AXIS ESG EQUITY FUND(An open-ended equity scheme investing in companies demonstrating sustainable practices across Environment, Social and Governance (ESG) theme)

Presenting

NFO Period: 22nd Jan, 2020 to 5th Feb, 2020

This product is suitable for investors who are seeking*:• Capital appreciation over long term • Investments in companies demonstrating sustainable practices across Environment, Social and Governance (ESG) parameters. *Investors should consult their financial advisers if in doubt about whetherthe product is suitable for them.

Investors understand that their principal will be at high risk

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ESG?What is

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ESG measures the sustainability of the companyHow companies make money rather than just how much they make

How companiesare run

Business modeland strategy

The assetsthey own

How muchmoney theymake

Investmentperformance

Inputs Outcomes

Long term drivers Market’s focus

Source: Axis AMC Analysis, Schroders

The 3 pillars of ESG

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Each pillar captures a number of issues

Climate Change

Natural Resource Use

Waste Management

Environmental Opportunities

Human capital

Product Safety

Social Opportunities

Corporate Governance

Business Ethics

Government & Public Policy

• Carbon emissions, Product carbon footprint, Energy Efficiency

• Water stress, Biodiversity & Land use, Raw material sourcing, Financing Environmental Impact

• Toxic Emissions & Waste, Packaging material and waste, Electronic waste

• Opportunities in clean tech, green building, renewable energy

• Labor management, Health & Safety, Supply chain, Controversial sourcing

• Chemical safety, Financial Product Safety, Privacy & Data security, Insuring health

• Nutrition & Health, Access to communication, health & finance

• Practice & policies, disclosures

• Corruption & instability, Ethics and Fraud, Anti-competitive practices

• Financial System instability

Source: MSCI, Institute and Faculty of Actuaries

Environmental

Social

Governance

Why ESG? - Businesses are gettingincreasingly impacted by non-financial factors

All stakeholders (investors, customers, regulators)are getting more sensitive to these issues

Climate change Privacy and

data security Greaterregulatoryscrutiny Lifestyle

changes

Sustainablefarming/mining

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Weak ESG practices increase business risksESG factors and the impact on risk

ESG factors lead to a range of potential impacts on stakeholders

Environmental:Firm generating high levels of

pollution may suffer from a future tax

Social:Firm that poorly treats its employees or

suppliers may be boycotted by the consumers

Governance:Firm with poor governance

heavily fined by the regulator

Low ESG score = Higher risk

• Events can have a meaningful impact on the value of the firm

• Impact is uncertain

• Timeframe is long and uncertain

Source: Axis AMC analysis, Institute and Faculty of Actuaries

Support from business, investors and regulators

ESG has become a global priority

6Source: Google Trends (Data as on 20th Dec 2019); US| SIF Foundation, https://www.ussif.org/

100

90

80

70

60

50

40

30

20

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ESG: Worldwide ESG: India

Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 2005

178 202 5691412

4803

8098

11,632

2007 20010 2012 2014 2016 2018

Google searches on ESG Growth of ESG incorporationby Money Managers in the US

(in USD bn)Interest over time (%)

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EXTREME WEATHER EVENTS CLIMATE CHANGE POLLUTION

• High insurance claims

• Bad debt risks for banks and NBFCs

• Government push on Renewables

• Ban on diesel vehicles in Delhi

• Ban/restriction on construction activities by NGT

• Switch to efficient fuels

Source: Axis AMC analysis

ESG is affecting Indian companiesRecent environmental issues/events

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HEALTH AND LIFESTYLECHANGES

SOCIAL UNREST GOVERNMENT PUSH ONSOCIAL SCHEMES

ESG is affecting Indian companiesRecent social issues/events

• Consumer preference switching to Ayurvedic/Herbal products

• Farmers/Locals protest against land acquisitions

• Labor strikes against perceived unfair treatment

• Affordable housing

• Financial inclusion - Jan Dhan Yojana

• Health insurance - Ayushman Bharat Yojana

Source: Axis AMC analysis

9Source: Axis AMC analysis

TRANSPARENCY WHISTLEBLOWERS REGULATORY SCRUTINY

• Auditors, Board, Rating agencies in spotlight

• Multiple auditor resignations

• Companies hit by whistleblower complaint alleging misconduct

• RBI stepping in on board appointments for banks

ESG is affecting Indian companiesRecent governance issues/events

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Does ESG add valuefor investors?

