AXA Group is to sell out of around €1.7 billion (£1.4 billion) worth of tobacco securities as the world’s largest insurer seeks to cut its conflicts of interest.
Effective immediately, AXA will drop its equity and debt interests in tobacco companies – split between £154 million in equity and £1.2 billion in corporate bonds – and will cease to invest in the sector.
Thomas Buberl, deputy CEO (and soon-to-be CEO) of AXA, said that despite the initial costs, the move is integral to the firm continuing its wider activities as a global insurance provider.
‘We strongly believe in the positive role insurance can play in society, and that insurers are part of the solution when it comes to health prevention to protect our clients,’ he said.
‘Hence, it makes no sense for us to continue our investments within the tobacco industry. With this divestment from tobacco, we are doing our share to support the efforts of governments around the world. This decision has a cost for us, but the case for divestment is clear: the human cost of tobacco is tragic; its economic cost is huge.’
Funds run by the group's UK asset management business, AXA Investment Managers, will not be directly affected by the policy. 'We take an active approach to monitoring companies and act as stewards of investments made on behalf of our clients,' said a statement from the firm.
'Stewardship entails our considered approach to the management of our clients’ assets keeping in mind their long-term interests and engaging with company representatives on issues of concern that impact the company’s long term performance.
'In particular, our engagement focuses on situations where a company’s strategy or performance on environmental, social and governance issues leads us to believe that there may be a material impact on the company’s performance.'
Axa IM funds which invest in the tobacco sector include Jamie Forbes-Wilson’s Axa Distribution, which has British American Tobacco in its top 10, and Axa Framlington Blue Chip Income, in which Imperial Tobacco Group is the largest holding.
AXA’s responsible investment policy emphasises its commitment to integrating environmental, social and corporate governance considerations into the firm’s investment processes.
Other investments excluded by the policy include arms manufacturers, palm oil and forestry, coal extraction and coal-based energy and soft commodities derivatives.
The group has also announced it will divest holdings in coal-related companies worth around £385.4 million, alongside pledging to treble its renewable investment assets to at least £2.3 billion in the next four years.