As an asset manager specialized in the financial sector, Axiom seeks to promote the transition to a socially just and low-carbon economy while seeking superior risk-adjusted returns. We are cognizant that the European banking sector plays a key role for the achievement of such a transition as it finances more than 70% of the EU economy, while only 30% is financed through capital markets. The energy transition will therefore not happen without banks’ action. Promoting action from the banking sector contributes positively to the climate.

In addition, we acknowledge that empirical research has established a link between firm performance and ESG performance. All this coupled with our focus on subordinated financial debt has led to the development of a Responsible Investment (RI) approach tailor-made for financial institutions which seeks to minimize both the ESG risks than can affect issuers’ financial performance as well as the negative impact that these may have in the economy, the society and the environment.

Our RI approach is comprised of the following tools:

Controversies

ESG Controversies database

Litigation is one of the main ESG risks weighing on financial institutions (fines and compensation paid by banks over the past 10 years amount to hundreds of billions). Axiom has developed over many years a capacity to analyze these controversies and assess the potential risks and associated investment opportunities. We list them in a proprietary database.

Planning

Sectoral and Thematic policies

Sectoral and thematic policies which cover financial institutions, corporates and sovereign debt investments. These explain our ESG beliefs and are used to determine our exclusion list.

ACRS

Axiom Climate Readiness Score

The Axiom Climate Readiness Score (ACRS), is a proprietary tool created by Axiom in partnership with Icare to assess banks’ and insurers’ climate readiness in the areas of: governance, strategy, climate-related risk management and contribution to the international climate goals. Through the ACRS, we notably assess the alignment of banks corporate loan portfolios and insurers investment portfolios with the well below 2°C objective of the Paris Agreement. The ACRS underpins our climate policy.

Social

Stewardship

By exercising our voting rights as well as direct engagement with investees and collaborative engagements. Our investee engagement is led by the results of the ACRS.

Our ESG offering:

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The investment objective of the Fund is to yield a return net of management fees that is equal to or greater than the performance of its benchmark, the BofA Contingent Capital Index (coupons reinvested), over a minimum investment horizon of 3 years. The fund incorporates Environmental, Social and Governance (ESG) characteristics, with a focus on climate change through the use of the Axiom Climate Readiness Score (ACRS). The Fund thus seeks to invest in financial institutions that are leaders in the integration of climate change considerations.

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Over a 5-year horizon, Axiom Equity seeks to outperform the Stoxx Europe 600 banks index. The fund is permanently exposed to equities, with at least 75% of total assets invested in the European financial sector. The fund considers companies with good Environmental, Social and Governance (ESG) or climate profiles. Its ESG score is higher than the ESG score of the universe.

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The main strategy of the fund is to purchase Tier 1 and Tier 2 securities issued by European financial institutions. These securities are bonds that constitute regulatory capital. The objective of this fund is to achieve, over a minimum 3-year investment horizon, a return (net of management fees) similar to or greater than that of its benchmarks. The fund considers companies Environmental, Social and Governance (ESG) performance.

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The compartment Investment policy is to select bonds or preferred shares issued by financial institutions. The investment strategy is based on carry trade which means it aims to invest in bonds offering high coupons and low volatility. To reach its investment objective, the fund is mainly invested in “Fixed to fixed” securities. The fund considers companies Environmental, Social and Governance (ESG) performance.

Our Collaborative Initiatives:

Axiom AI is a signatory of the United Nations Principles for Responsible Investment (UN PRI) and is committed to respecting its six principles.

Axiom AI is member of the Responsible Investment committee within the French Asset Management Association (AFG).

Axiom is a member of the Institutional Investors Group on Climate Change (IIGCC). The IIGCC is the European membership body for investor collaboration on climate change and the voice of investors taking action for a prosperous, low carbon future. IIGCC has more than 360 members, across 22 countries, with over €49 trillion in assets under management.