AXA celebrates the fifth anniversary of the Paris Agreement and calls for new commitments

Paris, December 12th 2020 - Emmanuel Macron, together with Finance Minister Bruno Lemaire, COP26 “Private Finance” lead Mark Carney, and AXA CEO Thomas Buberl joined forces today in Paris to celebrate the fifth anniversary of the COP21 Paris Agreement, by organizing an event dedicated to the role of finance in the run up to COP26.

Why does the Paris Agreement matter to AXA ?

Five years ago today, during COP21, 195 countries gathered in Paris to negotiate and adopt the “Paris Agreement”. Countries that ratified the agreement bound themselves to collectively hold warming to “well below 2°C compared to pre-industrial levels” and pursue best efforts to limit warming to 1.5°C by 2100 – today termed “climate neutrality”. The Paris Agreement also highlighted the role of investors in the response to threat of climate change by calling them to “make finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”

This low carbon target has significant consequences for the “real economy”, and in turn for investors and insurers. These can choose to develop a long-term risks & opportunities framework derived from the Paris Agreement roadmap. This is the backdrop for AXA’s climate action.

What have we done since 2015?

We first sounded the alarm when we said that « a 4°C world is not insurable », implying that runaway climate change will create risks so large that conventional market mechanisms may no longer be suitable. We legitimized coal divestment in early 2015, because coal is an investment risk and phasing it out is key to achieve the Paris Agreement. In 2017 we pioneered coal and oil sands underwriting restrictions, which is a difficult business decision, then extended it to our new Commercial Lines entity, AXA XL in 2018. We have also committed to and achieved an ambitious green investment target. We promoted a strong collective agenda notably with the TCFD and EU initiatives. We reframed the biodiversity crisis as a financial risk, together with the WWF teams.

Last year, we launched a new climate strategy with greatly ramped-up efforts, supporting the concept of aligning our business with the Paris Agreement. We committed to:

• Contain the “warming potential” of our investments under 1.5°C by 2050 in order to achieve climate neutrality. We report in detail against this target in our annual Climate Report. We joined the Net-Zero Asset Owner Alliance to support this commitment in a collective setting and lead the methodology-related work within this Alliance.
• Double our green investment target to 24Bn€ by 2023.
• Launch the “Transition Bond” asset class, with a 100M€ ‘Proof of Concept’ issuance.
• Completely exit the coal industry and massively strengthen our underwriting restrictions.

And finally, on December 1st 2020, AXA announced its new Strategy Plan, featuring strong climate leadership as one of five key strategy pillars. This shift is supported by two new developments: a -20% CO2 emissions reduction target in our investments (2019-2025), in line with the Net-Zero Asset Owner Alliance’s “target setting protocol”, as well as the launch of a second 100M€ “Transition Bond”.

In short, our climate-related initiatives leverage every asset and expertise at our disposal: green investments, divestments and underwriting restrictions, products with environmental added value, climate resilience and adaptation solutions, risk modelling, impact investing, shareholder engagement, direct environmental footprint reduction, academic research, outreach, thought leadership, partnerships and employee volunteering.

What about COP26?

The Paris Agreement commits parties to submit strengthened commitments every five years. This is why COP26 is a key COP meeting. In particular, the COP26 ‘Private Finance Agenda’ is designed to ensure that “every financial decision takes climate change into account”. This is why AXA believes it is key to support a strong yet balanced agenda during COP26 next November in Glasgow.

In conclusion, we have pioneered investment and insurance-related milestones since COP21, while also acting collectively within alliances. We have reframed the Paris Agreement as an investment roadmap by committing to climate neutrality in our investments. We actively support coalitions that bring collective solutions to issues that require industry-wide cooperation. Today, on the fifth anniversary of the signing of the Paris Agreement, we support the creation of a UN-convened “Net-Zero Underwriting Alliance” to collectively extend our commitment to climate neutrality to our insurance business. And we call for its creation ahead of COP26 in order to enshrine, in the “Glasgow Agreement”, the role of private finance as a key enabler to achieve the transition to a low carbon economy.