AMX UCITS ICAV – AXA Investment Managers – Euro Long Term Credit

Legal entity identifier: 635400TJOBOY5PHLE847

This document provides disclosure requirements according to Article 10 of Regulation (EU) 2019/2088, for the financial products referred to in Article 8 of the Regulation

Capitalised terms used in this document shall have the same meaning ascribed to them in the latest version of the prospectus of the Company (the “Prospectus”), unless the context otherwise requires.

Summary

Environmental or Social characteristic promoted by the Financial Product

The environmental and social characteristics promoted by the Financial Product consist of investing in:

Preservation of climate with exclusion policies on coal and oil sand activities
Protection of ecosystem and prevention of deforestation
Better health with exclusion on tobacco
Labour rights, society and human rights, business ethics, anti-corruption with exclusion on companies in violation of international norms and standards such as the United Nations Global Compact Principles, International Labour Organisation’s (ILO) Conventions or the OECD guidelines for Multinational Enterprises.
issuers considering their carbon intensity.

No ESG reference benchmark has been designated for the purpose of attaining the environmental or social characteristics promoted by this Financial Product.

AXA IM also applies specific policy to ensure good governance practices of investee companies.

Asset allocation planned for the Financial Product

The Financial Product aims to plan its assets’ allocation as presented in the graph above. This planned asset allocation might deviate on a temporary basis.

The planned minimum proportion of the investments of the Financial Product used to meet the environmental or social characteristics promoted by the Financial Product is 80% of the Financial Product Net Asset Value.

The planned minimum proportion of sustainable investments of the Financial Product where that Financial Products commits to making sustainable investments is 0% of the Financial Product Net Asset Value.

The remaining "other" investments will represent a maximum of 20% of the Financial Product Net Asset Value.

Financial Product’s investment strategy

The investment strategy of the Financial Product is principally to invest in Investment Grade bonds with maturities (including residual maturity) not less than 10 years at the time of purchase and minimizing downgrades into high yield. The Portfolio Manager seeks to minimise downgrades by primarily investing in bonds rated at least A- by Standard & Poor’s or such any other equivalent rating with maturities not less than 10 years.

The Portfolio Manager selects investments by applying an extra-financial approach based on the exclusion filters as described in the Portfolio Manager’s Top-Level Policies and ESG Standards.

As detailed in the "ESG Approach" section, in order to attain the environmental and social characteristics promoted by the Financial Product, all investments are selected using both the binding Top-Level Policies and ESG Standards, and the ESG scoring system.

Sectorial and Normative Exclusions:

In order to manage ESG and sustainability tail-risks, the Sub-Fund has the Top Level Policies.

By applying the Top-Level Policies to the Sub-Fund’s investments, which focus on the ESG elements outlined above, the Portfolio Manager excludes investments in:

a) Climate Risk

Coal - Companies where revenues from coal production or from coal power generation is higher than 15%.
Oil Sands - Companies for which oil sands represents more than 5% of global oil sands production.
Shale/Fracking – Companies that produce less than 100kboepd of shale and tight oil & gas and with more than 30% of their total production derived from fracking.
Arctic - Divestment from companies deriving more than 10% of their production from this region or representing more than 5% of the total global Arctic production.

b) Controversial Weapons

Companies that produce, use, store, trade, or ensure the maintenance of, transport or financing of controversial weapons including components specifically designed for those types of controversial weapons (i.e., customised components).
Companies that provide support, research or technology dedicated only to those controversial weapons.
Companies that breach the Treaty on the Non-proliferation Treaty of Nuclear Weapons.

c) Ecosystem Protection & Deforestation

Palm Oil – Companies that derive at least 5% of their revenues from palm oil production whether directly or indirectly through majority-owned (50%) subsidiaries or own over 30,000 hectares of palm oil plantations.
Soy, Cattle & Timber - Companies with controversial practices in land use and biodiversity (e.g., companies classified as "critical" for their impact on forests according to the Carbon Disclosure Project and with controversial practices in environmental supply chain incidents, operational incidents or environmental products and services incidents).

d) Soft Commodities

Instruments such as commodity futures and ETFs based on food ("soft") commodities or enter into speculative transactions that may contribute to price inflation in basic agricultural or marine commodities (such as wheat, rice, meat, soy, sugar, dairy, fish, and corn).

