AXA’s objectives, specifically for the global P&C underwriting business, encompass three areas:

1. engagement with clients and partners on the transition
2. development of new products and solutions enabling insurance innovation for a greener economy, and
3. measuring and reporting the impact of these efforts against our most material underwriting emissions reductions objectives.

AXA’s current P&C underwriting policies will also continue to be applied and refined to match AXA climate transition efforts as well as our strategic ambition. 

Taking AXA’s net zero journey to the next level: how AXA will insure the transition

With these new announcements we move forward on our net zero transition journey.

These announcements are possible due in part to the methodological work undertaken within the sector. AXA was a significant contributor to the development of these tools and methodologies for companies to measure and disclose greenhouse gas emissions associated with insurance and reinsurance underwriting portfolios, as well as the protocol for setting underwriting transition ambition.

From now until 2026, AXA will be engaging with our top 200 largest commercial clients globally, to increase their knowledge about climate impacts, transition efforts and associated risks as well as sources of emissions, solutions, and the benefits of disclosure. We are conscious that commercial clients are not all facing the same challenges with global climate transition efforts, and one role of AXA is to help by engaging to understand their unique risks and needs with regards to the climate transition. Engagement approaches with agents and brokers as well with retail motor clients will also be adopted.

Moreover, in the same time frame (by 2026), AXA will strengthen its offers & services to insure the transition, namely by increasing its support for renewable energy installations and infrastructure and by expanding sustainable claims management options and other climate transition products, including nature-based solutions. We are aiming to increase our green and sustainable claims by 10% and retail customers will also benefit from education efforts on sustainable mobility and the electric vehicles transition more broadly.

These activities support the Group intermediate targets for the most material commercial and retail motor portfolios of AXA, by 2030:

• a reduction in the carbon intensity (IAE*/vehicle) of the personal motor portfolio in selected geographies by 20%, using the baseline year 2019
• a reduction in the absolute carbon emissions (IAE) of AXA’s largest commercial insurance clients by 30%, using the baseline year 2021, and
• a reduction in the carbon intensity (IAE/GWP) of all other corporate clients within AXA’s largest markets by 20%, using the baseline year 2021**.  

A collective leadership responsibility - AXA’s call for action 

We want to be an enabler and a supporter of the transition and we are taking concrete actions to drive the broader ecosystem in support of transition efforts.

We want to lead by example but the whole real-economy needs to follow suit: AXA’s underwriting emissions reduction objectives reflect an optimistic-yet-possible view of real economy efforts for a stable and just transition. Achieving these interim targets depends on a number of variables. In particular:

• the real economy, including policy holders, transitioning in line with pathways* which have been used for AXA’s emissions reduction calculation;
• the energy transition for in-scope economic markets, being in-line with the transition pathways** used for AXA’s emissions reduction calculation;
• the transition of personal transportation to electric vehicles (EVs) and other low emissions solutions being in-line with government commitments; and
• governments and regulators (including insurance and financial regulators) around the world retaining, strengthening and evolving policies to achieve the emission reductions necessary to meet our targets.

In this regard, measurement and disclosure is a key step in achieving emissions reductions: our efforts to measure underwriting portfolio emissions are limited by the disclosure efforts of the real economy. Until this improves, actions and ambition are limited where only proxy data is available. The intermediate transition targets have been set on a limited scope of AXA’s underwriting portfolio and only include client’s Scope 1 and 2 emissions.  It is possible in the future that additional portfolios may be included and scope 3 GHG emissions integrated.

Moreover, as highlighted above, a significant gap currently exists between policies and science. Policy gap analysis highlights the widening divide between agreed 1.5C pathways and the estimated impact of currently funded policies.

Despite the known challenges and limitation AXA is taking the first step for its P&C underwriting portfolios. In doing so, we are also calling for collective action to embark all stakeholders on this journey.

This is an investment for the next generation and AXA, as we deliver value to our clients and partners.

