Paying for the planet: Can asset management solve the sustainability challenge?

AXA IM Core’s Hans Stoter says that the industry has a defining role in the world’s transition to a net zero economy

For Hans Stoter, sustainability has always been about more than protecting the earth – it goes to the very heart of redefining civilisation on our planet. And, as Global Head of AXA IM Core, he believes that the asset management industry plays a crucial role.

“I’m part of the generation that can do something about climate change, and I’m in a sector that can help to safeguard our way of life for the generations to come,” he says.

Stoter, who lives on the Netherlands’ north coast, argues that global asset management is ultimately responsible for delivering capital to the companies, projects and innovations that will lead the way towards a net zero economy by 2050.

Part of that journey, he explains, involves ensuring sufficient investment in the technology required for different forms of clean energy, from more wind and solar power – as well as improved storage – to completely new sources such as green hydrogen.

But the asset management industry, which handles about $100tn in global funds, will also have to supply capital to help today’s polluting companies transition to low carbon models. “If you start out by saying that you will only finance best-in-class companies, that is not going to do it,” he says. “We need to help companies go from brown to green.”

AXA IM, which has about $1tn under management, uses engagement as a lever to help businesses undertake that journey. Working with management can help define key performance goals on the path towards sustainability.

Roughly 41 per cent of AXA IM’s eligible assets are currently in line with the Net Zero Asset Managers Initiative, which sets out the objective to limit future global warming by 2050. But Stoter insists that the true test of the industry is to improve collaboration so that the entire sector sets the same standards and goals.

For example, active asset managers should collaborate more closely on divesting of companies that do not stick to their sustainability targets. “The real challenge for our sector is to put your money where your mouth is and say, ‘OK, we tried and it didn’t work so we’re exiting,” he insists. “At the moment, there is a lot of engagement but the examples of actual hard divestments are few and far between.”

Better collaboration on sustainability issues will provide an effective tool for financing the shift to a low carbon global economy, which will mean keeping large parts of life as we know it intact – albeit with some adaptation. A keen runner, Stoter always takes the train to work to reduce carbon emissions from more polluting forms of transport. He has also adopted a plant-based diet aligned with more sustainable forms of agriculture.

“We can either run away from the problem we caused, or towards the solutions that are within our grasp,” he says. “I think the choice is clear. We must act. And act today.”

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