In addition to the Top-Level Policies, the Portfolio Manager has identified certain sectors, products and services which the Sub-Fund will not invest in above a certain threshold due to ESG-related risk factors. The application of the ESG Standards results in the exclusion of:

Tobacco - Companies involved in the production of tobacco (revenue generated by production of tobacco >0%).
White Phosphorus - Companies involved in the development, production, maintenance or sale of white phosphorus weapons.
Severe Controversies - Companies exposed to severe controversies (Category 5 of Sustainalytics’ Controversies Research methodology).
Violations of International Norms and Standards - Companies assessed as being "non-compliant" with the UNGC, OECD guidelines for MNE, ILO Conventions or UNGP for Business and Human Rights.
Low ESG Quality- Companies with a low ESG score (<1.43 scores between 0 and 10), using the Portfolio Manager’s ESG Scoring methodology (detailed below).
Countries with Severe Human Rights Violations
- Countries in the bottom quintile of the Civil Liberties score from Freedom House.
- Countries in the bottom quartile of the Global Slavery index from the Walk Free Foundation.
- Countries in the bottom quartile of the Child Labour index of UNICEF.

Further detail and information in relation to the Top-Level Policies and ESG Standards is available here: Our Sustainability policies and reports.

All of the above exclusion policies aim to systematically address the most severe sustainability risks into the investment decision-making process. They may evolve over time.

ESG Scoring:

The Portfolio Manager has implemented scoring methodologies to rate issuers on ESG criteria (corporates, sovereigns, green, social and sustainability bonds).

These methodologies are based on quantitative data from several data providers and have been obtained from non-financial information published by issuers and sovereigns as well as internal and external research. The data used in these methodologies include carbon emissions, water stress, health and safety at work, supply chain labour standards, business ethics, corruption, and instability.

The corporate scoring methodology relies on three-pillars and several sub-factors that cover the main issues encountered by businesses in the E, S and G fields. The frame of reference draws on fundamental principles, such as the United Nations Global Compact, the OECD Guidelines for Multinational Enterprises, the International Labour Organisation conventions, and other international principles and conventions that guide companies’ activities in the field of sustainable development and social responsibility. The analysis is based on the most material ESG risks and opportunities previously identified for each sector and company, with 10 factors: Climate Change, Natural Capital, Pollution and Waste, Environmental Opportunities, Human Capital, Product Liability, Stakeholder Opposition, Social Opportunities, Corporate Governance and Corporate Behavior. The final ESG score also incorporates the concept of industry-dependent factors and deliberately differentiates between sectors, to overweight the most material factors for each industry. Materiality is not limited to impacts relating to a company’s operations, it also includes the impacts on external stakeholders as well as the underlying reputational risk arising from a poor grasp of major ESG issues.

In the corporate methodology, the severity of controversies are assessed and monitored on an ongoing basis to make sure that the most material risks are reflected in the final ESG score. The controversies with high severity will trigger large penalties on the sub-factor scores and ultimately on the ESG scores. Company controversies are assessed, pursuant to Sustainalytics’ Controversies Research, on the following aspects: i) the nature and scale of the negative impact that the incident has caused to society and the environment; ii) the business risk to the company as a result of the incident; and iii) how the company manages the issue. Companies are then rated on a scale of Category 1 (low severity) to Category 5 (most severe/high severity) to reflect the severity of the issue and the company’s level of involvement as well as response. The Portfolio Manager excludes companies rated in Category 5.

