AXA IM Aligns Executive Bonuses To Its ESG Ambitions

Amanda Cheesley Deputy Editor London 17 February 2023

AXA IM Aligns Executive Bonuses To Its ESG Ambitions

AXA Investment Managers has become the latest of a growing number of companies linking executive pay to ESG performance.

As part of its commitment to becoming net zero as a business and as an investor by 2050, AXA Investment Managers has said that it is including ESG targets in the remuneration of its senior executives.

The moves came in a bid to help the transition to a more sustainable world, it said in a statement yesterday. 

Other firms that have linked executive pay to ESG performance include Apple, Shell, McDonald’s, Pepsico, Unilver, Starbucks and Siemans. Apple, for example, announced plans in 2021 to tie executive bonuses to sustainability targets whilst Royal Dutch Shell announced in 2018 that it would tie executive compensation to short-term carbon emission targets. 

However, the issue has become a subject of increasing debate, with concerns riding high about greenwashing, highlighting the need for choosing meaningful metrics. Several oil and gas firms, for instance, have come under fire over the design of their incentive programmes which allowed executives to be given their bonuses even in years when the companies caused environmental damage or total emissions went up. 

Under the latest move, from 2023, the deferred compensation of about 400 people at AXA IM that will start to be paid in 2024 will include, alongside existing criteria, ESG metrics according to the employee’s business area and remit.

The new policy is reflected in the “AXA IM for Progress Monitor,” a set of metrics selected for their material contribution towards AXA IM’s ambition of becoming a responsible asset manager, the asset manager said.

The AXA IM for Progress Monitor metrics sit alongside AXA IM’s financial targets and indicators as additional indications of its progress as an investor and a business. Initially, it comprises eight metrics pertaining to net zero targets around the certain themes. This includes decarbonisation across the main asset classes and for the operations; the importance of engagement with investee companies and as employees of an asset manager; and solutions to consciously channel capital to companies and projects that can help accelerate the transition.

Progress towards these targets will be reported annually from 2023 and the AXA IM for Progress Monitor will evolve in time to factor in AXA IM’s commitments towards E, S and G criteria, the firm continued.

“As we further put sustainability at the heart of everything we do, we believe transparency and regular reporting on our progress and the challenges we may face is crucial. This is not something new at AXA IM but, with the launch of the AXA IM for Progress Monitor, we are choosing to visibly position our non-financial targets alongside our financial ones and to increasingly onboard our organisation to make our employees a part of our sustainability journey. Our adjusted deferred remuneration policy which falls within this objective is key to achieve our objectives and effect change on the road to net zero and beyond.” said Marco Morelli, executive chairman of AXA IM.

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