Investments

AXA is committed to transitioning its investment portfolio to net-zero greenhouse gas (GHG) emissions by 2050, consistent with a maximum temperature rise of 1.5°C above preindustrial levels by 2100 and taking into account the Intergovernmental Panel on Climate Change (IPCC) transition pathways.  

In 2019, AXA committed to reducing the carbon footprint of its general account investments by 20% between 2019 and 2025. This objective was met, and exceeded, with a reduced carbon footprint of 35% at year-end 2022. Following this successful first phase of AXA’s investment decarbonization plan, on 29 June 2023 the AXA Group established a new intermediate target on investments to reduce the carbon footprint of its General Account assets by 50% by 2030 (using the baseline year 2019).

The measure used to calculate AXA’s carbon footprint is carbon intensity normalized with enterprise value and using Scope 1 and 2 greenhouse gas data (according to the GHG Protocol). The asset classes covered are listed equities and corporate bonds as well as real estate, consistent with the approach adopted by the AXA Group with its first intermediate target.

The use of a carbon intensity normalization with enterprise value to measure carbon intensity allows a close link to the financing sources of the corporates and hence to our role as an investor. It also allows an easy comparison among asset classes, portfolios and sectors, compared with other metrics such as revenue or physical intensity.

Carbon intensity is expressed in tons of CO2 equivalent by million of euros invested. This means that we are aiming to reduce the carbon intensity of our combined portfolio of listed equities and corporate bonds complemented by real estate, from 66tCO2 equivalent per million euros invested in 2019 to 33tCO2 equivalent per million euros invested by 2030At the end of 2022, our portfolio came out at 43tCO2 equivalent per million euros invested - a reduction which reflected both our portfolio management efforts and the fall in scope 1 and 2 emissions from the companies in which we invested. We expect this to continue as we move into the second phase of AXA’s decarbonization plan.

Additionally, within our investment decision framework, AXA Group will reinforce its engagement with listed corporates contributing the most to its portfolio’s carbon footprint, focusing first on 20 listed companies among these largest contributors.

We want to lead by example but the whole real-economy needs to follow suit: AXA’s reduction objectives reflect an optimistic-yet-possible view of real economy efforts for a stable and just transition. Achieving these new intermediate targets depends on a number of variables. In particular:

• the real economy and the companies in which we invest transitioning in line with those scientific pathways***** which have been used for AXA’s investment portfolio reduction calculation;
• Government’s and regulators (including insurance and financial regulators) around the world retaining, strengthening and evolving policies to achieve the emission reductions necessary to meet our targets.

In this regard, measurement and disclosure is a key step in achieving emissions reductions: our efforts to measure investment portfolio carbon intensity are limited by the disclosure efforts of the real economy. Until this improves, actions and ambition are limited where only proxy data is available. It is possible in the future that additional assets may be included and scope 3 GHG emissions integrated.

Climate Change threatens society

The science is clear : the IPCC (Intergovernmental Panel on Climate Change) Sixth Assessment Report presented evidence from the global scientific community that the Earth is warming at an unprecedented rate and that anthropogenic Greenhouse Gas (GHG) emissions are the main cause, in particular CO2. The likely impacts of climate change are well documented, and indeed some of the effects that had been predicted by science in the past are now occurring: for example, loss of sea ice, accelerated sea level rise and longer, more intense heat waves. The IPCC predicts that effects will include further melting ice and rising seas, resulting in flooding and erosion of coastal and low-lying areas. Some developing countries will be most affected, as local populations depend significantly on their natural environment and have less resources to cope with a degraded climate. Heat-related deaths and water-borne illnesses may increase. Many plants and terrestrial, freshwater and marine species are struggling to cope with a fast-changing climate and face an increased risk of extinction. Finally, local economies may suffer from increased damage to property and infrastructure and certain industries which rely most on environmental factors, such as agriculture, forestry, energy and tourism, may face decreasing revenues.

