Impact Engagement Principles Delivering on the UN Sustainable Development Goals

Original Content: AXA IM

• AXA IM believes that significant positive societal impact can be generated through listed assets investment strategies. This is the case for capital allocation into best-in-class companies, and for engagement with companies where there is scope for change.
• Engagement is an important route for investors in listed assets – public equities and corporate bonds in particular – to drive impact through their actions. When done right, intervention by investors can contribute to broader societal goals, such as those set out in the Paris climate agreement or in the United Nations’ Sustainable Development Goals (SDGs).
• However, there is a risk of characterising business-as-usual environmental, social and governance (ESG) engagement as ‘impact engagement’ simply because there may be overlaps with the SDGs. We believe that this is not sufficiently ambitious.
• We believe that ‘impact engagement’ is a specific and distinct approach to active ownership. It is differentiated from broader and well-established approaches to ESG-related engagement.
• In this paper, we propose an approach to ‘impact engagement’ which is strategic in nature and has objectives that, if successfully achieved, will lead to meaningfully positive outcomes. It will often focus on how capital can be allocated to drive the future ambitions of the company’s core activities, in line with the SDGs. It goes beyond gaining insights into a company’s operational performance, mitigating risks of negative externalities or improving sustainability reporting.