These ESG scores provide a standardized and holistic view on the performance of issuers on ESG factors and enable the Sub-Fund to promote environmental and/or social factors and further incorporate ESG risks and opportunities in the investment decision.

One of the main limitations of this approach is related to the limited availability of data relevant to assess sustainability risks: such data is not yet systematically disclosed by issuers, and when disclosed may follow various methodologies. The investor should be aware that most of the ESG factors information is based on historical data and that they may not reflect the future ESG performance or risks of the investments.

The ESG scoring methodology is fully integrated in the investment process of the Sub-Fund for taking into account ESG criteria in the investment strategy as well as to monitor the sustainability risk on the basis of the Sub-Fund’s average ESG score.

Issuers are rated based on the ESG scoring methodology on a scale of 0 to 10. The Portfolio Manager considers any score below 1.43 to be a poor ESG score. Any score above 5 is considered a good ESG score. Any changes to the "Low ESG quality" score threshold will be communicated to Shareholders via an update to the ESG Scoring Framework, which Shareholders can find at: Putting ESG to work.

For more information regarding the Portfolio Manager’s ESG scoring methodology, please see the Portfolio Manager’s Article 29 - Task Force on Climate-related Financial Disclosures Report: 2022 AXA IM - TCFD – Article 29 report.

More details and information are presented in the Financial Product’s website disclosures and in its SFDR precontractual annex notably on AXA IM's SFDR sustainability framework, minimum asset allocation planned by the Financial Product, monitoring of environmental or social characteristics promoted, underlying data and due diligence.

Website product disclosure

No sustainable investment objective

This Financial Product promotes environmental or social characteristics but does not have as its objective sustainable investment.

Environmental or social characteristics of the financial product

The environmental and social characteristics promoted by the Financial Product consist of investing in:

Preservation of climate with exclusion policies on coal and oil sand activities
Protection of ecosystem and prevention of deforestation
Better health with exclusion on tobacco
Labour rights, society and human rights, business ethics, anti-corruption with exclusion on companies in violation of international norms and standards such as the United Nations Global Compact Principles, International Labour Organisation’s (ILO) Conventions or the OECD guidelines for Multinational Enterprises.
issuers considering their carbon intensity.

No ESG reference benchmark has been designated for the purpose of attaining the environmental or social characteristics promoted by this Financial Product.

Investment strategy

Sectorial and Normative Exclusions:

In order to manage ESG and sustainability tail-risks, the Sub-Fund has the Top Level Policies.

By applying the Top-Level Policies to the Sub-Fund’s investments, which focus on the ESG elements outlined above, the Portfolio Manager excludes investments in:

a) Climate Risk

Coal - Companies where revenues from coal production or from coal power generation is higher than 15%.
Oil Sands - Companies for which oil sands represents more than 5% of global oil sands production.
Shale/Fracking – Companies that produce less than 100kboepd of shale and tight oil & gas and with more than 30% of their total production derived from fracking.
Arctic - Divestment from companies deriving more than 10% of their production from this region or representing more than 5% of the total global Arctic production.

b) Controversial Weapons

Companies that produce, use, store, trade, or ensure the maintenance of, transport or financing of controversial weapons including components specifically designed for those types of controversial weapons (i.e., customised components).
Companies that provide support, research or technology dedicated only to those controversial weapons.
Companies that breach the Treaty on the Non-proliferation Treaty of Nuclear Weapons.

c) Ecosystem Protection & Deforestation

Palm Oil – Companies that derive at least 5% of their revenues from palm oil production whether directly or indirectly through majority-owned (50%) subsidiaries or own over 30,000 hectares of palm oil plantations.
Soy, Cattle & Timber - Companies with controversial practices in land use and biodiversity (e.g., companies classified as "critical" for their impact on forests according to the Carbon Disclosure Project and with controversial practices in environmental supply chain incidents, operational incidents or environmental products and services incidents).

d) Soft Commodities

Instruments such as commodity futures and ETFs based on food ("soft") commodities or enter into speculative transactions that may contribute to price inflation in basic agricultural or marine commodities (such as wheat, rice, meat, soy, sugar, dairy, fish, and corn).

