Daniel Pentzlin
Economic Justice Campaigner
Friends of the Earth Europe (FoEE) / Banktrack
19/12/2011
Dear Mr. Pentzlin,
Thanks for giving us extra time to look into your query, as well providing us with a draft AXA profile, which helped us to better identify our exposure to this type of investment.
Your new campaign raises two distinct issues: farmland investments that may contribute to "land grabbing", and investments in "soft commodities" that may contribute to food price increases. AXA is indirectly involved in the former through investments in certain companies, and proposes funds that feature investments in the latter, as listed in your draft report (please note that agricultural commodities constitute only a fraction of the funds involved). However, whilethe link between hunger and food prices is relatively plain, the link between commodities derivatives trading and food price increases and volatility is less clear among academics.
Indeed, if financial speculation in food commodity markets may contribute to food price increases, as explained in the UN Special Rapporteur on the Right to Food's 10/2010 briefing note,food prices are sensitive to a host of other factors, which include trade restrictions, production capacity, itself subject to local issues such as biofuel production or food distribution, as well as global concerns such as energy prices, climate change or rising global demand for agricultural products andgrain-fed livestock.
You will see in the questionnaire below that our exposure to these assets remains limited, especially when compared to the Group’s total assets under management (1,104 Bn € as of December 31, 2010).
Furthermore, as both AXA IM and AllianceBernstein are signatories to the UN PRI, we are able to confirm that the AXA IM funds you have identified comply with the UN PRI recommendations for investments in soft commodity derivatives, as set out in p7 of the “Responsible Investor’s Guide to Commodities” (see p7 of We can also confirm that AXA Real Estate’s portfolio, where AXA IM’s land holdings are located, is also compliant with the UN PRI recommendations for investments in farmland (indeed AXA Real Estate’s land investments are forest-based). Please note that we are still investigating AllianceBernstein’s potential exposure to such assets.
However, owing to the topic’s emerging nature and limited exposure, the Group currently does not have adedicated policy covering investments in soft commodities or land deals.Nevertheless, as the AXA Group is committed to supporting responsible investment practices, we are committed to investigate further the issues youraise, with the help of the AXA Group Responsible Investment Committee, as wellas AXA IM's RI team, expertise and tools. The Responsible Investment Committee was created in 2010, under the chairmanship of the Group CIO, with the objective to define a comprehensive GroupRI strategy and policy, so this issue will certainly be submitted for closer review in the coming months.
We naturally remain open to discussing these issues further with Banktrack or affiliated NGOs, and will revert to you as soon as we have any additional information relevant for the questionnaire below.
Kind regards,
Alice Steenland
Vice President - Corporate Responsibility
AXA Group