Sustainability criteria play a key role in investment decisions

AXA Switzerland is committed to sustainability – for investments too. We spoke to Daniel Gussmann, Chief Investment Officer of AXA Switzerland, about the areas AXA Switzerland is focusing on and how they influence its investment decisions.

Daniel Gussmann, what role do sustainable investments play at the AXA Group?

As an insurer, we’re directly affected by climate events and other global risks, and that’s why we’ve been working hard to address these issues for years. With this in mind, the AXA Group endeavors to play a pioneering role when it comes to sustainability. For example, in 2015, the AXA Group became the first major insurance company to announce that it would start to gradually pull out of the coal industry. In concrete terms, this means that by 2030 we will no longer have any assets invested in coal companies in OECD or EU countries, nor will we insure them. We will complete our exit from coal worldwide by 2040.  

Isn’t sustainability simply a matter of necessity these days?

Yes, it is. Companies can no longer afford to ignore it. That said, there are big differences in terms of the extent to which companies have genuinely incorporated the topic into their business models. If you’re serious, just talking about it isn’t enough. 

What exactly is the AXA Group doing?

The AXA Group has attached a great deal of importance to this topic for years and has a comprehensive sustainability strategy. It has developed its own system known as the AXA for Progress Index that it uses for measuring impacts and progress on an ongoing basis. The index assesses the sustainability efforts of the AXA Group as an insurer, an investor and as a model company in general. 

What does that mean specifically with respect to AXA Switzerland’s investments?

We factor environmental, social, and governance (ESG) criteria into our investment decisions. Sustainability criteria thus play a key role in the investment process. Companies that don’t meet our ESG standards end up on an exclusion list  – and this applies not just to our investments, but to our insurance operations as well.   

Which fields of business are most affected?

Tobacco producers; palm oil and soybean producers that are associated with the destruction of rain forest; companies that develop, produce or trade in controversial weapons and all companies that derive more than 15% of their revenues from coal mining or the generation of energy from coal are some examples of the businesses that are excluded.

How exactly do you factor that into your investment decisions? 

We assess firms on the basis of clearly defined ESG standards of the AXA Group and regularly track their performance. If a company fails to comply with our ESG guidelines and shows no sign of improvement, it’s blacklisted for exclusion from our investments. This means that we’ll sell any investments we have in that company and refrain from making any new ones. We apply these standards consistently, restricting or even completely ruling out investments in certain sectors and industries in accordance with the AXA Group Responsible Investment Policy.

Is climate protection AXA Switzerland’s top priority in terms of sustainability, or does the focus lie elsewhere?

Climate protection is definitely a main priority in our strategy. In line with the Paris Agreement on climate change, we’ve set ourselves the target of limiting the global warming potential of our own investments to less than 1.5°C by 2050. AXA Switzerland also employs ESG criteria in relation to its real estate and is striving to achieve net zero carbon emissions from the properties it owns by 2050. This affects both direct and indirect emissions from purchased energy (Scope 1 and Scope 2) as well as from rented and other leased properties (Scope 3.13), as per the Greenhouse Gas Protocol. Among its many other commitments, AXA Switzerland is also a member of the Swiss Climate Foundation, and it already reduced its own energy consumption by 28 percent between 2019 and 2023.

Of course, climate protection isn’t the only issue we’re addressing. Social justice, health and prevention are also vital to our sustainability strategy. 

What goals has AXA Switzerland set itself for the coming years?

Besides gradually pulling out of the coal industry and systematically implementing our ESG guidelines, the AXA Group had put a total of EUR 29.9 billion into environmentally friendly or “green” investments by the end of 2023. On top of this, AXA Switzerland is investing in transition bonds, an innovative asset class developed by the AXA Group that, among other things, supports companies transitioning from carbon-intensive business models to lower-carbon alternatives. 

Naturally, we can’t solve the biggest sustainability problems on our own. We also promote sustainable development by exercising our voting rights at the general meetings of companies we invest in and seek out direct dialog. 

We’ve been a member of various national and international initiatives for years, including the United Nations Principles for Responsible Investment (UNPRI), the UN Global Compact, the Net-Zero Asset Owner Alliance and Swiss Sustainable Finance. This allows us to play an active role in developing sustainable financial services.