Tobacco - Companies involved in the production of tobacco (revenue generated by production of tobacco >0%).
White Phosphorus - Companies involved in the development, production, maintenance or sale of white phosphorus weapons.
Severe Controversies - Companies exposed to severe controversies (Category 5 of Sustainalytics’ Controversies Research methodology).
Violations of International Norms and Standards - Companies assessed as being "non-compliant" with the UNGC, OECD guidelines for MNE, ILO Conventions or UNGP for Business and Human Rights.
Low ESG Quality- Companies with a low ESG score (<1.43 scores between 0 and 10), using the Portfolio Manager’s ESG Scoring methodology (detailed below).
Countries with Severe Human Rights Violations
- Countries in the bottom quintile of the Civil Liberties score from Freedom House.
- Countries in the bottom quartile of the Global Slavery index from the Walk Free Foundation.
- Countries in the bottom quartile of the Child Labour index of UNICEF.

Further detail and information in relation to the Top-Level Policies and ESG Standards is available here: Our Sustainability policies and reports.

All of the above exclusion policies aim to systematically address the most severe sustainability risks into the investment decision-making process. They may evolve over time.

ESG Scoring:

The Portfolio Manager has implemented scoring methodologies to rate issuers on ESG criteria (corporates, sovereigns, green, social and sustainability bonds).

The corporate scoring methodology relies on three-pillars and several sub-factors that cover the main issues encountered by businesses in the E, S and G fields. The frame of reference draws on fundamental principles, such as the United Nations Global Compact, the OECD Guidelines for Multinational Enterprises, the International Labour Organisation conventions, and other international principles and conventions that guide companies’ activities in the field of sustainable development and social responsibility. The analysis is based on the most material ESG risks and opportunities previously identified for each sector and company, with 10 factors: Climate Change, Natural Capital, Pollution and Waste, Environmental Opportunities, Human Capital, Product Liability, Stakeholder Opposition, Social Opportunities, Corporate Governance and Corporate Behaviour. The final ESG score also incorporates the concept of industry-dependent factors and deliberately differentiates between sectors, to overweight the most material factors for each industry. Materiality is not limited to impacts relating to a company’s operations, it also includes the impacts on external stakeholders as well as the underlying reputational risk arising from a poor grasp of major ESG issues.

The Financial Product doesn’t invest in companies which cause, contribute or are linked to violations of international norms and standards in a material manner. Those standards focus on Human Rights, Society, Labour and Environment. The Portfolio Manager relies on an external provider’s screening framework and excludes any companies that have been assessed as "non-compliant" to UN’s Global Compact Principles, International Labour Organisation’s (ILO) Conventions, OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights (UNGPs).

In addition, ensuring good governance practices is also addressed by the engagement policies. The Portfolio Manager implements a comprehensive active ownership strategy – engagement and voting – where the Portfolio Manager acts as stewards of investments made on the Financial Product’s behalf. The Portfolio Manager views engagement as a means for investors to influence, shape and shift investee company policies and practices to mitigate risks and secure long-term value. Governance practices of companies are engaged at first level by the portfolio managers and dedicated ESG analysts when meeting the companies’ management team. It is through the long-term investor status and in-depth knowledge of the investment targets that the Portfolio Manager feels legitimate to engage in a constructive but demanding dialogue with them.

Proportion of investments


		Taxonomy-aligned 0%
		Taxonomy-aligned 0%

		Other environmental 0%




		Social 0%

#1A Sustainable

#1 Aligned with E/S characteristics

80%

Investments

#1B Other E/S characteristics

80%

#2 Other

#1 Aligned with E/S characteristics includes the investments of the financial product used to attain the environmental or social characteristics promoted by the financial product.

