How do we do impact investing at Axylia?

Since 2005, Axylia has advised charities, foundations, endowment funds and companies who want their money to serve their values without sacrificing performance. Twenty years on, responsible finance has become a market in its own right, complete with its own labels, its greenwashing controversies, and methodologies that are sometimes opaque. Against this backdrop, we think it's worth explaining concretely how we work: our advisory method, and the two proprietary tools we've developed to make what too often remains a matter of self-reported claims more objective.

A starting point: financial value and social value are not at odds

Our founding conviction is simple, and it hasn't changed since 2005: non-financial criteria (environmental, social, governance) are not constraints weighing on returns, but analytical elements that help identify risk more effectively and, ultimately, protect an investment's profitability. A company that fails to anticipate its carbon trajectory, for instance, exposes itself to regulatory, reputational and financial risk that traditional analysis grids don't always capture.

This conviction translated early on into initiatives we were among the first to champion in France: creating one of the first SRI fund-of-funds (Plurial Éthique, launched in 1995), setting up shareholder-engagement funds, publishing a French inventory of impact investing products, and carrying out one of the first non-financial impact assessments for an investment fund. We are B Corp certified, with a score of 87 out of 100, and we donate 1% of our revenue to Eco Habitat, an association working on the renovation of poorly insulated homes.

Our method: a three-step advisory process

In practice, when a client (a charity, foundation or endowment fund) entrusts us with all or part of its portfolio, our support unfolds in three stages, which can also be deployed independently depending on needs:

1. Analysis and diagnosis. We start by quantifying the financial commitments weighing on the institution, projecting its future costs and revenues, setting an appropriate financial benchmark and identifying its societal commitments. We also analyse the performance and fees of existing mandates and funds, to build an unvarnished picture of where things stand.

2. Operational recommendations. On this basis, we either work from the client's existing SRI charter or help build one: identifying precisely its societal expectations (sector exclusions, pay equity, climate change, tobacco or obesity, disability inclusion, etc.). We then select the most suitable funds and products, and launch tenders where necessary to create dedicated funds.

3. Monitoring and rebalancing. Support doesn't stop at the initial selection: we oversee the portfolio on an ongoing basis, provide regular financial and SRI reporting, meet with fund managers, renegotiate fees where relevant, and defend the client's interests over time.

This choice — favouring pooled funds over direct lines — serves a pragmatic purpose: saving our clients time, letting them focus on their strategic decisions, and benefiting from the pooling and diversification that collective management offers.

The Axylia Carbon Score®: making the carbon bill legible

The trigger came from a client dissatisfied with conventional ESG ratings. Our own analysis proved them right: ESG ratings mostly reflect a company's ability to fill out a questionnaire, not its real externalities — a finding documented by Florian Berg in his paper "Aggregate Confusion: The Divergence of ESG Ratings", which shows that correlations between ratings from six major agencies for the same company range between 0.38 and 0.71.

Rather than settle for that observation, we built a new methodology: the Axylia Carbon Score®, which rates a company from A to F on its ability to pay its carbon bill — its CO2 emissions (all scopes included), priced using the IPCC's carbon cost, weighed against its profitability and its trajectory through to 2030. To our knowledge, no other financial advisory firm has built a proprietary methodology of this kind.

This methodology is now fed by carbon data provided by the 400 largest European listed companies. This work laid the foundation for the Vérité 40 Index, which brings together the 40 French listed companies judged best able to pay their carbon bill today and by 2030 — an index that later gave rise to a listed financial product at the end of 2022.

Carbon Score Finance: addressing a blind spot in the sector

The financial sector has a particularity that conventional ESG grids capture poorly: its direct carbon footprint (offices, branches, travel) is marginal compared with that of the assets it finances and insures. So-called "financed" emissions account for, by industry estimates, over 99% of a financial institution's total climate impact — yet they remain largely absent from traditional ESG assessments.

To address this blind spot, we developed Carbon Score Finance®, an adaptation of our methodology calibrated to assess — this time — not the emissions themselves, but the depth and transparency of financial institutions' greenhouse gas reporting, measured against the PCAF (Partnership for Carbon Accounting Financials) framework, now adopted by over 600 institutions worldwide and aligned with the GHG Protocol, TCFD and CSRD. This assessment rests on 12 criteria organised around three dimensions — the share of the portfolio covered by the calculation, the reliability of the methods used, and the transparency of disclosure — weighted according to each institution's business model, to produce a score out of 100.

Where do we actually invest?

Based on their non-financial expectations, time horizon and liquidity constraints, our clients are directed toward different investment buckets:

● Low-carbon-risk listed equities, to benefit from market liquidity while reducing exposure to climate risk.

● Unlisted impact investments, in funds that finance directly useful activities: microfinance and financial inclusion in the Global South, and positive-impact activities more broadly.

● Sustainable real estate, through funds that finance the energy renovation of housing in France.

● Renewable energy, through funds that finance the creation or transformation of infrastructure.

What sets us apart ?

In an increasingly crowded responsible-finance advisory market, here is what we believe makes the difference:

● Track record: a pioneer since 2005, with an ecosystem and methodologies built over 20 years, well before regulation (SFDR, CSRD, taxonomy) made these topics mandatory.

● Market coverage: French and European fund managers and funds, spanning all asset classes, themes, SDGs and regions.

● Direct field contact: meetings with the fund managers themselves, not just sales teams, to assess the reality of a strategy beyond its marketing pitch.

● Depth of due diligence: analyses that can extend over several months when the subject demands it, including site visits where necessary to verify on the ground what a report doesn't always show.

● Ongoing rather than reactive monitoring: some themes are tracked for several years, sometimes, before an actual investment is recommended, giving the strategy, team or vehicle time to reach the required level of transparency.

● Volume advised: several hundred million euros in portfolios supported since 2005.

● Claimed neutrality: our role is to find the impact strategy that meets each client's specific asset-liability constraints.

In summary

Our approach rests on three pillars: a structured three-step advisory method (diagnosis, recommendation, monitoring), proprietary tools to make carbon data more objective rather than relying on aggregated labels, and a fund selection spread across several asset classes and impact themes. Twenty years after our first SRI fund-of-funds, this approach keeps evolving (the recent creation of Carbon Score Finance is one example) as regulatory requirements (CSRD, PCAF) and our clients' expectations become more precise.

To learn more about our methodology or discuss your investment strategy, contact our team.