COVID-19: Stewardship and the pandemic

AXA Investment Managers (AXA IM) today publishes its H1 2020 Stewardship Report, outlining its engagement programme for the first half of the year and how it exercised its voting rights in H1 2020.

The COVID-19 crisis has sharpened the importance of active ownership, particularly around certain crucial issues. We doubled down on some of our engagement activities around public health, human capital and shareholder rights. So too, our enhanced voting policy on core themes revealed our industry leadership on resolutions around gender diversity, climate change and board accountability.

As an active long-term fund manager, we had the agility and experience to respond quickly and meaningfully in this crisis, helped in part by the quality of our existing relationships with investee companies.

Despite all the challenges of this lockdown period, we engaged more companies in a six-month period than ever before - 181 issuers - on behalf of our clients and wider stakeholders. We also voted at 4,300 shareholder meetings in H1 2020.

AXA IM’s record of expressing our opinion and recommendations through engagement and voting is revealed in this report. The case studies and the statistics in the report go some way to revealing the breadth and depth of our ever-evolving active ownership programme as we strive to meet our stewardship-related duties, and drive positive impact for society and the environment.

In response to the publication of the report, Yo Takatsuki, Head of ESG Research and Active Ownership at AXA IM, said:

“The first six months of 2020 can be divided into two very distinct halves. Our engagement programme came in two highly-contrasting segments – business as usual before the COVID-19 lockdown, and then an altogether quite different period when we were all confined to our homes from mid-March onwards.

“For most of the first quarter (Q1), our engagement was focused on the key thematic areas that we consider most urgent and material for investors: climate change, biodiversity, human capital as well as gender diversity, public health, data privacy and corporate governance. Climate change continued to be a major area of activity throughout the first half.

“The intensity of engagement efforts did not slow even after the lockdown started. We continued to participate in the Climate Action 100+ investor group, where we lead engagement with numerous companies in carbon-intensive sectors - and have started an initiative with state-owned oil and gas companies. This period also saw significant climate-related commitments being announced by European energy companies. These were major milestones, a decade in the making.

“We also started our work as co-chairs of the newly established Climate Transition Finance Working Group. This was set up under the auspices of the Green and Social Bond Principles to press forward the concept of transition financing – where companies in carbon-intensive sectors raise funds in capital markets for their decarbonisation efforts. The group has attracted more than 80 institutions ranging from corporates, investors, investment banks and other stakeholders. A Working Group event hosted in February in London focusing on concepts such as science-based targets, and alignment with the +1.5 degrees celsius pathway, envisaged under the Paris Agreement.

“Our work around biodiversity and slowing the extinction of species gathered pace. Investors need to be able to assess biodiversity risks and opportunities but measurement remains difficult due to limited relevant and uniform data. In this respect, we collaborated with three French asset managers to develop a methodology for biodiversity impact measurement.

“Following the lockdown, the dynamics of engagement changed completely as we became reliant on electronic communication. What is noteworthy is just how quickly both our colleagues and the representatives of investee companies adjusted to this “new normal”. It meant that disruption was kept to a minimum, and by April, engagement dialogue had largely resumed. This is an important time of year as companies solicit the views of investors ahead of annual shareholder meetings (see voting section for more).

“Our engagement in Q2 took on a COVID-19 tone. One early observation was that investee companies acknowledged that the crisis brought public scrutiny on their ESG-related practices, whether it was public health, human capital management or shareholder rights-related issues. Our discussions with companies often revealed the strain this placed on boards of directors and senior management as they navigated an unprecedented crisis. The engagement case studies on pages six and seven reveal more about our COVID-19 related engagements.

“On behalf of our clients and wider stakeholders, and despite all the challenges of this period, we engaged more companies in a six-month period than ever before – 181 issuers in 28 countries. The case studies and the statistics that follow go some way to revealing the breadth and depth of our ever-evolving active ownership programme as we strive to meet our stewardship-related duties, and drive positive impact for society and the environment.”