Axa announces a series of measures combining engagement and exclusion strategies for companies active in the palm oil, wood, farming and soy sectors (1).
While some companies will be immediately excluded from AXA’s investment and insurance portfolio, others face an ultimatum to respond to the insurer’s demands. This is the case for soy traders, which have until the end of 2023 at the latest to no longer transport soy produced on converted or deforested land after the date of the 1st January 2020 (2). AXA will divest from traders who do not satisfy these demands (3), and they will not be able to renew insurance contracts linked to soy cargo as of 2024.
Klervi Le Guenic from Canopée explains: “Contrary to BNP Paribas, AXA has grasped the importance of concrete measures: excluding traders responsible for deforestation. Although the implementation timeline is still too slow, this is a step in the right direction, which other financial players must emulate.”
The soy culture in the Cerrado region of Brazil is one of the main drivers of deforestation globally. The Cerrado is today one of the most threatened ecosystems in the planet : 50% of its original surface has already been destroyed. Its disappearance would be a disaster for the climate and for biodiversity, given that it stores 13.7 billion tons of carbon dioxide (CO2) and is home to 5% of global biodiversity (5). Notable soy traders concerned include Cargill, Bunge, ADM and Louis Dreyfus, companies which transport soy cultivated in the Cerrado onto international markets (6).
“More than 230,000 people have mobilised to demand that BNP and other financial institutions stop financing deforestation (7). Ultimately, financial support from major players like AXA is what allows soy companies like Cargill to carry on with their destructive practices. We call on all financial players to stop financing climate chaos, to exclude, straight away, traders who transport soy produced on deforested land and to respect, without delay, the cut-off date of the 1st January 2020,” comments Leyla Larbi, campaigner at SumOfUs.
AXA has also committed to strongly restrict its insurance cover for new mining, energy and infrastructure projects which would impact Unesco natural world heritage sites (8). This notably includes oil and gas projects. However, it does not involve a strict exclusion and exceptions are authorised, including for new projects in cases of compensation or mitigation.
“It’s a timid first step to tackling the climate emergency. The IEA yesterday reaffirmed in its World Energy Outlook that achieving carbon neutrality, an objective held by AXA as chair of the Net-Zero Insurers’ Alliance (NZIA), necessitates no longer opening new oil and gas fields. The insurance giant must go a lot futher if it wants to be seen as credible on the climate question in the run up to Climate Finance day and COP26,” concludes Lucie Pinson, executive director of Reclaim Finance.