#2 Other includes the remaining investments of the financial product which are neither aligned with the environmental or social characteristics, nor are qualified as sustainable investments.

The category #1 Aligned with E/S characteristics covers:

- The sub-category #1A Sustainable covers sustainable investments with environmental or social objectives.

- The sub-category #1B Other E/S characteristics covers investments aligned with the environmental or social characteristics that do not qualify as sustainable investments.

The Financial Product aims to plan its assets’ allocation as presented in the graph above. This planned asset allocation might deviate on a temporary basis.

The remaining "other" investments will represent a maximum of 20% of the Financial Product Net Asset Value.

The "other" assets may consist in:

cash and cash equivalent investments being bank deposit, eligible money market instruments (such as certificates of deposit, commercial papers and treasury bills) and money market funds used for managing the liquidity of the Financial Product, and
other instruments eligible to the Financial Product and that do not meet the environmental and/or social criteria described in this Appendix. Such assets may be debt instruments, derivatives investments and investment collective schemes that do not promote environmental or social characteristics and that are used to attain the financial objective of the Financial Product and / or for diversification and / or hedging purposes.

Environmental or social safeguards are applied and assessed on all "other" assets except on (i) non single name derivatives, (ii) collective investment schemes managed by another management company and (iii) on cash and cash equivalent investments described above.

Monitoring of environmental or social characteristics

The environmental and social characteristics promoted by the Financial Product are reflected in monitoring tool and monitored by AXA IM Risk and Control team at all times through the ban-lists established by AXA IM RI Research team on each exclusion policy described above. Ban-lists are built based on criteria defined in AXA IM policies that are presented under the following link: Our Policies and Reports (www.axa-im.com). The exclusion list is updated on an annual basis unless a specific event requires an intermediate revision or a delay in the publication of data from AXA IM sources which may postpone the update. Any updates are approved by dedicated governance body.

The sustainability indicator is reported to investment team in a specific report.

Methodologies for environmental or social characteristics

The attainment of the environmental and social characteristics promoted by the Financial Product and described above is measured with the following sustainability indicator:

The weighted average carbon intensity of the Financial Product, defined as the amount of GHG emissions per tons per millions $ revenue released into the atmosphere, expressed in CO₂e tons per millions $ revenue.
The weighted average ESG score of the Financial Product.

The ESG score is based on ESG scoring from an external data provider as primary inputs assessing data points across ESG dimensions. ESG scores are calculated by considering factors such as, but not limited to, carbon emissions, Health & Safety, and Corporate Governance. The weight given to each ESG factor depends on the specific industry that the issuer is in. Portfolio Manager analysts can complement this with a fundamental and documented ESG analysis in case of lack of coverage or disagreement on the ESG rating, provided that it is approved by a Portfolio Manager dedicated internal governance body. Further detail in relation to the "ESG score" is set out in the Supplement.

Data sources and processing

The AXA IM sectorial and ESG Standards’ ban-lists are prepared using information from external data providers. Data providers used to define those exclusion lists are detailed at the following link: Our Policies and Reports (www.axa-im.com). Ban lists are prepared and updated by AXA IM Responsible Investment Research team and approved by a dedicated governance body.

The ESG Scores rely on an external data provider (MSCI) coupled with an overlay of AXA IM’s own fundamental and documented ESG analysis. The proportion of data that are estimated is considered as being in the high range. Those ESG analysis are reviewed and approved in a dedicated governance body, the ESG Assessment and Review Committee.

The Carbon intensity (Scope 1+2) sustainability indicator is relying on an external data provider Trucost. These data are updated on an annual basis. The proportion of data that are estimated is considered as being in the high range.

AXA IM may change third party data providers at any time and at its own discretion and this may lead to changes to the data used for the same instruments or investments in the future.

