Navigating an evolving landscape of interconnected risks: the role of active stewardship in AXA IM’s fiduciary duty

AXA Investment Managers (AXA IM) releases its 2024 Stewardship report, reaffirming its commitment to long-term value creation through active stewardship. The report outlines AXA IM’s ongoing efforts to drive responsible investment practices, support the transformation of investee companies and deliver long-term performance for clients.

• 550 engagements with 426 companies.
• 54,550 proposals voted on at 4,929 meetings.
• Continued progress and success milestones, reflecting years of relationship building.
• New tailored engagement policies launched for AXA IM Prime and AXA IM Select, to strengthen  stewardship in alternative asset classes.

“As a responsible asset manager, we see stewardship as a powerful lever to encourage corporate behaviours that align with long-term value creation. It is through consistent engagement that we seek to build trust, drive accountability and support transformation where it is most relevant. At the same time, we have a responsibility towards our clients. Through our investment decisions, we aim to give them exposure to companies driving positive transformation, while seeking to reduce the risk of stranded assets.

Our approach remains pragmatic. We aim to anticipate change, adapt to new dynamics, and help convert emerging challenges into long term opportunities. And we do so with a clear conviction : that active stewardship is a full part of delivering on our fiduciary duty and positioning our clients for success.” said Marco Morelli, Executive Chairman of AXA IM.

Understanding the Interdependance of Risks

Although sustainable investing continued to grow in 2024, its pace slowed amid market volatility¹ .  Sustainability may seem deprioritised just as the consequences of global warming and other systemic risks become more evident. These risks, often interconnected, must be addressed holistically.

• Corporate Governance: the Bedrock of Sustainable Performance

Effective governance is essential for embedding climate, environmental and social considerations into corporate strategies. In 2024, governance was the focus of 25% of AXA IM’s engagements with objectives and 22% overall. Notably, 42% of climate change-related engagements with objectives in 2024 also involved corporate governance issues.

For instance, AXA IM engaged with a Chilean retail distribution company² , initially focusing on sustainability commitments. However, significant governance issues arose regarding resource allocation. By addressing both themes, the engagement accelerated progress across the board.

• The Climate-Biodiversity Nexus

Climate change drives biodiversity loss by disrupting ecosystems. Declining biodiversity reduces environmental resilience and exacerbates environmental degradation and vulnerability to climate risks. In 2024, over 56% of AXA IM’s biodiversity-related engagements with objectives also addressed climate issues.

In one case, AXA IM engaged with an Italian telecommunications company³  to integrate biodiversity and water risks into its supply chain strategy. The company has since committed to setting nature-related goals and improving sustainability targets. 

• Social Impacts of Climate Change

Climate change disproportionately impacts vulnerable populations, exacerbating inequalities and potential social unrest. Addressing climate change effectively requires equitable policies that account for these social implications.

In 2024, 22% of AXA IM’s climate-related engagements with objectives also addressed social issues and has sought to raise awareness around this link. AXA IM engaged with a Spanish utility firm⁴ to assess its “just transition⁵” strategy. Insights from this dialogue contributed to AXA IM’s framework for investor engagement on “just transition”.

Strengthening Stewardship Through Transparency and Tailored approaches

• Enhanced Transparency

AXA IM acknowledges that whilst interest in investors’ approach to engagement and voting continues to grow, varying frameworks and approaches to stewardship can complicate understanding and comparisons. To enhance transparency, AXA IM improved its disclosures by clearly outlining its voting decisions on ESG shareholder proposals, adding cases studies to engagement reports, and incorporating new metrics in its 2024 Stewardship report. This approach aims to clarify AXA IM’s escalation process and the influence of engagement on voting decisions. 

• Active Investment Teams

AXA IM's investment teams actively engage with companies and collaborate with responsible investment specialists, providing company specific insights and in return integrating the insights obtained during the engagement into investment decisions. In 2024, AXA IM began tracking engagements involving investment teams to highlight their role in stewardship efforts.

• On-boarding AXA IM Prime and AXA IM Select

Tailored engagement policies were launched for AXA IM Prime and AXA IM Select to embed best practices in additonal asset classes. From 2025, each business unit will define how engagement is integrated into investment selection and monitoring, in line with AXA IM’s overarching principles.

Looking Ahead

In 2025, AXA IM will continue to engage with investee companies:

• Climate: 2025 marks the third year of the “Three Strikes and You’re Out” policy.  Companies identified as climate “laggards” in 2022 have since improved their climate strategies have been removed from the list. Two companies will face divestment this year due to insufficient progress while others will face escalation during the AGM season, potentially including votes against the Board.
• Biodiversity: Deforestation remains a key concern. AXA IM will urge stronger commitments and improved transparency from issuers. For  companies that have strengthened their commitments, the focus will shift to implementation. Additional themes include regenerative agriculture, circular economy and water management.
• Social and Just Transition:  Issues such as modern slavery, living wages, public health, and working conditions will gain prominence. The Corporate Sustainability Reporting Directive (CSRD) is expected to enhance data comparability. Active ownership in this area will help improve reporting practices.
• Corporate Governance: AXA IM may withhold support in 2025 if sustainability disclosures lack quality and external assurance. Boards are expected to understand sustainability assurance processes and ensure transparent, rigourous provider selection. AXA IM has also instroduced new expectations for directors’ tenure and Board refreshment.

2024 key figures

• AXA IM conducted 550 engagements with 426 entities, of which 42% were engagements with objectives.
• 32% of engagements with objectives are in progress or have achieved success milestones in 2024, reflecting AXA IM’s long-term efforts.
• 35% of AXA IM’s engagements were conducted at board of C-suite level, allowing direct feedback to decision-makers, thus increasing the chances of meeting engagement objectives.
• Climate change remained AXA IM’s largest engagement theme, representing 41% of its engagements.
• Biodiversity (17%), human capital and human rights (8%) remain key engagement themes.
• AXA IM voted a total of 54,550 proposals at 4,929 meetings, representing 98.2% of the meetings that could be voted at.
• The opposition rate stands at 14.95%, with at least one vote against cast in 60% of the meetings where AXA IM voted. The highest level of opposition remains for board issues (37% of votes against management), followed by executive remuneration (25% of votes against).

To read AXA IM’s 2024 Stewardship report, please click here.

Notes to editors

‘Engagement with objectives’ and ‘sustainability dialogues’:

Since 2022, AXA IM has distinguished between ‘engagement with objectives’ and ‘sustainability dialogues’.

• Engagements with objectives, which aim to drive change at investee companies, by defining specific ESG objectives, typically led by the Responsible Investment Research and the Corporate Governance Research teams, often with the participation of fixed income and/or equity teams.
• Sustainability dialogues, which are often led by investment teams to better understand a  sustainability-related risk profile of a position held in portfolios, and may inform future targeted engagement.