.However,we will incur immediate costs related
13、to energy sovereignty,and longer-term costs associated with GHG emissions and in particular the physical impacts of climate change.Choosing lower carbon energy today means immediate higher costs to invest in necessary infrastructure and retire high-emitting power plants,but over the longer term,less
14、 reliance on foreign sources of energy and much-needed reductions in GHG emissions.We are all conscious of an increasing sense of urgency as the years to net-zero tick away and we realize that our efforts,as important as they are,may not be enough.As the IPCC warns us,even if current commitments fro
15、m governments are implemented,we are on track to a 3.2 degrees world.We are being called on to collectively transition to a lower carbon economy in time to avoid the worst effects of climate change,while avoiding sudden shocks in energy prices,risking continuity of supply and services to local econo
16、mies.Accelerated mitigation is only possible if together,we focus on the most high-impact areas:increased efficiency and electrification of buildings,industry,and transport,for example,and rapid decarbonization of the electricity sector.Net-Zero commitments on a 2050 timeline must remain our goal.Co
17、llective action also implies participation from all actors:the right enabling environments set by governments;investment,and real-economy transition with support from private-sector coalitions,and individual action.For institutional investors and insurers like AXA,we must fi nd the right balance to
18、support transitioning sectors which form the backbone of the current global economy,while also fi nancing new and disruptive products and technologies.Exploring the climate nature nexusThis years Climate and Biodiversity Report highlights AXAs ongoing commitments to contribute to fighting climate ch
19、ange and biodiversity loss.EditorialThe energy transition requires timely and coordinated collective actionThomas BuberlAXA Chief Executive Off icer This years Climate and Biodiversity Report has been prepared in the shadow of the war in the Ukraine.As the cloud of Covid-19 started to lift ,Europe w
20、as suddenly confronted with a new challenge:a violent conflict,and an associated humanitarian crisis,the largest Europe has experienced since the end of WWII.Subsequently the global economy is experiencing disruptions to supply chains,increases in energy prices and related price increases to primary
21、 materials and agricultural commodities.In 2022,AXA continued to explore forward-looking metrics.Applying the“Warming Potential”metric,AXAs investment portfolio revealed a temperature of 2.6C;an improvement on previous years,but a metric that will remain signifi cantly dependent on the carbon intens
22、ity of the global economy.This is why AXA continues to provide funding and insurance to support the transition to new,less carbon intensive models in all sectors,including real estate,utilities,transportation,as well as to innovations supporting greater electrifi cation and the circular economy.AXA
23、has also made strong progress towards its first intermediate portfolio emissions reduction target.In 2021,AXA reduced the carbon footprint of its investment portfolio by 29%compared to 2019.This result reflects changes in the real economy and select management actions and is a demonstration of what
24、is possible for large institutional investors committed to fighting climate change.It is an encouraging step to continue setting ambitious goals for future intermediate emissions reduction targets.We are also pleased to publish for the fi rst time an analysis of the impacts of AXAs investments and o
25、perations on biodiversity,in line with“Article 29”,and building on the Beta version of the Taskforce on Nature-related Financial Disclosures(TNFD).These analyses reveal that progress has been made to help translate nature into a language the financial sector can understand,but that ongoing work is s
26、till required.By partnering with Iceberg Data Lab and working with peers,AXA is committed to the development of decision-useful metrics.We know that nature is our ally,and we must respect and harness it to successfully rise to the dual challenges of climate change and biodiversity loss.Stronger toge
27、therThe solidarity that we have witnessed across Europe as the war in the Ukraine has intensified reminds us that we are stronger together.Europe has demonstrated its ability to mobilize,together,for the common good.Collective and sustained efforts are needed to confront future challenges of the ene
28、rgy transition.For AXA,this means continuing to mobilize its teams and experts,work with governments,partnering with our clients,and engaging in coalitions with peers to accelerate transition.02AXA GROUP 2022 Climate and Biodiversity Report June 2022AXA has set the standard for insurers seeking to l
29、everage both sides of the balance sheet to act against climate change.How does this work in practice?Frdric de Courtois AXA aims to have a coherent approach to enabling the transition towards a decarbonized economy,both as an investor and an insurer.We believe these two levers place us in a unique p
30、osition within the fi nancial sector.This is why we have taken strong commitments,notably more restrictive policies when it comes to the energy sector,biodiversity protection and human rights risk .These commitments were reinforced in the lead-up to COP26 at the end of 2021.However,in practice,it is
31、 not always possible to replicate these policies to the letter on both sides of the balance sheet due to diff erences in these business activities.In addition,an investor has the benefi t of a broad investable universe,whereas when an insurer chooses not to cover an activity,it is the end of the lin
32、e.However,where there is a red line AXA is not afraid to act,and we are not afraid to lead by example.It is all about striking the right balance.George Stansfield Transparency on actions and progress is important.All our policies are public and can be consulted,and we listen to a range of stakeholde
33、rs when developing these policies and we review them regularly.Having sound internal governance with the right checks and balances is key when considering issues like this that can impact multiple aspects of our business and multiple stakeholders,both internal and external.So is engaging with our pe
34、ople so they understand why AXA has taken a position,especially for our underwriters who are on the front line.FdC While the immediate impact on GHG emissions may be hard to quantify,we are convinced that over the mid-to long-term,such initiatives can contribute to new practices.In this regard,we be
35、lieve that collective action from investors and insurers can play a role in helping to steer the economy towards a low carbon future.The remaining challenge for AXA,like any investor or insurer which chooses to draw a line under certain activities,is that a competitor may win this lost business.When
36、 we say underwriting restrictions are not an easy decision,this is what we mean.To critics of restrictions,we say they can have a substantial impact.This is what we can observe with coal.Today,there are close to 40 insurers and around 60 investors globally that have put in place restrictions on coal
37、.There is a perceived ambition gap between national commitments and what the science is telling us.What should a large investor or insurer like AXA do in such circumstances?FdC We continue to increase our green investment target,which currently sits at 26 billion by 2023,and we continue to actively
38、seek new opportunities.For example,our recently announced commitment to invest 1.5 billion in forests.With this commitment we have demonstrated innovation by investing in nature-based solutions.At the same time,we must fi nance the real economy as it transitions,but this process will not happen over
39、night.There is no magic button for transition:we have a responsibility to accompany the real economy as a whole on this journey.GS Governments and regulators have a critical role to play in setting legislative frameworks and standards to define what is green,or not.This has been the subject of much
40、debate at an EU level for example,with the Taxonomy Regulation.Governments can also help steer the economy supporting new technologies.This is what we see in France,for instance,with the recent announcement of ecological and energy transition portfolios in the new French government.Public private pa
41、rtnerships are also key to help ensure the eff icient allocations of climate fi nance to where it is most needed.FdC The ambition gap is also a refl ection of the tensions between the science and the economic and social reality of today.We must be sensitive to the pressures on job and wealth creatio
42、n during transition.Even if we know that transition entails upfront costs to help the most emitting sectors decarbonize,to provide training for workers,and to fi nance necessary investments in technology and infrastructure,the cost of“doing nothing”would be higher.Recent research suggests that the m
43、ost pessimistic estimate of the cost of fi ghting climate change is lower than the most optimistic estimate of doing nothing.A just and orderly transition isnt nice to have,it is essential for social buy-in.Again,governments must lead the way,setting the rules and providing adequate protection when
44、required.In 2021 the Net-Zero Insurance Alliance was launched,with AXA as Chair.What has this Alliance been working on?Why is it important for insurers to set net-zero ambitions?FdC Insurers are an essential party for all economic transactions and their engagement towards net-zero pathways is requir
45、ed if we are to collectively transition.Therefore,it made sense for AXA to call for the creation of this Alliance and AXA is pleased to act as Chair of the NZIA.2022 has already been a fruitful year for members.Members of the NZIA have committed to transition their insurance and reinsurance underwri
46、ting portfolios to net-zero greenhouse gas emissions by 2050,consistent with the Paris Agreement.To achieve this goal,the NZIA is collaborating with the Partnership for Carbon Accounting Financials to develop a proposed first global standard to measure insured emissions.Members of the NZIA will be r
47、equired to publish their fi rst intermediate science-based target within six months of the publication of this standard.Cross interview:Frdric de Courtois and George Stansfi eldFrdric de Courtois Deputy CEO,in charge of Finance,Risk Management,Strategy,CededReinsurance and Operations George Stansfi
48、eldDeputy CEO and Group General Secretary,in charge of Legal,Human Resources,Audit,Compliance and Public Aff airs In this regard,we believe that collective action from investors and insurers can play a role in helping to steer the economy towards a low carbon future.On the occasion of the publicatio
49、n of AXAs Climate and Biodiversity Report,AXA Group Deputy CEOs Frdric de Courtois and George Stansfield reflect on progress made to date,and some of the challenges that lie ahead.03AXA GROUP 2022 Climate and Biodiversity Report June 2022To support collective change,it will also be important for ins
50、urers to engage with other actors in the insurance ecosystem,including brokers.GS AXA also continues to actively participate in the Net-Zero Asset Owner Alliance and has made strong progress towards its fi rst intermediate target,which is detailed in this Report.This Alliance has helped to set the s
51、tandard for protocol and target setting,and over time we hope that this approach will be adopted by other Net-Zero A lliances.AXA IM,our asset manager,is also engaged in the Net Zero Asset Managers Initiative and reports on progress regularly.In May 2022 AXA IM published its second progress report a
52、nd announced that 65%of all assets under management are managed in line with Net-Zero pathways,in line with the IPCC 1.5C pathways report.In last years Climate Report,AXA introduced its aim to develop“green business”to support the transition.What has happened since?GS In April 2022,AXA announced a g
53、reen business target to support more sustainable behaviors and business models for both retail and commercial clients.This includes a wide range of activities,from providing insurance coverage for renewable energy plants and equipment to designing and implementing more sustainable claims practices.T
54、here is also signifi cant potential for us to help our commercial clients in their transition.Engaging with an existing client to better understand the challenges they face to decarbonize or shift their business model,and helping them manage risks,is a powerful way for us to support the energy trans
55、ition.FdC We are convinced that we must accompany real economy actors to enable the energy transition.To do so,we cannot stand on the sidelines,rather we must stand with our clients and provide the right advice and direction.This work is driven by a long-term view and the knowledge that many of an i
