Partner Content - AXA Investment Managers, sponsor of the Investment Week Leaders Summit. Anna Vӓӓnӓnen looks into AI and sustainability.
As a group, how have you been boosting your investment capabilities, including taking advantage of technological advances in areas like AI?
Over the last 12 months we have been developing our listed impact equity range, which aims to make positive contributions to some of the greatest environmental and social challenges facing the world today.
Anna Vaananen joined the company in September 2023 as head of the equity impact team. Since arriving, Anna has spear-headed a complete renewal of our investment approach. We have reviewed our processes and reinforced our reporting by introducing a detailed annual impact report, additional impact KPIs and formal engagement targets at portfolio level, which we also report on.
Simultaneously, we have adjusted our approach to financial analysis. We believe that companies with strong fundamentals may have a greater chance of making a positive contribution over the long-term, as well as providing potential for enhanced investment growth.
As a result, we place equal importance on impact and financial analysis within our investment process and have focused the portfolio on quality companies, which could further enhance returns and potentially provide long-lasting positive change in our targeted areas.
What do you see as the big opportunities and risks for investors in 2025? How are you responding to these in a particular strategy?
We believe that investing in companies that make positive contributions to improving the natural environment and living standards for all is an investable long-term structural trend.
Our impact equity strategy invests globally, across the full market capitalisation spectrum, seeking the companies that we believe are best placed to benefit from multi-decade growth opportunities, within a solid risk-monitoring framework. We focus on identifying high quality companies with a proven track record of innovation and execution. We believe this helps us find the companies that could continue to make a positive contribution as well as generating financial performance.
A key risk in this area is the complex interrelationship of factors that are shaping the environment and society.
For example, while the transition to a low-carbon world has become a political and public priority, solar panels and wind turbines – as well as the lithium-ion batteries used in electric vehicles and consumer electronics – rely on so-called ‘critical' minerals such as copper, lithium, nickel, and cobalt. The demand for these minerals is accelerating, but this is a sector that has been plagued by accusations of abusive or unsustainable practises.
As well as the risk of ignoring these types of negative externalities, there is the risk of investors, wary of "greenwashing", shunning sustainable investment if asset managers cannot clearly account for these conflicts within their own reporting.
We utilise a thoughtful, methodical and holistic approach that focuses on generating positive outcomes while mitigating the effect of the negative. Additionally we have created robust reporting and analysis measures that allow our clients – and end-investors – to understand where we are making contributions and the how we are reducing any negative consequences.
What are your priorities as an asset manager for the year ahead?
Our focus remains on our clients. We are looking to maintain the high levels of service our clients have come to expect, while keeping ahead of their expectations.
Transparency with regard to sustainability issues has risen up the investor agenda in response to increasing concerns over so-called "greenwashing". As a leader in responsible investing, we have always been concerned that we are able to document and report back on our sustainable investing and ESG capabilities.
We are now looking closely at the Sustainability Disclosure Requirements from the FCA to ensure we meet the reporting requirements and to make sure our qualifying funds meet the criteria to achieve a Sustainability Label under the new regime.
As active managers we're also concerned to maintain performance of the key strategies across our range against a changing investment backdrop. We see opportunities in US dollar high yield and emerging markets hard currency debt, while robust Q3 earnings– especially in the tech sector – suggest US equities are likely to lead the pack as we head into the new year. However, whether the US economy's resilience will endure following the presidential election is a key consideration for investors in US dollar-denominated financial assets.
Anna Vӓӓnӓnen is Head of Listed Impact Equity at AXAInvestment Managers
