The future of Investing : BON ANNIVERSAIRE PRI !
From its inception, the Principles for Responsible Investment (PRI) has been one of the integral global initiatives in establishing the concept of Responsible Investing (RI) as a key tenant in mainstream asset management.
AXA Investment Managers (AXA IM) was among the first to sign the PRI initiative when it was launched in 2006. Since the PRI’s launch, we have seen socially responsible investment (SRI) develop from a niche status into a true investment theme. As the journey continues, we are confident that the PRI will evolve to foster further behavioural and cultural changes in the investment community.
There has been no shortage of situations highlighting the importance of RI in recent years. The Deepwater Horizon explosion, the subprime crisis, the Volkswagen emissions scandal, the rise of antibiotic resistance, and aggressive global tax avoidance schemes - these issues have palpably illustrated that we can no longer ignore non-financial criteria when investing.
While the importance of RI is clear, many practical questions remain for investors. Does the integration of environmental, social and governance (ESG) factors detract from equity performance? Can investors strengthen a credit portfolio with ESG integration? Is there a trade-off between financial and social returns? These are some of the topics we have explored with the financial community.
At AXA IM, we believe that RI can be materially relevant across the investment spectrum. We have come a long way since our first mandate to integrate specific social criteria in 1998. Today, we are progressively integrating ESG criteria into our investment process across asset classes, including; equities, bonds, property, high-yield, and alternatives. This is because we firmly believe that incorporating ESG analysis leads to more effective investment solutions that create long-term, sustainable value for our clients.
Building on the strong gains already made, RI has continued to develop and expand. For example, we are now seeing the growing ascendency of impact investing. These investments focus on projects with a measurable positive impact on society. Driven by a ‘double bottom line’ of addressing societal challenges as well as financial returns, these investments might include companies committed to reducing their carbon footprint or those that improve access to healthcare.
At AXA IM, we have pioneered impact solutions with themes such as education, healthcare and financial inclusion. By harnessing the power of capital and directing it towards ‘real issues’ faced by society, we have moved beyond simply filtering ESG risks or an RI ‘labelled’ fund. Impact is about actively investing in positive stories and steering capital towards greater utility.
The last decade has been a journey worth celebrating for both the PRI and AXA IM. The continued development of ESG will bring new challenges and opportunities. We look forward to working within the financial community to address the emerging issues ahead, such as:
expanding the scope of fiduciary duty to include ESG considerations,
the avoidance of dilution or ‘greenwashing’ of SRI investments,
the economic and social consequences of technology’s evolution and automation in the workforce,
simultaneously considering E, S and G factors, exemplified by companies failing to pay the minimum wage somewhere along its supply chain
The investment industry has progressed from the era of ethical investing to one of ESG integration and mainstreaming. As we advance further in the age of impact investing, we are confident that adopting sustainable investment solutions will contribute to a more promising future for all, far beyond the next 10 years.
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#ClimateChange, #SRI, #MattChristensen and the events we’re attending.
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