56、nsurers key activities are effective adaptation mechanisms:disaster risk management,climate services including early warning systems,social safety nets and risk spreading and sharing,for example This is why,for example,we are expanding our risk consulting offers for commercial clients with AXA XL an
57、d AXA Climate.Beyond our products and services,climate risk and opportunities have become key focus areas to the daily work of a broad range of teams:from fi nance to legal,from strategy to risk management,IT and investments.The last twelve months have seen increased action from regulators on both s
58、ides of the Atlantic as well as calls for greater convergence.What should be the priority?GS Current efforts to harmonize and improve extra-financial reporting standards are certainly welcome and should be a priority.More broadly,many sustainability practices have been,and are being co-built by the
59、private sector,regulators,scientists,and civil society organizations.We believe in sharing expertise and supporting transparency in reporting activities,which is what drove AXA to release its first Climate Report in 2016 using the TCFD recommendations.Since its creation in 2015,the TCFD has helped d
60、rive climate-risk related market transparency measures,which are being adopted by many governments around the world including in the EU,the UK,and potentially the US.As for nature-related risks and opportunities,the creation of the Taskforce on Nature Related Financial Disclosures in 2021 is also an
61、 important milestone.This initiative aims to develop a framework for biodiversity,backed by the science,similar to what the TCFD has done for climate.Like many other fi nancial institutions,AXA is eager to see decision-useful metrics emerge on biodiversity,and as a member of the TNFD,AXA is actively
62、 contributing to this eff ort.FdC Consensus on climate scenarios and their variables will be increasingly important as regulators and supervisors continue to explore climate risk-related stress tests.Again,AXA contributes to these exercises to help build collective understanding and consensus betwee
63、n public and private actors on the best approaches to understand climate-related risks.GS Finally,we hope that the various regulatory initiatives underway in Europe,in the US and in other markets where we do business can help drive convergence on classifi cation,metrics,and reporting over the coming
64、 years.We appreciate the complexity of that task and know,of course,that there will always be local specificities and adaptations.However,theres clearly a large overriding interest to get to the right level of standardization to enable comparability of information across markets for users of this in
65、formation,and a level playing field for private sector actors to operate and contribute to the transition.Even if we know that transition entails upfront costs to help the most emitting sectors decarbonize,to provide training for workers,and to finance necessary investments in technology and infrast
66、ructure,the cost of“doing nothing”would be higher.Cross interview:Denis Duverne and ThomasBuberl looking back and forging ahead 04AXA GROUP 2022 Climate and Biodiversity Report June 2022Executive SummaryThe Paris Agreement isour roadmap“Well below2C”and“pursue best eff orts to limit warming to 1.5C
67、by 2100”We are on track to a 3.2C world 4.8Cexpected temperature increase ifinaction prevails(“Business AsUsual”scenarios)To stay below 2C,climate finance formitigation must be 3 to 6 times higher by 2030AXAs climate stategy 1.5Cinvestment“warming potential”target by 205026bngreen investments by 202
68、30%Exit from coal by 2040-20%Intermediate investment-related carbon footprint target Integrating sustainability factors85%of the Groups Credit Portfolio covered by an internal credit rating8,000+companies covered by AXAs ESG research93%corporate equities 87%corporate debt 98%sovereign debt 73%Real E
69、state covered by ESG scoring153bnestimated annual cost of artificial pollinationAXA views the biodiversity challenge as a natural extension of its climate eff orts.Limiting ecosystem loss is a priority to maintain economic stability and mitigate climate change.In parallel,climate change also amplifi
70、 es ecosystem destruction worldwide.Aligning investments with the Paris Agreement:the“warming potential”approach-2021Warming potential0,00,51,01,52,02,53,03,54,04,55,0Corporate assetsSovereign debtAggregate BenchmarkAXA 3.67C3.66C2.44C1.98C2.96C2.62CN/A34members of the TNFD representing US$19.4trnin
71、 assets under management05AXA GROUP 2022 Climate and Biodiversity Report June 2022Net-Zero Asset OwnerAlliance*65 institutional investors representing almost US$10trillion in assets under management collectively committed to achieved climate neutrality by 2050Insurance riskPhysical risk(severity and
72、 frequency)Exposure(buildings physical properties)Vulnerability(destruction rates)Net Zero Asset Managers Initiative*220 signatories managing US$57 trillion of assets under management How climate change may impact our investments-11%Portfolio Climate Value at Risk*(under a 1.5C scenario)*As methodol
73、ogy changes occured,these fi gures may not be compared with those disclosed in our 2021 Climate Report.Products&services1.3bnin gross written premiums on Green Business by 202312m of customers on Inclusive Protection by 20231,390ton of CO2 emissions avoided annually with AXA IM Real assets 22 Bishop
74、sgate skyscraper in LondonVoting&engagement 20215,546General Meetings voted59%meetings where AXA did not fully support management proposals283issuers engaged Our sustainability performance97th percentile ranking according to the DJSI#58/100 AXAs ranking in our industry according to VigeoAAA MSCI Inv
75、estment and business exclusions7.5bntotal assets impacted by divestment policies0%coal in our business by 2030(EU/OECD)and 2040(rest of the world)Direct environmental footprint-61%AXAs decrease in absolute CO2 emissions between 2019 and 2021Achieve carbon neutrality for own operations by2025Net-Zero
76、 Insurance Alliance*Chaired by AXA Over 25(Re)insurers are members of the NZIA Over US$7 trillion in asset under management Physical risks on AXAs“Real Assets”6.6m our Real Assets Annual Average Loss to Floods2.2m AXAs Real Assets Annual Average Loss to Windstorms*as of end-2021*as of end-2021*as of
77、 end-202106AXA GROUP 2022 Climate and Biodiversity Report June 202207AXA GROUP 2022 Climate and Biodiversity Report June 2022Report structureSince 2015,AXA has published an annual“Climate Report”(1).AXAs 2022 Climate and Biodiversity Report(the“Report”)describes AXAs responsible investment and insur
78、anceinitiatives considering two diff erent frameworks(2):the mandatory disclosure requirements applicable in France derived from“Article 29”(3),which considers Environmental,as well as Social and Governance(ESG)matters,and amends and supplements the“Article 173”(4)framework referred to in previous y
79、ears reports;the voluntary disclosure recommendations of the Task Force on Climate-related Financial Disclosures(5).In preparing this Report,AXA has considered TCFDs“Guidance for all sectors”and“supplemental guidance”for asset owners and asset managers.This Report follows the TCFD structure(6).Key e
80、lements of this Report are also described in AXAs 2021 Universal Registration Document(7).This Report also considers the Beta version of the Taskforce on Nature Related Financial Disclosures(TNFD),released in March 2022(8).(1)Past Climate Reports are available on .(2)The frameworks partly overlap an
81、d are complementary.(3)Article 29 of Law No.2019-1147 dated November 8,2019,on energy and climate and Decree No.2021-663 dated May 27,2021.(4)Article 173-VI of Law No.2015-992 dated August 17,2015,on the energy transition for green growth.(6)Governance,Strategy,Risk Management,Metrics&Targets(see ac
82、companying diagram).(7)AXAs 2021“Universal Registration Document”for the year ended December 31,2021(“Annual Report”)was published in March 2022.(8)www.tnfd.global(9)Covering investments in public equities and corporate bonds.(10)ACPR Autorit de Contrle Prudentiel et de Rsolution French banking and
83、insurance supervisory authority.Core Elements of Recommended Climate-Related Financial Disclosures GovernanceThe organizations governance around climate-related risks and opportunities StrategyThe actual and potential impacts of climate-related risks and opportunities on the organizations businesses
84、,strategy and fi nancial planning Risk ManagementThe processes used by the organization to identify,assess and manage climate-related risks Metrics and TargetsThe metrics and targets used to assess and manage relevant climate-related risks and opportunitiesMetricsand TargetsRiskManagementStrategyGov
85、ernanceThere are a number of significant changes between this Report and AXAs 2021 Climate Report.These include:a greater focus on biodiversity:an exploration of the Beta release of the Taskforce on Nature-related Financial Disclosures(TNFD),the initial results of a pilot exercise involving the test
86、ing of biodiversity metrics,with the aim to measure the impact of AXAs own operations on biodiversity,an exploration of biodiversity metrics for use at investment portfolio level(9);information on new policies for Energy and Deforestation and Ecosystem Conversion;updates on Net-Zero coalition-buildi
87、ng initia-tives and related targets.This includes the progress of the Net-Zero Insurance Alliance;updates and reporting on the AXA for Progress Index.This includes new targets for Green Business and Inclusive Protection insurance activities;further updates on analyses using the ACPR(10)Climate Stres
88、s Testing“pilot exercise”and the stress tests from the Prudential Regulation Authority and the Bank of England;further detailed analysis of Property-related(re)insurance climate risks;andupdated methodologies leading to re-baselining of some key“Climate Metrics”.Statutory auditAXAs external auditors
89、(PwC)have emitted an independent limited assurance report on a selection of information from AXAs 2021 Climate report.This is a voluntary initiative.PwCs limited assurance report can be found at the end of this Report.Its fi ndings confi rm the robustness of AXAs processes and underlying assumptions
90、.Source:www.fsb-tcfd.org08AXA GROUP 2022 Climate and Biodiversity Report June 2022Market/political context/milestonesAXAs Climate and biodiversity strategies PFirst coal divestment PFirst green investment target PAXA vice-chairs TCFD PPalm oilpolicy PCOP21 Paris Agreement“well below 2C”target,enshri
91、nes role of investors P2012-2013“Food riots”PTCFD launch PTCFD guidelines fi nalized PU.S.government pledges to withdraw from Paris Agreement PFirst One Planet Summit event PG7 Summit in France PCOP26 postponed due to COVID-19 PThe U.S.rejoins the Paris Agreement PUS-led Climate Leaders Summit PGlas
92、gow Financial Alliance for Net-Zero(GFANZ)launch PCOP26(Glasgow)PCBD COP15 Part(Biodiversity,Kunming)PTNFD launch PIPBES-IPCC Report on Biodiversity and Climate change PClimate report wins fi rst top award PStrengthened coal divestment criteria PCoal policy extended to insurance underwriting POil sa
93、nds investment and underwriting restrictions PUnderwriting restrictions extended to newly acquired AXA XL PCreation of AXA Climate to address climate resilience PAct4Nature pledge PNew climate strategy:1.5C by 2050 24Bn green investments Transition bonds Coal phase out PNet-Zero Asset Owner Alliance
94、 PAXA-WWF“Into the Wild”Report.PImpact Investment Fund Climate&Biodiversity PTCFD membership renewed P“Climate leadership”integrated into 2023strategy plan PCommit to reduce investment carbon footprint by 20%by 2025 PNew 100 million investment in transition bonds issued by BPCE PImpact Investment Fu
95、nd Climate&Biodiversity size doubled to US$350 million PAXA calls for the creation of Net-Zero Insurance Alliance P3-year partnership with the WWF dedicated to biodiversity PJoin the“Business for Nature”and“Finance for Biodiversity”initiatives PLead“Informal Working Group”Governance workstream to cr
96、eate TNFD PAXA SAs inaugural Green Bond issuance(1 billion)PGreen Investment target increased to 25 billion by 2023 PNet-Zero Insurance Alliance leadership entrusted to AXA PEcosystem protection,Deforestation and Natural World Heritage Sites policy POil and gas exclusions to support the energy trans
97、ition 2000202020.Context1.1 AXAs key climate&biodiversity commitments putincontext09AXA GROUP 2022 Climate and Biodiversity Report June 20221.ContextMarket/political context/milestonesAXAs Climate and biodiversity strategies PSEC guidelines on c
98、limate-related disclosures for investors PISSB launch PIPCC AR6 report PCBD COP15 Part II PNet-Zero macro-targets:carbon sinks must compensate remaining carbon emissions PGreen Business&Inclusive Protection insurance targets 20222024202520302030204020402035203520502050Operational carbon footprintGre
99、en InvestmentsGreen Business&Inclusive Protection Investment carbon footprintUnderwriting carbon footprint(Net-Zero Insurance Alliance)Investment Warm ing Potential20232022202420252023Coal phase out EU/OECD Coal phase out rest of the world 10AXA GROUP 2022 Climate and Biodiversity Report June 20221.
