Opportunities in Transformation: How to Approach Companies with a Low ESG Score

Presented by

Sally Bridgeland, IAM | Clémence Humeau, AXA IM | Mark Hargraves, AXA IM | Alex Edmans, London Business School

About this talk

Environmental, social and governance (ESG) exclusion policies, and divesting from holdings that don't meet ESG standards, are often fairly straightforward tools available to asset managers taking a sustainable approach. However, simply divesting such stocks doesn't equate to achieving a truly net zero economy. The way investors allocate capital can give them influence over the behaviour of the companies in which they invest. By engaging with companies with low ESG scores and holding them accountable for reaching their own net zero goals, professional investors can play their part in facilitating the transition to a green economy while also aiming to bolster the long-term impact of their own portfolio. At AXA IM, we believe that engagement and open dialogue with companies and issuers – as well as with clients – are crucial to understanding and influencing the transition to net zero. And while we understand that many organisations need time to adjust, we're not willing to compromise on the rigorous standards that we hold on behalf of our clients. As a result, we have adopted a “three strikes and you’re out” approach, where we will divest from holdings that we believe to be laggards in terms of climate change, if we do not see sufficient progress on their paths to net zero. In Episode 5 of AXA IM’s ‘Investors’ ESG Guidebook: The Road to Equitable and Sustainable Growth' hear from leaders in ESG investing about the best practices for engaging and driving transformation with companies with low ESG scores. Topics for discussion include: - What constitutes poor practices in environmental, social or governance issues, and how investors may be able to help drive improvement - Divest or engage? Best practices for approaching companies with a low ESG score - The data advantage: Harnessing ESG disclosures to source companies that are prime for transformation - Holding companies to account: Active management strategies to drive transformation in low ESG performers
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