AXA Investment Managers (AXA IM) has adopted the Sustainability Improver label for the AXA Carbon Transition Global Short Duration and the AXA Carbon Transition Sterling Buy and Maintain Credit funds.
The two carbon transition strategies are the first fixed-income funds to adopt a Financial Conduct Authority (FCA’s) Sustainability Disclosure Requirements (SDR) label, which AXA believes underscores its position as a “fixed income ESG powerhouse”.
AXA IM said the two carbon transition strategies will continue to pursue both financial and sustainability objectives, aiming to support the transition to a net zero carbon economy by 2050.
AXA IM had previously already adopted SDR labels for three of its funds. In total, AXA IM SDR funds now equates to £1.2bn in assets.
Two sustainable equity funds have Sustainability Improvers labels, and a people and planet equity fund has a Sustainability Impact label.
AXA IM head of sustainability, core products & clients Jane Wadia said: “Bond investors are in a unique position to capitalise on the investment opportunities driven by the transition to a lower carbon economy and this has been proven by the success of our fixed-income carbon-transition strategies, and the demand we are seeing from UK-based clients.
“Our focus continues to be on empowering clients with a comprehensive suite of products. These range from traditional investments, which consider ESG factors as part of the investment process, to sustainability driven strategies, enabling them to align their portfolios with both financial objectives and sustainability priorities.”
Recently, research from the Investment Association (IA) showed that 80% of investment firms believe that the FCA SDR labelling system has reduced greenwashing across the industry.
This is despite just over 100 funds having adopted one of the labels.
According to the IA, one of the issues surrounding funds adopting a label is the FCA authorisation process.
Almost half (49%) of firms had at least one fund they considered adopting a label for, but later decided against it.
A third (32%) opted against it after going through the FCA authorisation process.
IA director of market insights Miranda Seath added that the authorisation process took longer than 20 weeks for some firms.
FCA director of sustainable finance Sacha Sadan believes labelled funds will continue to grow over time, however, and the whole purpose of the SDR regime was to reduce greenwashing, which according to the IA’s data it clearly has.
He added that the future of sustainability is bright and that people should be patient in regards to the uptake of SDR labels.