100、Context1.2 The science and politics of climate changeRobust scientifi c consensus on climate changeAdaptationAccording to the IPCC,Adaptation plays a key role in reducing exposure and vulnerability to climate change.Adaptation is the process of adjustment to actual or expected climate and its eff ec
101、ts in order to moderate harm or take advantage of benefi cial opportunities.(Source:AR6 Working Group 2)This section provides an overview of the climate science presented in the International Panel on Climate Change(IPCC)Sixth Assessment Report(AR6).In its most recent report,the IPCC(1)concluded tha
102、t it is“unequivocal”that human-induced climate change has warmed atmospheric,terrestrial,fresh,and salt-water systems.The evidence shows that:human-induced climate change has also either caused or increased the likelihood of different weather and climate-related extremes;and thatthe scale of this ch
103、ange is unprecedented.Without drastic reductions in GHG emissions over the coming decades,global warming will exceed 1.5C and 2C during the 21st century.(1)“The Physical Science Basis of Climate Change”WG1:https:/www.ipcc.ch/report/ar6/wg1/(2)For example,agriculture,forestry,energy and tourism.(3)“C
104、limate Change 2022:Impacts,Adaptation and Vulnerability”WG2:https:/www.ipcc.ch/report/sixth-assessment-report-working-group-ii/(4)“Climate Change 2022:Mitigation of Climate Change”WG3:https:/www.ipcc.ch/report/ar6/wg3/Climate change is already having a negative impact on human and natural systems.Si
105、nce 1950,the world has seen:more frequent and intense heatwaves;heavier precipitation events;more droughts;more tropical cyclones;more fi res;more fl ooding.Finally,local economies may suffer greater property and infrastructure damage.Certain industries most reliant on the environment(2)may see reve
106、nues decline.Vulnerable populations will likely be disproportionately affected by future climate change-related events,particulartly where local populations heavily depend on the natural environment and have less ability to adapt(3).In addition to decarbonization(mitigation),the IPCC states there is
107、 an immediate need to reduce climate risks through adaptation.These two actions,mitigation,and adaptation are not mutually exclusive.Both are necessary to address the immediate and long-term impact of climate change.Many adaptation strategies can increase resilience.Protecting and restoring ecosyste
108、ms can increase ecosystem,human resilience,and also contribute to mitigation.Climate FinanceThe role of mitigation and adaptationThe IPCC concludes that while annual public and private fi nance for climate change mitigation and adaptation rose by up to 60%from 2013 to 2020,more is needed.The IPCC es
109、timates that climate fi nance for mitigation must be 3 to 6 times higher by 2030 to stay below 2C(4).Separately,human adaptation requires changes to:lifestyles(where and how we live,including how we consume);mobility(such as low-carbon transport);andfood production.There is also an immediate need fo
110、r climate-proof infrastructure in urban areas to address risks such as heatwaves and water storage needs.Context Box 11AXA GROUP 2022 Climate and Biodiversity Report June 20221.Context1.3 International climate action frameworkCOP21 Paris Agreement article 2:the key role of investors“This Agreement()
111、aims to strengthen the global response to the threat of climate change()by:(a)Holding the increase in the global average temperature to well below 2C above pre-industrial levels();(b)Increasing the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenh
112、ouse gas emissions development();and(c)Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”COP21:the Paris AgreementCOP26:“keeping 1.5alive”COP26 was held in Glasgow in late 2021.Its main goal was to“keep 1.5 alive”:to limit warming
113、to 1.5C above preindustrial levels.This goal,if achieved,would make the 2020s the“decisive decade”for climate action.Governments are required to produce new Nationally Defi ned Contributions(NDCs)to decarbonization for the next COP in Sharm El-Sheikh in Egypt at the end of 2022.Before this,the next
114、publication of NDCs had been due in 2025.The agreement also included the fi rst-ever plan to reduce the use of fossil fuels.Ahead of the final Glasgow pact,over 40 countries agreed to move away from coal as an energy source.This meant committing to phase out coal power in developed economies in the
115、2030s,and emerging markets in the 2040s.In addition,over 20 countries agreed to halt new direct public fi nancing for coal development by the end of 2022 and invest more in renewable energy.Alongside the government targets,a coalition of over 450 international fi nancial companies with$130trn in ass
116、ets has committed to align with the goal of Net-Zero by 2050.The group,known as the Glasgow Financial Alliance for Net-Zero(GFANZ)and which AXA has joined,will help provide the necessary fi nance for the carbon transition.Recognizing the link between climate change and nature,COP26 also included a p
117、ledge to end deforestation by 2030.The pledge was signed by countries with around 85%of the worlds forests(3).For investors,supporting eff orts to stop and reverse deforestation means addressing those large-scale activities that are driving it(4).AXA has implemented a policy to limit AXAs investment
118、 in companies involved in deforestation and those that potentially damage natural ecosystems,see Section 3.4“ESG Integration Exclusions and sensitive ESG restrictions”.COP27 will be held in Sharm El-Sheikh in Egypt in 2022.This COP will address the following subjects:a greater focus on resilience;pu
119、shing for increased fi nance for climate action;closer scrutiny of Net-Zero commitments;further eff orts to strengthen links between climate change mitigation and adaptation and biodiversity(5).COP21 was held in Paris in December 2015.It saw 195 countries negotiate and adopt the Paris Agreement(1).C
120、ountries ratifying it are legally bound to collectively keep warming to“well below 2C compared to pre-industrial levels”and pursue best efforts to limit warming to 1.5C by 2100.These thresholds were chosen based on the“level of destruction”they entail.Indeed,the risks associated with warming are sub
121、stantially lower at 1.5C than 2C(2).The Paris Agreement also highlighted the role of investors(see box)in the response to the threat of climate change.The Paris Agreement binds Governments to collectively keep warming within safe levels by reducing greenhouse gas emissions within(1)https:/unfccc.int
122、/sites/default/fi les/english_paris_agreement.pdf(2)https:/www.ipcc.ch/report/ar5/syr/(3)This includes Brazil,home to the critically important Amazon rainforest.(4)This includes meat production and grazing,palm oil and soya bean cultivation.(5)For example,through plans to eliminate agricultural comm
123、odities-driven deforestation,scale up fi nancing.specifi c timeframes,which requires rapid and signifi cant reductions.This low carbon transition target will have signifi cant consequences for the real economy,and in turn for investors and insurers.They can choose to develop a long-term risks&opport
124、unities framework derived from the Paris Agreement roadmap.This is the backdrop for AXAs climate action.COP27Context Box Source:AXA12AXA GROUP 2022 Climate and Biodiversity Report June 20221.Context1.4 UN Convention on Biological Diversity,(COP15),theCOP21for biodiversity?1.5 EU Sustainability Finan
125、ce StrategyAs described above,the Paris Agreement at COP21 sent a clear political signal to the private sector that climate action was needed.With respect to biodiversity,AXA can contribute through voluntary initiatives such as the“Business for Nature”and“Finance for Biodiversity”initiatives,see Sec
126、tion 3.3“Biodiversity”.However,against the background of a competitive market environment,adequate rules and guidance from governments are key for cutting-edge issues where the playing fi eld is not yet level.Government adoption of international science-based biodiversity targets at COP15 is the sur
127、est way to provide this much needed clarity.General aspirations will not be sufficient to achieve tangible outcomes.Clear targets will help companies,financial institutions,and civil society to translate these nature conservation objectives into robust long-term business strategies.Clear steps have
128、already been made in this direction.In October 2021,the first part of COP15 was held in Kunming,China.The Kunming Declaration,agreed at this meeting,identifies the role of finance in addressing biodiversity loss.Like the Paris Agreement,the Kunming Declaration identifies the need to“align all financ
129、ial flows in support of the conservation and sustainable use of biodiversity”(Article 13)(1).The second part of COP15 is scheduled to take place in October 2022.It is important that a“science-based”Kunming Agreement is achieved this year.The hope is that it will have the same transformative effect o
130、n governments and businesses worldwide as the Paris Agreement had 5 years ago.Such an agreement is needed to achieve the same level of political and business leadership for the preservation of biodiversity as has been seen for climate change.(1)https:/www.cbd.int/doc/c/df35/4b94/5e86e1ee09bc8c7d4b35
131、aaf0/kunmingdeclaration-en.pdfThe EU has developed a comprehensive sustainability regulatory framework.It aims to:support the flow of private finance to sustainable economic activities;andfacilitate the transition to a carbon neutral economy by 2050.Key aspects of this framework are already fully or
132、 partly in place while other aspects are still under development:the Taxonomy Regulation(2):this creates a scientifi c-based classifi cation system of environmentally sustainable economic activities(the Taxonomy).The aim is to trigger behavioral changes in the fi nancial sector,discouraging greenwas
133、hing,and scaling up sustainable investments(for more information about the Taxonomy Regulation,refer to“EU Taxonomy Regulation”in Section 4.3“Climate Change and ESG Integration”and“Regulation and SupervisionClimate and Sustainable finance-related regulatory initiatives”in Section 7.3“General Informa
134、tion”in AXAs 2021 Universal Registration Document);the Corporate Sustainability Reporting Directive(CSRD)(3):this will more comprehensively amend the existing non-fi nancial reporting requirements under the Accounting Directive(4).The European Commissions current CSRD proposal intends to,among other
135、 things:(i)extend the scope of the reporting requirements under the previous Non-Financial Reporting Directive(NFRD)to additional companies,(ii)increase the level of assurance for sustainability reporting,(iii)create mandatory EU sustainability reporting standards,(iv)introduce a double materiality
136、perspective,(v)require inclusion of sustainability reporting in corporate management reports,and(vi)align the collective responsibility of members of administrative,management,and supervisory bodies of reporting companies under the Accounting Directive with the revised sustainability reporting requi
137、rements;(2)Regulation(EU)2020/852 of the European Parliament and of the Council of June 18,2020 on the establishment of a framework to facilitate sustainable investment and amending Regulation(EU)2019/2088.(3)Proposal for a directive of the European Parliament and of the Council amending Directive 2
138、013/34/EU,Directive 2004/109/EC,Directive 2006/43/EC and Regulation(EU)No 537/2014,as regards corporate sustainability reporting,published by the European Commission on April 21,2021.(4)As amended by the Non-Financial Reporting Directive(NFRD).13AXA GROUP 2022 Climate and Biodiversity Report June 20
139、221.Contextthe Sustainable Finance Disclosure Regulation(SFDR)(1):this governs how fi nancial market participants(FMPs)(2)and financial advisers(FAs)(3)should disclose sustainability information to end-investors(4)from March 2021(or,for certain information,starting from January 2022 or January 2023)
140、;the Corporate Sustainable Due Diligence Directive(5):this aims to foster sustainable and responsible corporate behavior throughout global value chains.The European Commissions current CSDD proposal intends to,among others,set common rules with respect to due diligence,due diligence processes and st
141、andards,that companies should implement regarding actual and potential adverse effects on human rights and the environment,in connection with their activities,the activities of their subsidiaries and the value chain operations carried out under established business relationships.The CSDD proposal al
