What do you see as the role of the financial industry when it comes to accelerating positive social impact?
The finance industry plays an important role in enabling positive social impact and achieving the Sustainable Development Goals. As a long-term, responsible and active investor, we are committed to making positive and lasting change. Large global asset managers, like us, benefit from the investment expertise across numerous asset classes, broad research capability (including in sustainability issues) and also, the access to investment opportunities from around the world. This allows for large sums of capital to be deployed efficiently and effectively to help achieve the dual goals of strong financial returns and positive social impact.
Why did AXA choose to partner with the Access to Medicine Foundation?
The Access to Medicine Foundation is an independent nonprofit organisation that stimulates and guides pharmaceutical companies to do more for the people living in low and middle-income countries without access to essential medicine. Our involvement with the Access to Medicine Foundation began long before the need to combat an unforeseen pandemic. We have been a member of the Foundation’s Expert Review Committee for some years and have also actively participated in pushing for positive change in the pharmaceutical industry through engaging collaboratively alongside other investors. With our latest initiatives, we aim to go a step further than this. As we become increasingly aware of the fragility of the world, we recognise a need for the financial industry to play a different and even more impactful role in our societies. We’re committing €500,000 that will be allocated to the Access to Medicine Foundation and its activities that pertain to the prevention and response to infectious diseases and pandemics such as the current COVID-19 pandemic.
What challenges are you looking to address in collaboration with the Foundation? What mechanisms are you putting in place to ensure that AXA IM is contributing to long-term change?
With this partnership with the Access to Medicine Foundation, our goal is to develop an infectious disease and pandemic resilient society. We will work together to evolve what best-in-class practice in research, impact investment and engagement looks like. This partnership will demonstrate the asset management industry’s power and responsibility to engage with governments and pharmaceutical companies to translate principles into practice. The broader objective is to steer what the future of impact investment means for society. I believe that our market presence, investment capabilities and engagement approach in conjunction with the Access to Medicine Foundation’s independent research and network in global health can lead to powerful and tangible outcomes. These will in turn lead to better action by the pharmaceutical industry to help achieve Sustainable Development Goal 3 – Good Health and Well Being. This is an example of how we seek to contribute to long-term change.
AXA has invested heavily in COVID-19 bonds. What are they and what purpose do they serve?
COVID-19 bonds are a new development in the sustainable bond market. They emerged in response to the spread of coronavirus around the world and the subsequent upheaval in healthcare systems and the wider economy. The battle against the COVID-19 pandemic will incur a huge cost to the global economy. We anticipate healthcare systems, governments, financial institutions and companies will need hundreds of billions dollars to cope with and recover from the crisis. According to the International Monetary Fund: “the cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around $9tn, greater than the economies of Japan and Germany, combined.” Institutional investors have an important role in the recovery by ensuring availability of and access to financing through capital markets.
The challenge in this fast-moving crisis is to ensure that capital can flow where and when it is most needed. One response to this challenge has been the emergence of COVID-19 bonds. We see the nascent COVID-19 bonds market as a new area for impactful debt issuance, with similarities to green and social bonds. We believe these bonds can help to address the current and future societal challenges of the pandemic. AXA IM is investing in these bonds to support the fight against COVID-19. Generally, COVID-19 bonds are issued to finance activities that can help with combatting the disease, by monitoring, testing and supporting public health services. Also, proceeds are used to assist businesses facing adverse economic impacts, by providing support to small and medium-sized enterprises (SMEs) facing cash flow issues, for example.
What impact investment trends do you think we’ll see in the wake of COVID-19?
We think that infectious disease and pandemic resilience will be a major area of impact investment focus in the coming years. The scale of the COVID-19 pandemic is unprecedented but the dynamics of the disease – how it spreads and affects patients – were, arguably, predictable. Coronavirus has exploited well-established inequalities in society and vulnerabilities in healthcare systems. So, although this highly infectious disease has impacted all our lives in some way, it has not affected us all equally. COVID-19 bonds are a good example of how quickly the finance and healthcare industries have responded to deal with the immediate emergency but in the medium term we expect there will be funding needs for major innovations in medicine, vaccines, protective equipment and diagnostics, alongside many other aspects.
About Yo Takatsuki
Yo Takatsuki joined AXA IM in November 2018 as Head of ESG Research and Active Ownership, overseeing delivery of in-depth global sustainability thematic research. Yo also is responsible for the engagement programme with investee companies. Prior to this, he spent seven years working as Director, Governance and Sustainable Investment at BMO Global Asset Management where he led the ESG engagement overlay service and established the listed impact investment practice. He also has previous experiences as a business journalist for the BBC, CNBC, Bloomberg News and Asahi Shimbun. Yo holds a MBA (distinction) from Cass Business School and a MA / BA (hons) undergraduate degree in Geography from the University of Cambridge.