There has been a significant shift in responsible investment, moving from a specialist area to a “must have” investment capability for asset managers, says AXA Investment Managers.
In its Responsible Investment 2016 Outlook, AXA Investment Managers said the demand for responsible investment (RI) strategies has increased significantly over the last 20 years.
“We believe that RI consists of an array of factors that will shape the future. Such factors can be sources of risks but can also create opportunities,” AXA IM said.
AXA IM said investment opportunities will continue to emerge, created by climate change and other governance implications.
According to the asset management firm, three topics will increasingly influence investment decisions and fuel opportunities for asset managers. These include the evolution of carbon-intensive sectors, identifying opportunities to finance the transition to a low carbon economy and greater engagement and higher governance standards.
“We believe that analysts and investors will incorporate climate change into their research and fundamental analysis to assess how companies choose to respond to the evolving landscape,” AXA IM stated.
Environmental, social and governance (ESG) analysis will become more robust going forward in 2016, with many investors seeking such data to incorporate into their fundamental analysis, the outlook said.
Regarding the transition to a low carbon economy, AXA IM pointed out investment opportunities will undoubtedly emerge. “Working off the assumption that the population will continue to consume the same level of energy, investments will be directed at either reducing the carbon intensity of current sources of energy or replacing this demand with new sources," AXA IM said.
Impact investment, according to AXA IM, will also accelerate in 2016.
"We see [impact investment] as a wave – it started with alternatives, but will grow to touch all asset classes, including listed and public securities.
"In time, we believe that the culture of impact measurement will become embedded across the financial industry," AXA IM said.
More to come:
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