Axa Investment Managers (Axa IM) is to divest from companies that derive the majority of their revenues from coal-related activities.
The manager announced today that from 30 June it will divest companies deriving more than 50% of their revenues from coal, specifically mining and electric utilities companies.
This policy will apply to €714bn (£605m), or 99.5%, of the fund group’s assets under management.
Approximately €177m (£150m) will be pulled from its portfolios – €165m in fixed income and €12m in equity – Axa IM said in a statement.
It added it was too early to comment on where this freed-up money would be invested, but said its fund managers will “ensure a smooth transition for all portfolios impacted and any asset allocation decisions made as a result will depend on market, liquidity and portfolio construction constraints”.
Funds of funds and index funds categories will be excluded from the policy while clients in segregated mandates may choose to opt out of it should they wish to.
The new policy will be implemented alongside the manager’s existing policies on palm oil and soft commodities derivatives implemented in 2014, and on controversial weapons established in 2008.
Axa IM chief executive Andrea Rossi said the company strongly believed that divesting from coal can help de-risk portfolios over the long term by decreasing assets likely to become stranded as the world targets the 2°C scenario.
According to the Intergovernmental Panel on Climate Change (IPCC), 2°C is considered to be the maximum increase in temperature before significant risks to society are triggered by global warming.
Rossi added: “This decision is consistent with our ambitions for continued and greater ESG integration across Axa IM. It is also in line with our belief that asset managers have an important role to play in helping the global transition to a low carbon economy.
“We want to engage with our clients, increasing awareness about the potential long-term risks related to the production and consumption of coal at current levels and encouraging investors to fully consider the long-term benefits of low carbon portfolios.”
Axa IM global head of responsible investment Matt Christensen added: “We believe that following COP21, the ratification of the Paris Agreement and growing momentum for fossil fuel divestment globally, now is the right time for Axa IM to make this move sending a strong message to the rest of our industry.”
Axa IM said it had worked closely with its parent Axa Group, which announced its €0.5bn divestment from coal in May 2015.