AXA IM has been working with ESG data providers for several years and performs a due diligence on the methodology and outputs when selecting them. To make the best possible choices, the strengths and weaknesses of each data provider were reviewed and compared to determine factors such as coverage, data quality, alignment with sustainability-related regulations, calculation methodologies and level of transparency on these methodologies, update frequency and cost. When selected, AXA IM also performs regular checks on such external data providers. Regarding ESG scores and Sustainable Investment methodology in particular, each refresh of data is subject to a review as per our internal governance with an involvement from the risk department, quantitative experts and investment teams.

Data is received generally from automated data feeds. Values are cascaded to relevant associated issuers or securities and are then processed to aggregate instrument level data at portfolio level. Appropriate controls on aggregation are performed by quant analysts. Data is stored in AXA IM data management system and is made available to various teams (mainly quant analysts, investment teams, risk and control). Investment teams have access to ESG data of which related to sustainability indicators and sustainable assets through AXA IM Front Office tools.

More information on data providers, measures and any relevant governance bodies taken to ensure data quality and governance on data is available in AXA IM Climate report at the following link: 2021 Article 173 – TCFD combined report.pdf

Limitations to methodologies and data

Methodologies may evolve in the future to take into account any improvements for example in data availability and reliability, or any developments of, but not limited to, regulations or other external frameworks or initiatives.

AXA IM relies largely on third-party data providers on ESG related data. Ultimately, data coming from either the issuers’ reporting or external providers might not be equally calculated due to different measurement methodologies or an embedded risk of error. AXA IM may also change third party data providers at any time and at its own discretion and this may lead to changes and hence limitations to the data used for the same instruments or investments.

However, AXA IM conducts some due diligences on data or methodologies that could prevent any limitations in the attainment of environmental or social characteristics promoted by the Financial Product.

Due diligence

AXA IM sectorial exclusion policies encompass areas such as Controversial Weapons, Climate risks, Soft Commodities and Ecosystem Protection & Deforestation and Tobacco. AXA IM’s Environmental, Social and Governance standards policy ("ESG Standards") integrates specific sectorial exclusions such as white phosphorus weapons, includes violation of international norms and standards such as the United Nations Global Compact Principles or the OECD guidelines for Multinational Enterprises and excludes investment companies which are involved in severe ESG-related incidents and investments in issuers with a Low ESG quality. Instruments issued by countries where serious specific categories of violations of Human Rights are observed are also banned. More details on those policies are available at Our Policies and Reports (www.axa-im.com).

AXA IM’s exclusion policies and ESG standards are reviewed annually by our Compliance and RI Coordination teams and updated accordingly. Based on these policies and standards, our responsible Investment Research team draws up ban lists which are then implemented into our systems to be monitored.

The Financial Product's other extra-financial commitments are also implemented through our monitoring tool which take into account other regulations and extra-financial guidelines (such as, but not limited to, Label guidelines). The parameters used for the monitoring are reviewed by our Compliance team before being implemented into our monitoring tools.

These due diligence processes’ implementation and monitoring are controlled internally by our Compliance team to ensure compliance with applicable regulatory norms.

Engagement policies

AXA IM implemented a comprehensive active ownership strategy – engagement and voting – where AXA IM acts as stewards of investments made on the clients' behalf. AXA IM views engagement as a means for investors to influence, shape and shift investee company policies and practices to mitigate risks and secure long-term value. Governance practices of companies are engaged at first level by the portfolio managers and dedicated ESG analysts when meeting companies’ management team. It is through the long-term investor status and in-depth knowledge of the investment targets that AXA IM feels legitimate to engage in a constructive but demanding dialogue with them.

An engagement action can be initiated with corporate issuers subject to severe controversies with progress of engagement activities is monitored by RI dedicated governance committee.

More details on AXA IM Stewardship policies are available at AXA Investment Managers - Engagement Policy and AXA IM last stewardship report is available at Stewardship and Engagement (www.axa-im.com).

Designated reference benchmark

Not Applicable

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