142、so includes rules on liability in the event of a breach of due diligence processes and standards.(1)Regulation(EU)2019/2088 of the European Parliament and of the Council of November 27,2019 on sustainability-related disclosures in the fi nancial services sector.(2)Refers to Financial Market Particip
143、ants(e.g.,asset managers,insurers).(3)Refers to Financial Advisors(e.g.,brokers).(4)This includes customers/clients.(5)Proposal for a directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and amending Directive(EU)2019/1937,published by the European Commis
144、sion on February 23,2022.The European Unions Sustainable Finance Strategy has already led to important regulatory changes at unprecedented speed with the objective to make Europe the first climate neutral continent by 2050 and to support the transition towards a more sustainable economy.Along the li
145、nes set in its renewed sustainable finance strategy,the European Commission has emphasized the need for a supportive framework to recognize transition eff ort.Among the measures proposed,the extension of the Taxonomy to include the transition would turn the existing Taxonomy into a guiding tool driv
146、ing transition towards sustainability.Patricia Plas,Group Head of Public Aff airsThe EU Sustainable Finance Strategy:next key milestones14AXA GROUP 2022 Climate and Biodiversity Report June 20221.Context1.6“Just Transition”getting very realThe ongoing decline in real income triggered by the spike in
147、 energy prices would be particularly acute for the poorest members of society were it not for the government fiscal response.We may see this as a“dress rehearsal”for a more permanent tension between the necessary fight against climate change,which may well come with a rise in the overall level of co
148、nsumer prices on trend,and social fairness.The“just transition”issue i.e.the need to preserve social cohesion as the economy moves towards Net-Zero is no longer theoretical.Hard choices are ahead.Fundamentally,climate change is a negative externality.In clear,it means that,if kept unchecked,it will
149、ultimately come with a cost to collective welfare which is not“chargeable”to anyone in particular(and thats precisely why GHGs emissions would continue in an uncontrolled manner).Fighting global warming entails“internalizing the externality”or,translated into less pompous words,it means revealing th
150、e future cost in todays prices so that behaviors can change in time.The European Union has taken the lead on this by putting together the largest and most eff icient carbon trading system in the world,the Emissions Trading Systems(ETS).The EU sets an overall limit to the carbon issuance of key secto
151、rs,and businesses are then free to trade those“carbon credits”,generating a market price.Reflecting the policy push towards decarbonization,the price of carbon has increased over the last 2years and the EU is working on an extension to more sectors of the economy.Still,using the latest academic esti
152、mates of the price of carbon consistent with a trajectory to Net-Zero by 2050,the market price needs to rise further,to probably exceed 100 per ton.If we put a price on carbon someone must pay for it,and there is every chance that the final consumer will be the payer,as carbon prices work their way
153、through producers input prices.Another way to“internalize the externality”is to directly add a premium on heavily carbonated retail prices to fund the emergence of decarbonized options.The bill can be heft y.In Germany,at the peak of the shift to renewable energy which is still incomplete given the
154、countrys continued reliance on coal households were paying a premium on their electricity bill equivalent to a full percentage point of their disposable income.Ultimately,the transition will work if consumption and investment shift from heavily carbonated options to better ones.An issue is that the
155、decarbonized solutions are oft en more expensive at least transitorily.To take a concrete example,at the point of purchase,the price of an electric car before tax and subsidy is higher than the price of a traditional combustion engine car.Governments can incentivize consumers to shift to the green o
156、ption by levelling its price,in practice by levying a tax on the combustion engine cars to fund a subsidy for the electric ones.The problem is that dynamically,this cant be neutral for public finances:as people start buying more green cars,there are fewer traditional cars to tax.Down the road,a Net-
157、Zero trajectory can work in a way which does not elevate the global price level only if the price of green options before tax subsidy falls quickly enough.In theory,this will be the case,and examples abound e.g.the steep decline in the price of solar panels as the technology went mainstream and econ
158、omies of scale kicked in but bottlenecks may appear.For instance,an acute issue now is that some green solutions are dependent on“rare earth”materials which prices have shot up.Still,the“Just Transition”issue cannot be ignored since a fair distribution of the cost of the transition is crucial to its
159、 success.The conversion of public opinion to the decarbonization of our economies is very new,incomplete in many countries,and fragile everywhere.Sustained political support to the Net-Zero trajectory is needed,and glaring inequalities in how the shock is apportioned could stop the process in its tr
160、acks.When it comes to ESG,the“E”pillar cannot leave the“S”one on the sidelines.At the business level,this means a properly integrated strategy mixing environmental and social goals is necessary.Gilles Moc,Group Chief Economist“Just Transition”getting very real15AXA GROUP 2022 Climate and Biodiversit
161、y Report June 20222.Governance2.Governance2.1 Board OversightAXA has established a solid governance framework to develop and implement its Sustainability Strategy.In accordance with applicable regulations and its Terms of Reference,the Board of Directors exercises its oversight of the Sustainability
162、 Strategy mainly through the Board of Directors Compensation&Governance Committee.Every year,the Board of Directors Compensation&Governance Committee reviews the Groups Sustainability Strategy and reports to the Board of Directors on this matter.In addition,the Board of Directors Audit Committee ann
163、ually reviews the Statement of Non-Financial Performance included in AXAs Universal Registration Document and the Board of Directors Finance&Risk Committee oversees the climate related risk appetite driven by the climate related stress testing and report to the Board of Directors on these matters.Bo
164、ard of DirectorsGroup Management CommitteeRole in Society Steering CommitteeResponsible InvestmentCommitteeGroup UnderwritingCommitteeSteer AXA Groups Sustainability Strategy Chaired by Group CIO,Group CRO,Group Chief Communication,?2.2“Role in Society Steering Committee”(RISSC)The Group Management
165、Committee is supported by the RISSC,which is co-chaired by the:Group Chief Risk Off icer;Group Chief Investment Off icer;and Group Chief Communication,Brand and Sustainability Off icer.The purpose of the RISSC is to steer AXAs Sustainability Strategy and review material sustainability-related issues
166、 faced by AXA as well as monitor material sustainability-related initiatives across AXA,including this Report,which is also provided to the Board of Directors Audit Committee and the Board of Directors for information.The RISSC meets monthly and ensures coordination across all internal stakeholders
167、in formulating AXAs overall Sustainability Strategy,which it submits to the Group Management Committee for review and approval.The RISSC reports back to the Management Committee on a regular basis concerning material decisions taken or to be taken and issues considered on which Management Committee
168、guidance and/or decisions are needed.16AXA GROUP 2022 Climate and Biodiversity Report June 20222.Governance2.3 Investments2.4 Insurance(1)Emerging risks are risks that may develop or that already exist and are continuously evolving.Emerging risks are subject to a high degree of uncertainty,as some o
169、f them may never even emerge.As far as investment-related matters are concerned,the RISSC is supported by the Responsible Investment Committee(RIC),which is chaired by the Group Chief Investment Officer.Any sensitive and/or strategic climate finance-related decisions debated in the RIC are ultimatel
170、y submitted to the RISSC for approval.The RIC also reports to the Group Investment Committee(GIC),chaired by the Group Chief Financial Officer.The presence of the Group Chief Investment Officer on the RIC,the GIC,and the RISSC facilitates the alignment of AXAs Responsible Investment strategy with AX
171、As Sustainability Strategy.The RIC is supported by the Responsible Investment(RI)Centre of Expertise.This is a cross-functional working group of over 60 experts from AXAs local investment teams interacting with AXA IM.AXA IM has also developed a dedicated RI governance involving all its central mana
172、gement teams and investment platforms.In addition,the ESG Monitoring&Engagement Working Group advises on issuers and sectors challenged from an ESG or climate perspective and provides investment-related recommendations for approval by the RIC.Insurance-related ESG risks and opportunities are also su
173、bject to specific governance,notably by the Group Underwriting Committee(GUC)chaired by Group Risk Management(GRM).The GUC:defines all underwriting restrictions,guidelines,and exemption criteria,including the Sustainability Underwriting Restrictions,and reviews their application in all AXA entities;
174、includes representatives from GRM,Group Performance Management,Group Corporate Development,AXA Global Re,and Group Sustainability.Similar to what happens with investments,sensitive and/or strategic climate-related decisions discussed by the GUC are ultimately submitted to the RISSC for approval.In a
175、ddition,a dedicated team within Group Risk Management analyzes emerging risks(1)and monitors their potential impact on AXAs business.These may,for example,relate to long-term ESG issues.Group InvestmentCommitteeRI Center of ExpertiseLocal Chief Investment Offi cersRole in Society Steering CommiteeES
176、G Monitoring&Engagement Working GroupAXA IM Participate in RIC and give guidance on RI strategy Provide ESG research Report annually on RI progress Carry out engagement on behalf of the Group Provide support to regulatory developments(preparation and implementation of regulatory changes)Take lead in
177、 supporting specifi c RI initiativesResponsible Investment Committee Defi ne,launch,implement and follow up on RI strategy Chaired by Group CIO+RI CoE sponsor,investment teams members,representatives from Group functions&internal asset managersGroup Sustainability Monitor RI trends Propose RI themes
178、 for study Manage relationship with NGOs17AXA GROUP 2022 Climate and Biodiversity Report June 20222.GovernanceIn addition to AXAs governance framework,AXAs compensation policy is designed to align the interests of AXA employees with AXAs Sustainability Strategy.In this context,AXA has progressively
179、integrated ESG criteria in compensation packages of its top executives on the short-and long-term components.For 2022,annual variable compensation of top executives is subject to Group performance(including a criteria on reduction in the Groups carbon footprint in AXAs General Account assets,weighti
180、ng for 15%)and individual performance(including achievement on diversity and climate related goals).Since 2021,AXA has also increased the weight of Sustainability criteria in AXA Performance Shares from 10%to 30%,including the following metrics for the 2022 grant:AXAs ranking in the DJSI(10%),reduct
181、ion in Group operations carbon emissions(10%),and increase in the proportion of women in the Group executive population(10%).Furthermore,approximately 5,000 employees were granted long-term incentives known as Restricted Shares which are subject to a Sustainability underpin i.e.minimum AXAs ranking
182、in the DJSI to be met.Finally,?the weight of environmental and social criteria in profit sharing schemes(20 000+employees)has been enhanced in 2022.For more information,please refer to AXAs 2021 Universal Registration Document(“Annual Report”,section“3.2 Executive compensation and share ownership”).
