The COP21 Paris Agreement puts investors at the forefront: they must strive to align financial flows with a “low-carbon” future in order to maintain global warming below +2°C. It is against this backdrop that France developed a new regulatory requirement (“article 173” of the 2015 Energy Transition for Green Growth law) for all investors to disclose their climate strategy, and that the Taskforce on Climate-related Financial Disclosures (TCFD), led by Michael Bloomberg and co-chaired by AXA, was launched to develop similar disclosure recommendations.
Following a first award-winning “article 173” report in 2016-2017, AXA publishes today its first comprehensive TCFD report. Amongst other features, this broader work builds on current understanding of climate-related risks for financial assets by testing a new, forward-looking methodology, that estimates company-specific costs and revenues related to climate change. The resulting “Climate Value-at-Risk” (VaR) balances both climate-related financial risks and opportunities. The report also explores a novel “warming potential” methodology to test our portfolios’ alignment against a “2oC” scenario.
In addition, the report explains in detail our other climate-related initiatives, such as those announced during the December 2017 One Planet Summit and in particular how AXA is also actively leveraging its insurance business in this area.
Our message is clear: climate change requires both collective action and leadership by example. Ultimately, our commitment is to strive to align our insurance business and our investments with the “2°C” trajectory that science and the Paris Agreement are calling for.