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Sustainable businesses can generatesustainable growth

Source: Axis AMC analysis

Run for the long term

Taking into account impacton all stakeholders

Maintain structural growth

• Deliver compounding returns

to shareholders

• Have a lower cost of capital

• Command premium valuation

• Have a lower volatility and

reduced drawdown risk

Sustainablecompanies

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Does ESG add value?

*Percentage of studies showing. Data Source: Oxford report ‘From stockholder to stakeholder’ based on more than 200 academic studies (Mar 2015), Bloomberg, NSE, Axis AMC analysis.Past performance may or may not be sustained in future. Returns provided are CAGR for the period 31st Dec 2011 to 31st Dec 2019.

Global experience

90%*Cost of Capital:

Sound sustainability standards lower the

cost of capital of companies

Operational Performance:

Solid ESG practices result in improved

operational performance

Share price performance:

Good sustainability practices have a

positive influence on the performance of

shares

88%* 80%*

RISK REPUTATION RETURNS

Indian experience

Nifty100 ESG Index Nifty 50 Index

33% 32% 32%

4% 3%

29%

-2% -4%

3% 3%

31%

9% 7% 11%12%

28%

CY 2012 CY 2013 CY 2014 CY 2015 CY 2016 CY 2017 CY 2018 CY 2019

Returns (2011 –2019)

Nifty 100 ESG Index

14.5%

Nifty 50 Index

12.9%

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Axis Approachtowards ESG investing

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ESG is a logical extension to our philosophySupports our research on quality companies that can deliver sustainable growth

Axis Approach to ESG Investing

Process Enhancement

Integrating ESG in the overall investment process

Product Solution

Launching a dedicated ESG Fund

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Sustainability is more than ESG

ESG analysis is necessary but not sufficient

Needs to be seen in conjunction with other financial and business metrics

Conventional ESG metrics and 3rd party sources provide useful information but have limited investment value

Qualitative assessments using a deep understanding of the company are key

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ESG approach at Axis

A proprietary, forward-looking and dynamic view of ESG based on qualitative assessment of each company

Process created with inputs from Schroders – incorporating global best practices

All companies evaluated using a standardized framework that uses data as well as analyst assessments

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ESG process

Please refer SID for detailed investment strategy.

Detailed ESG assessment on

stock inclusion in the universe

Annual stock-level ESG review to capture changes to operating

environment

Review of specific ESG issue faced by

any company in the universe

Active engagement with management –

improved disclosures, proxy voting

Process designed based on Schroders inputs

^Make money does not signify any assurance of return / capital appreciation on investment.*Data Source: Bloomberg, NSE, Axis AMC analysis. 8 year period is from 31st December, 2011 to 31st December, 2019 (CY).Past performance may or not be sustained in the future. 18

What are we looking for?

• Offers a rich source of alpha• Can deliver stable returns with lower tail risk• Has a positive social impact

• Requires much more than a tick box approach• ESG analysis is necessary, but not sufficient• Our existing process of looking for long term quality companies should give us an edge

• Strong stakeholder relationships• Managed for durable long term growth• Strong fundamentals

We believe investing inthese companies

Finding these companiesis challenging

We look for trulysustainable businesses

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Sector level screening:• The scheme will exclude sectors/themes

that are deemed harmful from a societal

perspective. Eg: Exclude Tobacco,

Liquor, Gambling stocks

Stock level screening:• No investments in stocks which throw up

ESG red flags as a part of our review

Portfolio Construction:• Allocation based on a detailed qualitative

ESG review of each company

complementing the existing fundamentals

based investment process

Fund will follow a multi-stage process

20Please refer SID for detailed investment strategy.