183、2.6 ESG Acceleration Team 10%to 30%weight of Sustainability criteria in AXA Performance Shares 2.5 RemunerationIn 2021,a new body was established to ensure the success of AXAs strategic plan“Driving Progress 2023”:a dedicated Acceleration Team is now in place for ESG,with members of the Management C
184、ommittee and representatives of Strategy functions and Markets(Europe,Asia).The ESG Acceleration Team is oriented toward the implementation within the entities and the anticipation of next horizon challenges to tackle.18AXA GROUP 2022 Climate and Biodiversity Report June 20223.Strategy3.StrategyThis
185、 section sets out AXAs overall Sustainability Strategy,with a particular focus on AXAs climate strategy and biodiversity commitments.It combines both investment and underwriting-related initiatives,as well as AXAs broader ESG integration strategy.Following the TCFD recommendations,Metrics and Target
186、s can be found in Section4.1“AXA For Progress Index”of this report.3.1 AXAs Sustainability StrategyAXA Groups overall Sustainability Strategy aims to fulfi ll two main goals:act as a leading force against climate change;andexpand AXAs health and protection businesses as an inclusive insurer.AXA crea
187、ted a strong signal by putting its climate commitments at the heart of the new strategic plan“Driving Progress 2023”,which was launched in December 2020.To make AXAs Purpose“Act for human progress to protect what matters”tangible for all AXA teams,AXA launched the AXA For Progress Index in April 202
188、1.It is designed to measure and track progress in rolling out AXAs Purpose across all AXA activities.This tool is based on seven commitments shared across the Group to further embed sustainable development in AXAs activities as an investor,insurer,and exemplary company.With five of the seven commitm
189、ents aimed at shaping the energy transition,the AXA for Progress Index is now the Groups primary measurement tool for its climate strategy and biodiversity commitments.This index allows AXA to identify,measure,and steer actions to fulfill commitments with Key Performance Indicators(KPIs).For further
190、 information on the metrics,targets,and progress to date,please see Section 4.1“AXA For Progress Index”of this report.Source:AXA.19AXA GROUP 2022 Climate and Biodiversity Report June 20223.Strategy3.2 Climate changeStrategic contextAXA has promoted a strong collective agenda with TCFD,TNFD,and EU in
191、itiatives and explored new forward-looking climate alignment metrics since its 2018 Climate Report.In 2019,AXA reframed biodiversity loss as a fi nancial risk.In 2021,it announced a new Energy Policy and Deforestation and Ecosystem Conversion Policy.In this 2022 Report,AXA is presenting the fi rst p
192、ilot of an analysis of the impact of its investments and operations on biodiversity.AXAs climate strategyAXAs current climate strategy,launched in November 2019,supports the concept of aligning AXAs business with the Paris Agreement.To contribute to this overall ambition,AXA has made the following c
193、ommitments:applying the“Warming Potential”methodology for its investments,aligned with a+1.5C trajectory by 2050.This long-term target is complemented,since December 2020,by an intermediate-20%investment-related carbon footprint target(1)between 2019 and 2025(part of the“AXA for Progress Index”);(1)
194、See press release:https:/ green investment target of 26bn by 2023,and a new Green Business target for AXAs insurance activities to support the energy transition(part of the“AXA for Progress Index”);a long-term exit strategy from the coal industry backed by strict investment and underwriting restrict
195、ions;a target to reduce its direct environmental footprint by 20%between 2019 and 2025 and achieve carbon neutrality for its operations by off setting remaining emissions(part of the“AXA for Progress Index”);the launch of the AXA Climate Academy to train employees(part of the“AXA for Progress Index”
196、);andan enhanced energy policyand an alignment of climate and biodiversity goals.For further details on AXAs biodiversity actions,please see Section 3.3“Biodiversity”.Progress against these targets is discussed in Section 4.1“AXA For Progress Index”.Climate change is a medium to long-term risk for w
197、hich it is diff icult to quantify the impact on AXAs activities.AXAs strategy is not only to adapt but also to leverage AXAs expertise to provide solutions.AXA is well equipped to further the understanding of climate change through:its risk management expertise;the vast number of claims data it coll
198、ects;andthe research it funds to address climate-related risks.As an insurer,AXA also has a responsibility to share knowledge about new risks.Through AXAs underwriting decisions,it can also show the risks society is taking and foster prevention actions to mitigate them.Finally,through AXAs significa
199、nt investments,it is well-positioned to send the right signals to the investment community and to the specifi c companies in which it invests.AXAs climate strategy leverages both sides of the balance sheet:investments and insurance.AXA also contributes by reducing its direct environmental footprint.
200、AXA supports academic research,outreach,thought leadership,partnerships,and employee training and volunteering.AXA was a pioneer in creating an ambitious climate strategy.In 2015,the year the Paris Agreement was signed,AXA sounded the alarm stating that“a+4C world is not insurable”.In other words,ru
201、naway climate change will create risks so large that conventional market mechanisms may no longer be suitable.Starting in 2015,AXA adopted a balanced approach regarding its contribution to the transition to a more sustainable and less carbon-intensive economy.AXA popularized coal divestment in early
202、 2015.Coal is by far the most carbon-intensive form of energy.Phasing it out is key to achieving the goals of the Paris Agreement.In 2017,AXA pioneered coal and oil sands restrictions in its insurance business.This was a difficult business decision.In 2018,it progressively extended this to AXAs new
203、Commercial Lines entity,AXA XL.AXA has also committed to an ambitious green investment target.20AXA GROUP 2022 Climate and Biodiversity Report June 20223.StrategyGFANZ(1)To achieve the goals of the COP21 Paris Agreement the whole economy will need to transition.To this end,the Glasgow Financial Alli
204、ance for Net-Zero(GFANZ)was launched in April 2021,ahead of COP26.This global coalition of leading financial institutions brings together“Net-Zero”fi nance initiatives as part of the UN-backed“Race to Zero”commitment to accelerating the decarbonization of the economy.As of November 2021,GFANZ had ov
205、er 450 members,including AXA,from 45 countries.They manage private assets of over U.S.$130trn committed to achieving“Net-Zero”.AXA participates in GFANZ through NZAOA,NZAMI,and NZIA.It is also a member of the GFANZ Real Economy Transition Plan Working Group.Net-Zero Asset Owner Alliance(NZAOA)(2)AXA
206、 joined the UN-led Net-Zero Asset Owner Alliance(NZAOA)in November 2019.NZAOA is an international group of institutional investors committed to transitioning their investment portfolios to Net-Zero GHG(Greenhouse Gas)emissions by 2050.This involves regular reporting on progress,including establishin
207、g intermediate targets every fi ve years.The metric for reporting on progress is based on GHG emissions and“investment temperature”methodologies.NZAOAs shareholder engagement eff orts will be key to achieving the“real-world”transformation driven by its members climate neutrality commitments.AXA has
208、contributed to the NZAOA“Portfolio Alignment”working group(see Portfolio Alignment section).AXA also launched its-20%carbon footprint(2019-2025)target,in line with NZAOAs“Target Setting Protocol”.In 2021,NZAOAs membership grew from 34 to 65,representing over U.S.$10trn(3)in assets under management(A
209、uM).NZAOA engages on an ongoing basis with the Science Based Targets Initiative with respect to SBTis Net-Zero Foundations for Financial Institutions(4).SBTi is expected to set a standard for Financial Institutions in 2023.In January 2022,the NZAOA released the second edition of its Target Setting P
210、rotocol.This guides members in setting further ambitious climate targets that align with the latest IPCC pathways to keep global warming below+1.5C.The second protocol includes the following additions:a broadening of the scope to bring scope 3 within the targets,as they typically represent the major
211、ity of members emissions;revised,more ambitious portfolio emissions reductions targets;a set of climate-related considerations that members can use to match emission data and reporting principles.In 2021,NZAOA members also worked on a target-setting approach for sovereign issuers through two main pr
212、ojects to develop standards:the carbon accounting of sovereigns with the Partnership of Carbon Accounting Financials(PCAF);assessing Sovereign Climate-related Opportunities and Risks(ASCOR).Net Zero Asset Managers Initiative(NZAMI)(5)The Net Zero Asset Managers Initiative(NZAMI)was launched in Decem
213、ber 2020(6)to bring together an international group of asset managers committed to supporting global eff orts to limit warming to 1.5C.As a founding investor of the NZAMI,AXA Investment Managers(AXA IM)is committed to:achieving Net-Zero emissions across its portfolios by 2050 at the latest;as well a
214、splaying a key role in helping to realize AXAs ambitious climate goals.(1)https:/ les/AOA-SBTi-comparison-table.pdf(5)https:/zeroassetmanagers.org/(6)https:/www.axa- Coalition Building“We must all play our part in the transition to a low-carbon world,and we were proud to announce key updates to our
215、climate commitments during the World Climate Summit,the Investment COP.As active asset managers,the way we act on our convictions and allocate capital has the power to influence investee companies behaviors.Our fiduciary duty goes beyond delivering returns to our clients,its also about investing res
216、ponsibly and driving climate action.This is how AXA IM plays its part.In our investment decisions,in the products we off er,in the way we engage and vote,and in the way we manage our own business we act to balance returns with the long-term sustainability of the world we live in.”Marco Morelli,Execu
217、tive Chairman,AXA Investment ManagersRecognizing the importance of the financial services industry in achieving the goals of the Paris Agreement,multiple“Net-Zero”alliances have been established with the support of the UN Environment Program-Finance Initiative(UNEP-FI).These alliances help coordinat
218、e and accelerate efforts towards climate neutrality.The Glasgow Financial Alliance for Net-Zero(GFANZ)is now coordinating these Net-Zero alliances.AXA is a member of the following alliances thereby contributing to the industrys collective eff orts.This means that AXA IM will work closely with AXA Gr
219、oup and in partnership with asset-owner clients on analysis,reporting,and changes to investment portfolios.In April 2022,as part of its second report to the NZAMI,AXA IM revised its Net-Zero Ambition and committed to:increasing the scope of Net-Zero aligned assets to 65%of total assets under managem
220、ent(AUM)(7);setting interim carbon intensity reduction targets for 2025(-25%vs 2019 baseline)and 2030(-50%),which are applicable to corporate assets;continuing to grow the proportion of Net-Zero aligned AUM over time.Updates will be provided in the course of 2022.(7)This now includes 100%of corporat
