Move beyond the ‘let’s divest’ headline: AXA
The divestment argument for pension funds is much more nuanced than the oft-quoted easy headline of just ‘let's divest' from coal or fossil fuels, a head of responsible investments argued.
Speaking at the 2014 Association of Superannuation Funds of Australia conference in Melbourne, AXA Investment Managers' (France) Matt Christensen said funds and institutions need to understand how to start making traction on allocation design amidst growing pressure to move towards low carbon.
"One of the things I've heard about when I joined about three and a half years ago at AXA was portfolio managers would come to me and say, ‘right, ESG, but how do we start to talk about this and cross the bridge from our normal financial world into that funny sort of world that you belong to?'" he said.
Christensen proposed a five-standard environmental, social and governance (ESG) performance indicator that everyone will have to check against over time.
He said performance should be measured against carbon footprint, water intensity due to the real resource scarcity issue, independence of boards, gender diversity of boards, and social controversies.
"There are ways to measure now the most egregious social controversies that your portfolios face and again against an index," he said.
"This is where this issue starts to become tangible and concrete for you and I think in about five years time I believe that all of you will be used to looking at this measure."
Christensen recommends a fixed income option like green bonds, with allocation to green or renewable projects, and said it was a huge growth market in 2016.
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