Shortlisted for PRI Awards 2024: Recognition for Action – Nature

Organisation: AXA IM Alts (department of AXA Investment Managers) 

Signatory type: Investment manager 

HQ country: France 

The approach, initiative, or process 

AXA IM Alts is a global leader in alternative investments, with €183 billion of assets under management in real estate, alternative credit, infrastructure, natural capital and impact investments. AXA IM Alts’ natural capital and impact investing strategy deploys capital to projects and companies that generate intentional, measurable, positive environmental and social outcomes while meeting clients’ financial objectives. 

Responsible investment is central to our business approach and anchored by the three key pillars of decarbonisation, resilience and building tomorrow. We integrate both financial and non-financial criteria into our investment decisions and active ownership practices. Using proprietary methodologies, we conduct quantitative and qualitative assessments to evaluate the environmental and social impacts of our investments and their climate change risk exposure. 

Why we focus on nature and biodiversity 

Climate change is regarded as one of the biggest challenges facing the world today. Increasing incidences of extreme weather conditions are having a negative effect on nature, biodiversity and an ever-wider circle of people and businesses that depend on nature. 

In addition, the reliance on nature for resource extraction, both on land and under the oceans, accounts for significant ecosystems degradation and biodiversity loss. Land use change, particularly for agricultural use, is one of the most important drivers of biodiversity loss and the unprecedented rate of species extinction, according to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services. This is particularly true in tropical and subtropical forests, which are home to over half of the world’s biodiversity, provide habitats for threatened species and support the livelihoods of over 1.5 billion people in rural communities. 

The people dimension to these challenges, while universal, falls most heavily on the world’s poorest regions. Rural communities rely on natural resources for their livelihoods, food production and water supplies. Sustainable use of these resources is essential if these communities are to prosper. 

As investors, we recognise that the potential loss of biodiversity and related ecosystem services endangers not only populations but the businesses that depend on them. There is a material financial and investment imperative driving the protection of nature. A report from the World Economic Forum demonstrates that over half of the world’s GDP is highly or moderately dependent on nature. Nature provides important direct inputs for many sectors, from pharmaceuticals to agribusiness, as well as providing indirect benefits for other sectors. An intentional focus on protecting and restoring nature and its inherent biodiversity will enable investors to mitigate risk and enhance opportunities.  

A key aspect to solving these challenges is closing the significant financing gap needed to conserve ecosystems, foster sustainable solutions, and protect vulnerable communities. It is estimated that the world will need to invest trillions by 2030 to combat these global challenges. 

How we finance natural capital restoration and protection 

AXA Group, AXA Investment Managers’ parent company, has a long-standing commitment to the conservation of natural capital, ecosystems and biodiversity protection, and the associated climate change mitigation benefits that result from nature. In 2019, in partnership with WWF France, AXA Group published a report – Into the Wild: integrating nature into investment strategies  – which highlighted the economic and financial impacts of “bankrupting” nature and how investors can help reverse nature loss through their investment strategies. This commitment was underpinned in October 2021 by the establishment of a natural capital target whereby AXA dedicated €1.5bn of investment capital to the protection and restoration of nature. 

The AXA IM Natural Capital Fund, managed by AXA IM Alts, provides an investment solution that translates its nature and climate objectives into real-world impacts. The fund finances projects that implement a range of nature-based solutions, such as afforestation, forest restoration, avoided deforestation and related solutions, including nature-tech, that enhance the delivery of nature-based solutions. While the fund invests globally, projects supported are principally in emerging markets, where habitats and ecosystems of global importance are typically located. 

The fund implements its objectives by providing financing that: 

  • catalyses ecosystem conservation, resulting in the direct protection of primary natural capital, for example forested land, peatland, and mangroves;
  • promotes sustainable land use programs that alleviate incursion into protected primary natural capital;
  • provides enhanced livelihood opportunities for stakeholder communities, for example smallholder farmers;
  • ensures that ecosystem services provided by nature are valued properly. 

The fund has provided financing to a range of nature-based projects in line with its mandate. These projects include:

These projects are contributing to the protection and restoration of nature, biodiversity, climate change mitigation and resilience, as well as benefiting communities and other stakeholders. 

In 2022, two of the fund’s projects, Fundaeco and Forest Carbon, were recognised as Lighthouses by the World Business Council for Sustainable Development and the NCS Alliance. This is a recognition given to nature-based solutions that have generated verified carbon credits as well as positive environmental and socio-economic benefits for local communities and Indigenous Peoples, thus addressing two other major crises – the loss of biodiversity and social injustice. 

Restoring the Brazilian Amazon rainforest 

The Brazilian Amazon rainforest is experiencing mass deforestation of around 1 million hectares per year, a result of the expansion of cattle farming and production of agricultural commodities. This scale of deforestation contributes to climate change and destroys natural capital, with negative consequences for habitats and the Amazon’s native flora and fauna. 

The AXA IM Natural Capital Fund has provided US$58.5m of project finance to reforest degraded cattle pastures using tree species native to the Brazilian Amazon. The fund has also provided equity financing to the project developer Mombak, a carbon-removals company, to enhance its operational and technological systems and the delivery of the impact objective relative to this afforestation project. 

The project buys or rents degraded pastureland in Brazil and is planting over 60 species of native trees to establish new conservation forests on approximately 5,000 hectares of previously degraded land. The newly established forests will be managed for 50 years before being legally converted into permanently protected forests, ensuring that climate and biodiversity benefits are long term and durable. 

The measures to ensure transparency and generate outcomes 

The AXA Natural Capital Fund’s contributions to its nature and climate objectives are measured and monitored relative to key impact performance indicators at investment and portfolio level including:

  • area of land protected, measured in hectares
  • area of land restored, measured in hectares
  • area of land sustainably managed, measured in hectares
  • area of land for critical habitats and species, measured in hectares
  • climate benefit, measured in tons of CO2e emissions avoided, reduced, removed, or sequestered 

In addition, to align the interests of local stakeholders with climate and biodiversity objectives, the fund actively monitors and measures socio-economic contributions and livelihood opportunities provided to local communities, in addition to managing environmental, social and governance risks. 

 

Information in this document is provided based the state of knowledge by AXA IM Alts at the time of creation (as at the end of June 2024, including non-consolidated entities).

PRI disclaimer:This case study aims to contribute to the debate around topical responsible investment issues. It should not be construed as advice, nor relied upon. It is written by a guest contributor. Authors write in their individual capacity – posts do not necessarily represent a PRI view. The inclusion of examples or case studies does not constitute an endorsement by PRI Association or PRI signatories. 

AXA IM Alts disclaimer: This communication does not constitute on the part of AXA Investment Managers a solicitation or investment, legal or tax advice. This material does not contain sufficient information to support an investment decision. Before making an investment, investors should read the relevant legal documentation (including the Placement Memorandum) of the AXA IM Natural Capital Fund, which provide full product details including investment charges, risks and type of authorized investors (as of the date of this publication, the fund is It is not eligible to retail customers).

The products and strategies discussed in this document may not be registered nor available in your jurisdiction. Please check the countries of registration with the asset manager. This material has not been reviewed, approved or disapproved by any regulatory authority in any jurisdiction. The distribution of this material in certain jurisdictions may be restricted by law. Nature-based projects shown herein are for illustrative purposes only as of 04/10/2024 and may no longer be in the portfolio later. For more information on sustainability-related aspects please visit https://www.axa-im.com/what-is-sfdr.

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