221、e equity and bonds,100%of government bonds,100%of listed real assets,and 100%of real estate assets of AXA Group,for which clear Net-Zero pathways in line with the IPCC 1.5C pathways report were defi ned.21AXA GROUP 2022 Climate and Biodiversity Report June 20223.StrategyNet-Zero Insurance Alliance(N
222、ZIA)(1)As Chair of the NZIA,AXA played an important role in its founding and development in 2021.AXA notably helped the NZIA to:lead outreach to educate other insurers and encourage their participation;communicate with the insurance regulators;anddialogue with the real economy regarding the risks an
223、d opportunities of the energy transition.The NZIA now counts over 25 insurer members plus Lloyds Corporation with its unique role in the insurance industry as a marketplace and regulator.The NZIA is also working with PCAF(2)in 2021 on the development of the fi rst ever insurance associated carbon em
224、issions attribution factor for property and casualty insurance lines.The NZIA achieved signifi cant milestones in 2021 with:the off icial launch of the NZIA statement of commitment(3)by signatory members;accreditation by the Race to Zero campaign;andbecoming a member of GFANZ.AXA was a contributing
225、author to the NZIA white paper“Insuring the Net-Zero Transition”launched in April 2022.AXA also provides resources for the development of the target setting protocol,and the Governance,Engagement,Communications,and Life&Health workstreams.(1)See UN PSI global communications here:https:/www.unepfi.or
226、g/psi/wp-content/uploads/2021/04/PSI-NZIA-announcement.pdf(2)Partnership for Carbon Accounting Financials:https:/carbonaccountingfi the Net-Zero TransitionThe insurance industry has been a pioneer ringing the alarm bell about the significant impacts from greenhouse gas emissions and a carbon-reliant
227、 growth model.Our leadership in modeling natural events,highlighting emerging risks and advising on risk management options are all relevant to this pivotal challenge.Historically,discussions have focused on climate change impacts to insurers not on the impact insurers may have on climate change.The
228、 double materiality principle acknowledges that insurance is necessary for economic growth and stability and can drive changes in the global economy.With the creation of the Net-Zero Insurance Alliance,we have called to action our(re)insurance peers to use underwriting portfolios,i.e.the(re)insuranc
229、e coverage we provide to our clients,to promote a green transition.In less than a year,the Net-Zero agenda has gained momentum across the whole industry,with more than 25members.Together we are building a common ambition,a common framework,a common language.Our end-goal is to support our customers N
230、et-Zero transitions through GHG mitigation strategies applying the principles of abatement,neutralization,and compensation.Renaud Guide,Group Chief Risk Off icer and Chairman of the Net-Zero Insurance Alliance22AXA GROUP 2022 Climate and Biodiversity Report June 20223.Strategy3.3 BiodiversityIt is q
231、uite simple:nature is essential to human activity and survival,from food and shelter to the active ingredients in medicines.Each species makes implicit economic contributions that are far-reaching:their work can be seen as services(ecosystemic services)provided free of charge by nature.An EU funded
232、study estimated that artifi cial pollination would cost 153bn annually,generating labor and technological costs far beyond what would be economically viable(1).The potential loss of key ecosystemic services endangers not only humans but also certain businesses that depend on them.This can therefore
233、be of concern for investors and insurers that rely on a well-functioning economy.Indeed,in a recent study,the Banque de France concluded that biodiversity loss could have an impact on financial risks(2).Investors ability to understand and map these potential risks would enable them to identify oppor
234、tunities and in doing so help support solutions rather than environmentally unsustainable business practices.This is the theory of change underpinning AXAs support for the creation of the TNFD.AXA views the biodiversity challenge as a natural extension of its climate eff orts.This is important becau
235、se limiting ecosystem loss is a priority to maintain economic stability and mitigate climate change.In parallel,climate change also amplifi es ecosystem destruction.Indeed,the IPBES(3),the IPCC and the TNFD both identify climate change as a key driver of changes to nature and by extension,biodiversi
236、ty(4).AXA did not wait for a precise calculation of its biodiversity impacts to start acting.As with AXAs approach to combatting climate change,AXA aims to harness all its expertise as both investor and insurer.As a result,AXA has announced a series of initiatives,designed to protect ecosystems,and
237、act on the nexus between climate and nature.These include:AXA launched the“Into the Wild Integrating nature into investment strategies”report with the WWF at the G7 Ministerial meetings in 2019.This idea was to raise awareness regarding biodiversity loss and its economic and fi nancial impact.The re
238、port contained a series of recommendations,including launching TNFD and creating biodiversity risk metrics for investors;AXA was an active member of the“Informal Working Group”(IWG)and led the Governance working group that resulted in TNFD being set up in 2021.AXA is currently a TNFD member and cont
239、ributes to the TNFDs Metrics and Targets Working Group;AXA began a three-year partnership(2020-2023)with the WWF to develop and strengthen its biodiversity strategy;AXA IM,with three asset management peers(BNP Paribas AM,Mirova,Sycomore AM),partnered with one of the most promising biodiversity risks
240、 data providers.This provider has developed its own metric the Corporate Biodiversity Footprint(CBF)based on the concept of Mean Species Abundance(MSA),to calculate the degradation of ecosystems caused by business activities across AXAs investment portfolio(5);in October 2021,AXA announced a new pol
241、icy on Ecosystem protection,Deforestation and Natural World Heritage Sites.This is built on AXAs 2013 Palm Oil Policy.Applied to both AXAs investment and insurance activities,it seeks to:address risks related to deforestation and protected areas of key biodiversity value,and halt support for firms n
242、egatively impacting ecosystems that house critical biodiversity;in October 2021,AXA also announced a new Energy Policy.This responds to the twin challenge of:climate change(via GHG emissions attributable to the energy sector),and biodiversity loss(by reducing exposure to operations that negatively i
243、mpact local ecosystems);at end-2021,AXA called for the adoption of a robust international agreement at COP15 in Kunming,China,see Section 1.4“UN Convention on Biological Diversity,(COP15),the COP21 for biodiversity?”.(1)https:/cordis.europa.eu/article/id/29867-insect-pollination-worth-eur-153-billio
244、n-a-year/fr(2)https:/publications.banque-france.fr/sites/default/fi les/medias/documents/wp826_0.pdf(3)Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem.Services:https:/ fi rst results from AXAs analysis are published this year in Section 4.4“Biodiversity metrics”(6)See press r
245、elease here:https:/ may wonder why is a large insurance company,which is also a large institutional investor,interested incombatting biodiversity loss and protecting nature?1B Regenerative Agriculture Fund to Help Mitigate Climate ChangeIn May 2022,AXA Climate in partnership with Tikehau Capital and
246、 Unilever announced the creation of a new fund dedicated to accelerating and scaling the regenerative agriculture transition(6).The three partners aim to invest 100m each,and combine a unique set of industry,risk,and financial expertise to drive structural change.The fund will also be open to invest
247、ors who wish to participate and benefi t from this initiative,with a target size of 1bn.Context Box 23AXA GROUP 2022 Climate and Biodiversity Report June 20223.StrategyForestsWhat is nature?The TNFD defines nature as a construct of four realms Land,Ocean,Freshwater and Atmosphere.These provide an en
248、try point for understanding how organizations and people depend on and impact natural capital,which the TNFD defi nes as natural resources that combine to yield a fl ow of benefi ts to people.Just as in the fi nancial world,where assets exist that give rise to fl ows of revenue,nature consists of st
249、ocks of environmental assets that give rise to associated fl ows of benefi ts to people and the economy(1).Forests for GoodAXAs forest estate in France is about 15,000 ha.Due to climate change bark beetle outbreaks are increasing in spruce plantations.Some stands have been severely aff ected and had
250、 to be clear cut to avoid the spread of attacks to neighboring forests.AXA will restore harvested forests as requested by French law.It will take this opportunity to test different restoration options,with pilot plantations designed to better cope with the expected consequences of climate change,imp
251、rove the conservation of biodiversity in forests and raise public awareness of the services provided by forest ecosystems.AXA Group,AXA IM Alts,and AXA France are partnering with a consortium of scientists,NGOs,and forestry experts(namely INRAE,Agro ParisTech,France Nature Environnement and Reforest
252、action)in a 3-year project,using salvage harvested spruce forests as an opportunity to experiment new methods of forest restoration and management,including mixed species plantations.Ultimately,AXA aims to propose a more effective and sustainable way to restore damaged plantations,promoting their mu
253、ltifunctionality(i.e.,providing habitat for biodiversity while fostering carbon sink,biomaterial production,water cycle and human well-being).This initiative is intended to be shared with forest ecosystem stakeholders and the broader public.Context Box Context Box In 2021,AXA committed to a new“Natu
254、ral Capital”target of 1.5 billion for reforestation to support forestry management projects in developed markets and natured-based solutions through initiatives such as afforestation,restoration and avoided deforestation which outcome can often be measured through the production of carbon credits wi
255、th the objective is to sequestrate/avoid 25 mt CO2 on an annual basis.To better select projects for internal and external clients to off set CO2 emissions.In 2021,AXA Investment Managers acquired ClimateSeed.This is an innovative marketplace that connects businesses seeking carbon credits with proje
256、ct developers off ering carbon off setting projects.ClimateSeed has a portfolio of 36 projects in 24 countries.In total,they represent over four million verified carbon credits.(1)TNFD v0.1 Beta Release Framework https:/tnfd.global/the-tnfd-framework/tnfd-framework-summary/In addition to the commitm
257、ents listed above,AXA has also identified specific actions to address biodiversity loss with a particular focus on two of the four realms:land(via AXAs actions on forests),and the ocean.24AXA GROUP 2022 Climate and Biodiversity Report June 20223.StrategyAXA Climate(1),in partnership with AXA XL,is p
258、roviding risk capacity for coral protection against tropical cyclones at four sites along the Mesoamerican reef in Mexico,Belize,Guatemala,and Honduras.The pay-out(2)will be used by the client to do restoration work such as cleaning debris and attaching corals back to the reef.AXA is scaling up this