AXA’s position on climate change

The science shows there is a need for strong collective action to protect against climate change. Climate change is a medium to long-term risk, with a complex quantification of impacts on our activities. AXA’s strategy is not only to adapt, but also to take advantage of our expertise to provide solutions. Indeed, insurers are well equipped to contribute to the understanding of climate change through their risk management expertise, the vast number of claims data they collect, and the research they can fund to address climate-related risks. They also have a duty to disseminate knowledge about new risks. Through their underwriting decisions, they can also show the risks society is taking and foster prevention actions to mitigate them.

AXA’s climate strategy currently includes the following initiatives:

• Investments: investing in green assets, Impact Investing, divesting from certain carbon-intensive industries (coal and oil sands), climate-related shareholder engagement, climate risk analysis with a long-term view. This work notably explores advanced portfolio alignment and cost of climate metrics in line with the TCFD framework. This insightful temperature approach helps to raise awareness on the need to factor transition pathways into climate risk analyses. See latest Climate Risk Report below for further details.
• Insurance: underwriting restrictions on the coal and oil sands industries, green/sustainable products in both Property & Casualty and Life & Savings ranges, promotion of new insurance solutions designed for developing countries (typically parametric insurance). As a signatory of the UN Principles for Sustainable Insurance, AXA is committed to work together with our clients and business partners to raise awareness of environmental, social and governance issues, manage risk and develop solutions., as mentioned in the Principle n°2. When relevant, AXA will discuss about Climate or ESG material issues with some of its Corporate clients, and on a more long term and systematic approach, AXA has also initiated this conversation with some of its brokers, either on a one to one format or in the context of the UN Principles for Sustainable Insurance initiatives and forums. See latest Climate Risk Report below for further details.
• Operations: direct environmental footprint targets covering energy & carbon emissions, water and paper (see Environmental Footprint Management).
• Thought leadership, NGO partnerships, academic research (AXA Research Fund), public / private partnerships to foster prevention. See latest Climate Risk report for details.
• More recently, the Group has also decided to start addressing the interrelated issue of biodiversity loss through a comprehensive strategy that will be gradually rolled out. See for example AXA’s first report, with recommendations co-signed by AXA and the WWF, on the connections between biodiversity loss and investments.

NOTES

1. Climate or sustainability-related metrics and underlying emissions data are subject to measurement uncertainties resulting from limitations inherent in the nature and the methods used to determine them. There is a limited availability of relevant data: such data is not yet systematically disclosed by issuers, or, when disclosed by issuers or collected from third-party data providers, it may be incorrect, incomplete or follow various reporting methodologies. The measurement techniques used for determining non-financial metrics and data may involve complex modelling processes and research. The use of different measurement techniques can also result in materially different measurements, while the precision of these techniques may vary. The data sources and methodologies for emissions factors are expected to evolve and improve over time and may materially impact targets and the achievement of targets.
2. The interim portfolio transition targets noted above reflect management’s current expectations, and are subject to a number of assumptions, variables and uncertainties. In particular, the achievement of AXA’s transition targets will depend on the overall transition of the world economy and society to net zero in the coming decades which itself will depend on a variety of political, economic, regulatory, civil society and scientific developments beyond AXA’s control. There can be no assurances that our transition targets will be achieved in whole or in part, the timetable for any transition process, or the impact on our business of meeting or failing to meet such targets.

* IAE represents Insurance-Associated Emissions as defined by the absolute carbon accounting standard published by the Partnership for Carbon Accounting Financials

** Commercial IAE values based on client Scopes 1 and 2 emissions

*** Net Zero by 2050:  A Global Roadmap for the Global Energy Sector; IEA: May 2021 and SBTi sector guidance

**** World Energy Outlook 2022; IEA; October 2022

***** IPCC Special Report on Global Warming of 1.5°C and IPCC Sixth Assessment Report (AR6)