AXA IM is launching a biodiversity fund to invest in issuers that support the conservation and restoration of ecosystems.
- AXA Investment Managers (AXA IM) complements its impact funds with a strategy to support biodiversity loss prevention and ecosystem restoration, focusing on the four UN Sustainable Environmental Goals (SDGs).
- AXA IM will work with the Iceberg Data Lab to assess the impact of companies on the fund’s investment universe environment.
- The fund includes ESG criteria (Environment, Social, Governance) and is classified as “Article 91” under the European Sustainable Finance Disclosure Regulation (SFDR).
AXA Investment Managers (AXA IM) announces the launch of the AXA WF ACT Biodiversity Fund, which aims to create a positive and measurable impact on biodiversity through its investments and ensure long-term growth.
This Impact Fund is part of the ACT range from AXA IM. At the end of December 2021, this range is 29 billion euros in management. The fund is actively managed by Amanda O’Toole, and only uses the MSCI AC World Total Return Net Index for comparison. It aims to preserve biodiversity by investing mainly in companies that offer solutions to problems such as soil and water pollution, soil degradation, protection of fauna and flora, desertification and overconsumption.
The fund focuses on four areas of investment identified by AXA IM that contribute to the conservation or restoration of biodiversity:
- Ecological materials
- Land and animal welfare
- Aquatic ecosystems
- Recycling and reduction of packaging
The fund adheres to the process of investing in the share capital of AXA IM with a choice of major and lower shares. The fund applies ESG exemptions (producers of weapons with white phosphorus, tobacco, violations of international norms and standards, low quality ESG, serious disputes and countries that seriously violate human rights) and industry exclusions (disputed weapons, ecosystem protection and deforestation, natural agricultural resources [«soft commodities»] and climate risks). These exceptions do not apply to derivatives and related underlying collective investment schemes.
The Fund’s strategy has been specifically designed to invest in sustainable businesses that support the following UN SDGs in the long run: clean water and sanitation (SDG 6), responsible consumption (SDG 12), underwater life (SDG 14) and land life. (SDG 15).
Amanda O’Toole, manager of the AXA WF ACT Biodiversity Foundation, commented on the launch: “The loss of our planet’s biodiversity continues at an alarming rate, threatening the future of the planet, and human economic activity is a major factor. There is a growing awareness that economic and human costs are associated with this loss of biodiversity. Over time, these negative externalities crystallize into economic costs for the business. AXA IM Biodiversity Fund identifies and invests in companies that help preserve and restore ecosystems through their products and services. ”
Hans Stoter, Global Head of AXA IM Core, added: “We believe that companies that are involved in their impact on the planet and help conserve and restore biodiversity can achieve greater profit growth and higher profits for their long-term shareholders. The companies in which we invest and cooperate ultimately contribute to the transition to a positive economy. “
The growth of the sector is not synonymous with the efficiency of its member companies.
The fund benefits from AXA IM’s partnership with Iceberg Data Lab to develop a tool for measuring biodiversity. Iceberg Data Lab provides scientifically sound indicators that determine the most harmful and significant impacts of companies from the bottom up. Its models calculate the impact of companies on the environment throughout their value chain and supply, up to end use. This tool allows the management team to measure the impact of the Fund’s portfolio on biodiversity and will use the company’s biodiversity footprint, which quantifies the company’s impact on all its activities. .
ESG data used in the investment process are based on ESG methodologies, which are partly based on data provided by third parties, and in some cases developed internally. They are subjective and may change over time. Despite several initiatives, the lack of harmonized definitions can make ESG criteria heterogeneous. Thus, different investment strategies that use ESG criteria and ESG reporting are difficult to compare. Strategies that include ESG criteria and those that include sustainable development criteria may use ESG data that look similar, but should be distinguished because their calculation method may differ.
The fund is classified as “Article 9” in accordance with the European Regulation on the Disclosure of Sustainable Finance (SFDR), which emphasizes its sound investment process aimed at positive impact on the environment through individual investments.
As an integral part of the range of influential funds of AXA IM, 5% of management fees collected for the management of the fund will be transferred to several charitable organizations that aim to develop solutions with significant impact on society. AXA IM’s priority is to act in areas where we can make systemic changes through our priority themes of climate change, biodiversity, education and health.
The fund is registered and available to institutional, professional and retail clients in Austria, Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and the United Kingdom.
The fund is actively managed with possible significant deviations in structure and performance compared to the benchmark used for comparison.
The main risks
Risk of capital loss: The Fund invests in financial markets and uses methods and tools that may change, which may result in a loss of initially invested capital.
Impact of investment risk: the effectiveness of a fund that implements an impact investment approach may differ from the effectiveness of a fund that implements a similar investment strategy without an impact investment approach.
Risks associated with investing in stocks: stock prices fluctuate, which can lead to gains or losses.
Risks inherent in investing in the universe of small and micro capitalization: stocks with small and micro-caps are less liquid.
Counterparty risk: Risk of bankruptcy, insolvency or default of the Fund’s counterparty, which may lead to non-payment or delivery.
Risks associated with derivative instruments: certain management strategies involve certain risks, such as liquidity risk, credit risk, counterparty risk, legal risk, valuation risk, operational risk and underlying asset risks.
Global investment risks: securities issued or registered in different countries may require different standards and regulations and may be affected by changes in exchange rates.
ESG risk: Integrating ESG and sustainability criteria into the investment process may exclude securities from certain issuers for non-investment reasons, and therefore certain market opportunities available to funds that do not use ESG criteria or sustainability criteria may not be available to the Sub-Fund, and the Fund’s Fund Performance may be better or worse than comparable funds that do not use ESG or sustainability criteria.