259、 product in 2022 and broadening the coverage to other types of coastal ecosystems,including mangroves.The Oceana and UN Environment Program Finance Initiative(UNEP FI)Insurance Industry Statement Against Illegal,Unreported,and Unregulated(IUU)Fishing.AXA signed this statement in 2017.It includes bes
260、t practices about which vessels to insure.AXAs Marine Underwriting Rules and Guidelines now require vessels to be checked against IUU fi shing blacklists.This assesses whether fishing vessels have the proper licenses and checks that they dont have periods when their tracking systems are inactive.In
261、addition,AXA XL now requires International Maritime Organization(IMO)numbers for all fi shing vessels and refrigerated cargo vessels that it insures.IMO numbers help ensure eff ective identifi cation of vessels.AXA XL Coastal Risk Index:At COP26,AXA XL launched the Coastal Risk Index(CRI).This is an
262、 innovative tool that maps current and future fl ood hazards resulting from climate change.For the first time,it integrates the protective benefi ts of coastal ecosystems into insurance risk models.The CRI(3)assesses coastal flooding in the context of climate change by comparing scenarios with and w
263、ithout coastal ecosystems,such as coral reefs and mangroves.This helps build the case for nature-based solutions.The CRI illustrates the:potential benefits ecosystems provide to assets and populations in different fl ooding scenarios;and estimated value of restoring lost mangroves due to their flood
264、 reduction benefits through new global mangrove maps.The CRI is designed to be used by communities,policymakers,insurers,investors,and development banks to assess current and future fl ood risk and calculate the resilience value of ecosystems.This will thus improve how they measure risk and lead to
265、more robust resilience strategies that catalyze the protection of coastal natural assets.(1)An AXA entity that has developed a comprehensive set of business lines around climate change.(2)The insurance cover is based on a parametric product that triggers a pay-out within days of a cyclone passing th
266、rough the targeted reefs.The product is structured to pay out based on windspeed measured by satellite data.(3)The CRI has been developed in partnership with AXAs scientifi c partners,IHE Delft (Netherlands)and University of California,Santa Cruz(USA)and the Government of Canada through the Ocean Ri
267、sk and Resilience Action Alliance(ORRAA).OceansOne may wonder why we connect our business to biodiversity loss.But ultimately the global economy is so dependent on nature every good produced and sold that it is in fact rather surprising the nature-finance nexus has remained a niche topic for so long
268、.Moreover,diverse ecosystems are key to tackling climate change,as flourishing forests and well-preserved oceans absorb carbon emissions.Conversely,climate change accelerates biodiversity loss,creating a vicious circle.We raised this issue in our 2019“Into the Wild”report,which called for the creati
269、on of a Taskforce on Nature-Related Financial Disclosures.AXA is proud to be a founding member of the TNFD to help develop a framework enabling financial institutions to identify economic activities that have a material impact on biodiversity.As a member of the Metrics and Targets Working Group,we c
270、ollaborate with peers to define decision-useful metrics that will enable investors to further incorporate nature conservation objectives into their asset allocation strategies,helping to reorient financial flows away from“nature-negative”towards“nature-positive”outcomes.Progress has alsobeen made to
271、wards the COP15 in October last year,with the“Kunming Declaration”which highlighted the need to align financial flows in support of the conservation and sustainable use of biodiversity.2022 will also be an important year with the conclusion of the COP15.We hope the outcome of this conference will la
272、y the ground for closer public-private cooperation on nature preservation.We must remember that nature is our ally,and we all have a common interest to preserve it.Ulrike Decoene,Group Chief Communications,Brand and Sustainability Off icer25AXA GROUP 2022 Climate and Biodiversity Report June 20223.S
273、trategy3.4 ESG IntegrationSince 2015,AXA has made ESG a cornerstone of its investment policy by factoring ESG considerations into its qualitative credit assessment and investment processes.AXAs Credit Research Team(2)assigns internal credit ratings(ICRs)and manages issuer eligibility for Fixed Incom
274、e investments.ICRs cover over 85%of AXAs credit portfolio.When performing a credit review and assigning an ICR,AXAs Credit Research Team assesses several credit factors related to an issuers business and fi nancial profi le(see diagram).AXAs Credit Research Team focuses on material ESG risks,which i
275、t calls“Resilience&Transparency”factors.These may impact the sustainability of an industrys business model by:shift ing off er and demand dynamics;impacting product prices;creating substitution risk or opportunities;oraff ecting costs and profi tability.They can also lead to stranded asset risks.AXA
276、s Credit Research Team identifies industry-specifi c,material factors,to which most issuers are exposed due to their range of(2)It oversees AXAs corporate debt investments strategy.Internal ESG-integrated credit rating frameworkNon-Financial Corporates&REITsISSUER SPECIFICBUSINESS FACTORSFINANCIALFA
277、CTORSINDUSTRY-WIDEBUSINESS FACTORS Market position Strategy Resilience&TransparencyFinancial CorporatesFINANCIALFACTORS Solvency&leverage Asset quality Profitability Liquidity&fundingCOUNTRY-WIDEBUSINESS FACTORS Operatingenvironment System ResilienceISSUER SPECIFICBUSINESS FACTORS Market position St
278、rategy&risk appetite Support Resilience&Transparency Profitability Cash flow coverageIndustryIndustry Resilience LeverageTNFD:AXA is a member of TNFD.Its members include both fi nancial institutions and corporates.It is developing an industry standard to identify and mitigate impacts,dependencies an
279、d risks related to nature.A beta framework was released in March 2022.Testing and refinement will continue until mid-2023 in consultation with key knowledge partners.AXA is a member of the Metrics and Targets Working Group and is actively working with other members to identify the best existing appr
280、oaches.TNFD membership also provides AXA with access to best practice on identifying and mitigating biodiversity-related risks.ORRAA:AXA is a co-chair of the Ocean Risk and Resilience Action Alliance(ORRAA).This was formed following the 2018 Ocean Risk Summit.ORRAA brings together the finance and in
281、surance sectors along with governments,non-profi ts,and stakeholders to:drive investment in marine and coastal natural capital;reduce ocean and climate risks;andbuild resilience in coastal communities.AXA supports the ORRAA BackBlue Ocean Finance Commitment.Sustainable Blue Economy Finance Initiativ
282、e:AXA became a member in 2021.It has signed up to the Sustainable Blue Economy Finance Principles and endorsed the#BackBlue commitment.This initiative,founded by the European Commission and other institutions,provides key principles to promote the implementation of Sustainable Development Goal 14(Li
283、fe Below Water)and set out ocean-specifi c standards.Poseidon Principles:AXA became a signatory of the Poseidon Principles for Marine Insurance(PPMI)in 2022(1).This initiative was developed in an effort spearheaded by global insurance institutions in collaboration with leading industry player and ma
284、ritime expert support.It recognizes the role of insurers in promoting responsible environmental stewardship throughout the maritime value chain,hence providing tools to foster collaboration with clients,gain insight to enhance strategic decision-making,and address the impacts of climate change.AXA h
285、as also committed to several public pledges that focus on biodiversity loss since 2018:Act4Nature,“Business for Nature”and the“Finance for Biodiversity”initiative;andFinancial Sector Commitment on Eliminating Agricultural Commodity-Driven Deforestation at COP26(“DEFRA Pledge”);AXA also supported the
286、 Joint Declaration on the creation of a global coalition for blue carbon at the One Ocean Summit,held in Brest in February 2022.(2)(2)ItoverseesAXAscorporatedebtinvestmentsstrategyIt oversees AXAs corporate debt investments strategy.(1)For more information:https:/www.poseidonprinciples.org/insurance
287、/news/poseidon-principles-for-marine-insurance-hold-founding-meeting-and-enter-into-force-with-navium-and-axa-xl-as-latest-signatories/Biodiversity-related membershipsactivities or assets in their given sector.Based on an overall assessment of the materiality of E,S and G factors on industry credit
288、risk,industries are classified as subject to high,medium,or low resilience risk.Short-term and long-term considerationsResilience&Transparency risk factors may be material within AXAs Credit Research Teams usual rating horizon(approximatively 2 years)and thereby impact the ICR.They may,however,also
289、have a longer time horizon.In this case,the ICR may not fully incorporate Resilience&Transparency-related risks/opportunities,but AXAs Credit Research Team may use other levers such as proposing to stop investing or imposing maturity constraints.Those decisions are then implemented by asset managers
290、 investing on behalf of AXA in fully controlled mandates.A cornerstone of AXAs investment philosophy26AXA GROUP 2022 Climate and Biodiversity Report June 20223.StrategyESG Scoring:description of new methodologyESG Scores:Dashboard The coverage ratio remains similar to last years.The overall score in
291、creased in 2021 compared to 2020,notably due to the update of the methodology described above.The fi gures set out in our 2021 Climate Report are not comparable,and should not be compared with the fi gures included in this report.ESGESG%Cov ESGCorporate bonds6.766.835.225.3286.6%ICE BofAML Global Br
292、oad Market Corporate6.146.894.884.97Equities6.716.775.325.0892.5%MSCI World AC6.156.505.064.83Government bonds6.164.527.626.9898.1%JPM GBI Global6.105.017.976.72Corp.+Equities6.756.825.235.2887.3%Corp.+Equities+Gov.6.405.466.646.2993.4%In addition to the ESG integration done by the AXAs Credit Resea
293、rch Team and AXA IMs Credit Research Team,AXA,through its asset manager AXA IM,also tracks the ESG performance of its investments.AXA IM has had an ESG scoring tool since 2007.This is used to track ESG performance both for AXAs General Account assets and third-party client assets.In 2021,AXA IMs qua
294、ntitative ESG-specific tool evolved from a“blended score”,which was an aggregation of KPIs from different third-party providers to a score called Q2.Q2 stands for“Qualitative and Quantitative”.Q2 uses MSCI ESG scores as primary inputs.It then combines these with qualitative inputs from AXA IMs ESG a
295、nd fundamental research to generate a quantitative ESG score by issuer.Using MSCI scores for both corporates and sovereigns enables Q2 to provide consistent ratings across these two asset classes.AXA IMs scoring methodologyMSCIAXA IM s starting pointfor ESG scoring methodology(increased coverage,fin
