AXA’s newest report, building on our their first two Climate reports, explores both investments and insurance-related developments, as well as their Climate and more general “Environment, Social and Governance” (ESG) strategy. It is structured around the Taskforce on Climate-related Financial Disclosures’ structure: Governance, Strategy, Risk Management and Metrics & Targets.

It seeks to model both the impact that climate-related risks may have on their investments (what AXA has termed the “cost of climate”, expressed in financial terms) and conversely the impact that their investments (ie. the businesses and governments they finance) may have on the climate (called here the “warming potential”, expressed in “temperature”).

For their corporate assets, AXA uses Carbon Delta’s “Warming Potential”, combining top-down data derived from the Paris Agreement and bottom-up economic, sector and company data to establish a forward-looking set of climate-related metrics.

One of the key features of Carbon Delta’s approach is to calculate the share of global “carbon budgets” that companies have depending on their geographic footprint and sector, as well as business mix. By working with Carbon Delta, AXA was also able to produce a more balanced Warming Potential approach considering both companies’ absolute and sector relative contributions to global warming.

Read the full report here.