Speaking in a recent media call, AXA IM global head of impact strategy and responsible investments, Matt Christensen, said asset managers were starting to think of their fiduciary duty to clients as being inextricably linked to positive impacts on the environment and society.
“This idea of what is our fiduciary duty, it is the traditional idea of thinking about our beneficiaries and how to protect them, but also thinking through ESG factors in decision-making because they are going to be more critical to share price and company resilience over time,” Mr Christensen said.
“We are at the starting line for the next chapter of responsible investment where ESG investing becomes the norm, and active investing is going to be about how we incorporate activism into the DNA of asset management.”
Mr Christensen said this involved fund managers doing more than just tacitly engaging with companies around ESG issues, but actively voting against the company’s proposed actions if they felt the action was short-sighted or not in line with its ESG commitments.
“One of the things we see is a disconnect between lots of talk about engagement, but if you follow through to see if the voting meets the engagement discussion, sometimes it falls short,” he said.
“Where we see things are not moving quick enough, we are going to make sure our voting intention lines up with the research we’ve been doing.”
One key area where the fund manager was looking to bring about significant shifts was climate change, with AXA IM research indicating the world would have to have a COVID-19-style event every year until 2050 to reach the Paris climate commitments under the current energy settings.
As a result, the investment manager’s head of climate strategy, Lise Moret, said fund managers would need to broaden their engagement to include not only fossil fuel companies but also the primary consumers of that energy, including the property and aviation sectors.
“The three main contributors to greenhouse gas emissions on the demand side have been industrial processes, transportation and construction, which includes real estate development,” Ms Moret said.
“This means that the transformation of these sectors will have a very important effect, in particular the energy efficiency gains these sectors can potentially record, especially in the context of the recovery from COVID-19.”