296、e-tuned fundamental analyses,instrument-level differentiation)Adding an issuer not covered by MSCI with a Qual to quant analysis(e.g.,Investment Grade EM,High Yield,Small/Mid Caps)Override of issuer covered by MSCI(ESG analysis submitted to ESG Assessmentand Review Committee for Investment Grade EM,
297、High Yield or Equities)Greenium Instrument-level differentiation in ESG scores,for sustainable bondsCascading ESG Score from root issuers to their affiliates after and beyond MSCIs methodologySource:AXA IM as at 02/11/2021,for Illustration Purpose only ESG Score is a metric that reflects a companys
298、performance across a range of environmental(E),social(S),and governance(G)criteria.An ESG score may not be available for all of the stocks in the universe.Q2 enables AXA IMs asset management teams(1)to further embed ESG considerations in their investment decisions.This tool provides ESG scores and k
299、ey performance indicators across each of the Environmental,Social and Governance pillars.It is fed by data from leading expert sources in ESG analysis.The tool currently covers over 8,000 companies and governments globally.(1)Portfolio managers,fund managers and analysts.Quantitative ESG-specifi c t
300、ools tailored to each asset class27AXA GROUP 2022 Climate and Biodiversity Report June 20223.StrategyThe ESG tool is tailored to various asset classes by applying a diff erent framework to corporate issuers,sovereign issuers,and real assets,as described below.Sovereign issuersAXA IMs scoring framewo
301、rk for sovereigns covers over 190 countries.It also applies to supranational institutions,regions,provinces and cantons.The ratings refl ect how exposure to and management of environmental social,and governance risk factors may affect the long-term sustainability of their economies.The Governance Pi
302、llar is assigned a higher weighting(50%)than the Environmental and Social pillars(25%)as in AXAs opinion governance is a key way to influence the management of environmental,social and institutional risks.As of 2021,98%of government bonds within AXAs general account assets under management by AXA IM
303、 were covered by ESG scoring.Corporate issuers(equity and debt)ESG-related controversies(1)are also incorporated into the model,with the most material controversies automatically resulting in lower ESG scores.Issuers with ESG scores of 2/10 or lower are referred to the ESG Engagement&Monitoring Work
304、ing Group for exclusion(divestment).Corporate ESG evaluations are updated every six months.As of 2021,92.5%of corporate equities and 87%of corporate bonds within AXAs general account assets under management by AXA IM were covered by ESG scoring.(1)For example,environmental damage,human rights violat
305、ions,corrupt business conduct.Natural Resource Risk Risk Exposure:Energy Security Risk,Productive Land and Mineral Resources,Water Resources Risk Management:Energy Resources Management,Resources Conservation,Water Resource Management Environmental Externalities and Vulnerability Risk Risk Exposure:V
306、ulnerability to Environmental Events,Environmental Externalities Risk Management:Environmental Performance,Management of Environmental ExternalitiesFinancial Governance Risk Risk Exposure:Financial Capital and Trade Vulnerability Risk Management:Financial ManagementPolitical Governance Risk?Risk Man
307、agement:Stability and Peace,Corruption Control,Political Rights and Civil LiabilitiesSovereign framework factorsPillarGHuman Capital Risk Risk exposure:Basic Human capital,Higher Education and Technology Readiness,Knowledge Capital Risk Management:Basic Needs,Human Capital Infrastructure,Human Capit
308、al Performance,Knowledge Capital Management Economic Environment Risk Risk exposure:Economic Environment Risk Management:WellnessSE Climate Change(Carbon Emissions,Product Carbon Footprint,Financing Environmental Impact&Climate Change Vulnerability)Natural Capital(Water Stress,Raw Material Sourcing&
309、Biodiversity and Land use)Pollution&Waste(Toxic Emissions and waste,Packaging Material and Waste&Electronic Waste)Environmental Opportunities(Opportunities in Clean Tech,Green Building and Renewable Energy)Corporate Behavior(Business Ethics,Tax transparency)Corporate framework factors PillarGHuman C
310、apital(Labor Management,Health&Safety,Human Capital and Development,Supply Chain Labor Standards)Product Liability(Product Safety&Quality,Chemical Safety,Financial Product Safety,Privacy&Data Security,Responsible investment,Health&Demographic Risk)Stakeholder Positions(Controversial Sourcing,Communi
311、ty Relations)Social Opportunities(Access to communications,to Finance,to healthcare,and Opportunities in Nutrition and in Health)SECorporate Governance(Ownership&Control,Board,Pay and Accounting)AXA IM manages over 121bn in real asset investments,covering both real estate and infrastructure investme
312、nts.AXA IM Real Assets takes an integrated approach to responsible investment management following three steps specific to this asset class when integrating ESG considerations into investment decisions:defi ning the investible universe by applying sector exclusions and ban lists;integrating ESG fact
313、ors into investment decisions with proprietary ESG scores;andintegrating ESG targets into active management for annual business plans.See AXAs investments in real assets in the Section 4.3“Green Investments-A focus on Real Assets”Real assets28AXA GROUP 2022 Climate and Biodiversity Report June 20223
314、.StrategyUsing ESG sc ores to drive positive changeTo take AXA IMs proprietary ESG scoring tool even further,66%of AXA IMs open funds(in Assets Under Management)have binding ESG targets.These range:from a target to outperform the ESG score of the investment universe(4);to an even more material commi
315、tment to remove the 20%bottom performers based on the ESG criteria for its“Label ISR”funds(37 SRI funds),and UN SDG(Sustainable Development Goals)targets for its Impact Investing strategy.ESG data quality and comparability are clear roadblocks on this path due to:the absence of standardized data and
316、 mandatory reporting at issuer level;andongoing discussions on forward-looking methodologies.It is hoped that EU and global initiatives(5)will help address these challenges in the medium-term.(4)40%of the open funds AUM.(5)Including CSRD and IFRS Foundation projects.The ESG scoring tool used by AXA
317、IM for direct real estate investments is a proprietary tool developed in line with sectoral benchmarks like BREEAM In-Use(1)and GRESB(2).Since April 2020,the Investment Committee(IC)process(3)includes a review of all direct real estate investment proposals using the following five ESG factors.These
318、provide an initial view on asset-level sustainability risk and form the basis for key actions for the ongoing strategic asset plan for each investment.The fi ve factors are as follows:regulatory risk:the estimated transitional or regulatory risk associated with the asset;physical risk:the estimated
319、physical risk associated with natural disasters and climate change;independent certification:the appropriate level and type of certifi cation for a relevant market,and view as to the relative level of asset quality;counterparty risk:appropriate counterparty risk governance,including checks against A
320、XAs Anti-money laundering and KYC reviews in addition to AXA IM exclusion policies;andESG score:the estimated performance of the asset relative to the AXA IM Real Assets portfolio at sector and country level.This is assessed using AXA IMs proprietary ESG rating tool for sovereigns.It addresses both
321、sustainability risk and principal adverse impacts and forms the basis for active management of the asset.(4)(4)40%oftheopenfundsAUM40%of the open funds AUM.(1)https:/ decision-making forum for all real estate investments.Real estateAXA IM considers both fi nancial and non-fi nancial criteria in its
322、investment decisions in the direct real estate investment business.Non-fi nancial criteria include environmental,social and governance(ESG)factors as well as sustainability risks that may have a material impact on investment performance.The assessment is linked to the expected performance of a build
323、ing over a defi ned period and therefore considers criteria that can be measured at asset level.29AXA GROUP 2022 Climate and Biodiversity Report June 20223.StrategyA history of investments and underwriting restrictionsINVESTMENTSUNDERWRITING20072000030-2040WeaponsPal
324、m oilTobaccoEnergyTobaccoCoal phase outCoal phase outWeaponsCoal 1Coal 3Coal 3Coal 2Oil SandsCoal 2Oil SandsAll restrictionsextended toAXA XLDeforestationExclusions and sensitive ESG restrictionsAXA uses various tools to encourage transition strategies.These tools include investment and underwriting
325、 guidelines that off er clear criteria.Certain activities and products are deemed to be inconsistent with AXAs climate strategy and broader sustainability goals.In this context,AXA has developed specifi c“sector guidelines”that seek to address those issues.They apply to both direct investment and un
326、derwriting activities.These currently include the following sectors:coal;oil&gas(see sub-section“AXA Group Energy Policy”below);manufacturers of“controversial weapons”that are banned by international conventions(3);tobacco manufacturers,whose products are in confl ict with AXAs role as a leading glo
327、bal health insurer;ecosystem conversion and deforestation,Natural World Heritage Sites(the latter applicable to underwriting activities only)(see dedicated sections below);soft commodity derivatives which may be responsible for inflating the price of basic food commodities(applicable to investments
328、only).These sector guidelines are published on AXAs website(4).Since 2007,AXAs investment restrictions represent assets of approximately 7.5bn.They include listed equity assets,with any related corporate bond holdings being left in run off(no new direct investments).The remaining exposure under appl
329、icable policies in AXAs portfolio amounted to less than 400m at end-2021.The release in 2021of the AXA Group Energy Policy,the AXA Group Ecosystem conversion&Deforestation policy and the AXA Group Natural World Heritage Sites policy will impact these fi gures.From 2015,AXA adopted a balanced approac
330、h to contribute to the transition towards a more sustainable and less carbon-intensive economy.Carbon emissions require significant reductions to reduce the risk of climate change,which may place business constraints on carbon-intensive industries,leaving some assets“stranded”,which in turn may lead
331、 to reduced valuations.Current valuation models may not adequately account for such risks.AXA Group coal policy Coal is by far the most carbon-intensive form of energy and as such coal-based power generation is seen as the industry the most exposed to stranded asset risk.AXA acted early in May 2015
332、with a pioneering coal divestment policy(“coal 1”in above diagram),later strengthened in 2017 with underwriting restrictions(“coal 2”)and extended these to its new entity AXA XL in 2018.In November 2019,this approach was amplified and complemented with a long-term perspective(5)(“coal 3”).AXA has us
333、ed the“Global Coal Exit List”(GCEL)(6)to implement this policy since 2017.InvestmentsAXA bans investments,for General Accounts and in Unit-Linked assets in fully controlled mandates,in the following companies:power generation companies with coal share of power production(energy mix)over 30%and/or coal“expansion plans”producing more than 300 MW and/or over 10 GW of coal-based power installed capaci