AXA IM Alts is partnering with Brazilian carbon removal company Mombak to restore biodiversity in the Amazon rainforest.
The firm, which represents AXA Investment Managers' alternatives business and has more than €185 billion ($207.7 billion) in assets under management, has committed $49 million to finance the restoration of the Amazon jungle and has taken a minority stake in the Brazilian startup.
The investment will form part of AXA's natural capital and impact investing strategy, which has $1.5 billion in assets under management and is aimed at mitigating the effects of climate change.
Jonathan Dean, the firm's head of impact private equity fund management, said in an interview that AXA's impact platform existed for about 10 years and is focused on obtaining financial returns for investors alongside measurable environmental impact.
"We are focusing on mega trends in being able to address issues with society and the environment, more specifically health care and natural capital and nature-based solutions," he added.
The expansion of cattle farming in Brazil, which is responsible for greenhouse gas emissions, has destroyed habitat and food sources for the species that live in the rainforest. AXA's investment strategy is focused on restoring natural assets, such as land.
"We are looking to re-establish the rainforest on that land (in the Amazon) ...the process is to acquire a land, grow the trees and conserve it," Mr. Dean said.
"Carbon is being captured as these trees grow in the area; it's being stored in the stock of the area and that is the carbon removal exercise that can be credited by one of those carbon accreditation methodologies," he added.
The carbon credit market is predicted to grow between 15 and 100 times by 2050.
The firm can turn its investment into income through removal of carbon or avoidance of carbon that can be valued in the form of a carbon credit. For example, major corporations will buy carbon credits when they are short on their transition goals.
"They need to source high-quality credits to be able to meet targets they have signed up for," Mr. Dean said.