Fixed income

ESG Research Roundtable

Solène Danière, Fixed Income Portfolio Strategist, discusses some myths around Environmental, Social and Governance (ESG) integration, how fixed income investors can engage with issuers & what lies ahead for ESG.


Presenter: Hello, I’m here in conversation with Solène Danière, AXA IM’s Fixed Income Portfolio Strategist, to talk about fixed income and sustainability. Solène, environmental, social and governance (ESG) is becoming a hot topic with investors, what is the one myth that you keep hearing that you would like to bust today?

Solène Danière: Well it’s true that there are a number of myths around ESG integration in the fixed income space, as always with hot topics, and the one I would like to tackle is the fact that bondholders cannot lead engagement in stewardship initiatives with the companies they invest in, when we actually believe that it’s one of the key building blocks of our ESG integration process. 

Presenter: I understand that but how do fixed income investors engage without having voting rights?

Solène Danière: We’re one of the biggest bondholders in the market. So, when we meet with the companies we invest in our opinion definitely matters. We also have broader engagement framework at AXA IM levels. So, we leverage on our equity investments or fixed income investment and private placements. But engagement is definitely part of our day-to-day job. So, our credit analysts, our portfolio managers, when they meet on a regular basis with the companies, they definitely raise ESG concerns when they see fit. And when you think about it, engagement is actually a much broader process than this. It’s about keeping a dialogue very much alive with all the stakeholders. So, with companies we invest in, with ESG providers, and also with our clients. 

Presenter: Another question I get asked all the time is whether ESG factors limit the opportunity set of end investors, and conflict with the investor goals. Do you face that a lot?

Solène Danière: Well as long-term investors, we believe that, on the contrary, taking ESG integration into consideration helps us mitigate downside risk, and as such there’s a natural alignment between our long-term interests and the fact that companies are shifting their business model towards a sustainable one. Let’s take the example of the utilities sector. Now it’s becoming cheaper and cheaper to produce renewable energy and a lot of companies in that sector are obviously transitioning their business model towards a more sustainable one. So in the vast majority of cases there’s actually medium to long-term alignment of interests here, rather than a conflict. 

Presenter: Speaking of transitions, AXA IM has been working a lot on transition bonds, but it sounds a bit like green washing to me?

Solène Danière: I don’t think that it’s true because a transition bond is designed to finance companies that are willing to initiate projects to transform their business model. So let’s take an example. Let’s take an industrial company that has very high CO2 emissions. While this company would have a very high interest in investing in carbon capture and storage projects, but these projects would definitely not fit in a green bond taxonomy. So, what we’re saying with transition bonds is that if the company is willing to transform and has a strong environmental strategy, strong commitment and very strong targets, we’re willing to help them take these intermediate steps so that one day they can also be part of the green bond market. 

Presenter: So, Solène, final question. Where do you see ESG going within the wider fixed income landscape?

Solène Danière: Well seeing how fast things have changed in the past few years and how broad the ESG topic is, it is difficult to predict how things will evolve. But I have a couple of things in mind, a couple of things we’re working on at the moment to take ESG integration next steps. The first one is obviously transition bonds, we’re definitely hoping that this will be a bigger part of the fixed income market, and we’re working on a broader impact framework as well to be able to screen the entire credit universe basically based on impact metrics. 

The second point is climate change. It’s a growing preoccupation for investors, for governments. It’s supported by strong initiatives in the regulation space. And we set up our climate framework back in 2018. It’s part of our day-to-day ESG integration process. But we also want to go further. And that’s what we’re currently working on. And, we’re very excited about new initiatives in that space, and new innovations regarding forward-looking metrics, portfolio temperatures and being able to run full scenario analysis on the portfolio to measure the alignment with the 2-degree scenario. 

Important information

This communication is for Professional Investors only and must not be relied upon by retail clients.  Circulation must be restricted accordingly.  Any reproduction of this information, in whole or in part, is prohibited.

This communication is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalised recommendation to buy or sell securities. It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date.

The views expressed do not constitute investment advice, do not necessarily represent the views of any company within the Group and may be subject to change without notice. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein.


All information in this communication is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document. Furthermore, due to the subjective nature of these opinions and analysis, these data, projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. 


Before making an investment, investors should read the relevant Prospectus and the Key Investor Information Document / scheme documents, which provide full product details including investment charges and risks. The information contained herein is not a substitute for those documents or for independent advice. Some of the investment vehicles mentioned may not be available in certain jurisdictions. Please check the countries in which they are registered with the asset manager.

Past performance is not a guide to future performance.  The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. Due to this and the initial charge that is usually made, an investment is not usually suitable as a short term holding.

Issued by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales No: 01431068. Registered Office: 7 Newgate Street, London EC1A 7NX. Telephone calls may be recorded for quality assurance purposes.

© AXA Investment Managers 2019