Source: Axis AMC analysis

Portfolio based on standardized ESG assessment

Environment Is the industry resource heavy polluting, carbon intensity, high water usage?Are the company's assets exposed to areas of heavy pollution or water scarcity that could pose a threat to growth / ROIC?Does the company have explicit resource reduction targets, or policies in place to manage resources efficiently?Do the company's products have a significant positive or negative environmental impact?

SocialDo the company's activities create significant positive or negative externalities (benefits/harm to society)?Is this a labour intensive or 'knowledge based' business with inherently higher personnel related risks?Evidence of safety breaches / fatalities/ injuries (vs industry peers)?Is there a risk to forecast ROIC via possible future ESG related policies (eg. sugar tax, carbon pricing, plastics legislation, rising social security & healthcare costs, etc)

Governance & ManagementCapital allocation: Is payout ratio adequate, has it increased or decreased in the last 3Y, evidence of unwarranted cap raise or poor investment / M&A?Shareholder structure: could the current structure propose risk to minorities (VIE, SoE, effective poison pills, risk related party transactions)Board Structure: Are minorities adequately protected by independent BODs, CEO & Chairman separate, tenure or jobs for the boys?Management quality: consider accessibility, communication, accounting practices (red flags), appropriate tax paid, auditor credibility/churn?

1) Rating for each variable (E/S/G) separately 2) Consolidated to provide overall score 3) Comparable across companies and sectors

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Portfolio to reflect both growth and sustainability

ESG/sustainability review

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StrongWeak

Nil allocations

Min 80% of the portfolio will be in stocks that rate highly on internal ESG review

Topallocations

22Please refer SID for detailed asset allocation and investment strategy.

Moderate allocations

Selectiveallocations based

on improvingESG trend

Selectiveallocations based

on improvinggrowth trend

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Fund will invest upto 30% in global sustainable companies

Please refer to the Scheme Information document of the document for detailed asset allocation and investment strategy. Axis AMC may appoint investment advisors foroverseas investments. Axis AMC proposes to appoint Schroders to provide investment advice for investment in foreign securities.

Invest directly in overseassecurities – focus on

developed markets withhigh level of ESG

matuirty

INVESTMENT

EXECUTION

Transaction executedthrough key intermediaries(broking/custody) in US and

other major markets

GLOBAL ADVICEOverseas investments will

be advised by Schroders

PHILOSOPHY

Aligned with the fundphilosophy of looking for

strong ESG businesses

Please refer SID for details. * Hitesh Das as additional fund manager only for exposure to foreign investments

Fund Facts

Name of the fund Axis ESG Equity Fund

Type of scheme

Category Equity – Thematic Fund

Benchmark Nifty 100 ESG TRI Index

Fund Manager* Jinesh Gopani

Minimum Application Amount Rs. 5,000 and in multiples of Re. 1/- thereafter

DescriptionParameter

An Open ended equity scheme investing in companies demonstratingsustainable practices across Environment, Social and Governance(ESG) theme

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Why should you invest?Sustainable stocks deliver sustainable growth

• Sustainable companies are expected to have lower risk and deliver sustainable growth

• Axis is well positioned to incorporate ESG while investing basis our core focus towards quality and sustainable growth

• To aim for long term capital appreciation by investing in quality companies with sustainable growth prospects

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Product Label, Riskometer & Disclaimer

Disclaimer: Past performance may or may not be sustained in the future. Sector(s) / Stock(s) / Issuer(s) mentioned above are for the purpose of disclosure of the portfolio of the Scheme(s) and should not be construed as recommendation. The fund manager(s) may or may not choose to hold the stock mentioned, from time to time. Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted toRs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC).Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme.This document represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.Scheme specific risk factors: Apart from the risks associated with domestic investments, the scheme may invest in overseas markets which carry risks related to fluctuations in the foreign exchange rates, the nature of the securities market of the country, repatriation of capital due to exchange controls and political circumstances. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). The material should not be construed as issued by Government of India or any of its authority.Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

Axis ESG Equity Fund(An open-ended equity scheme investing in companies demonstrating sustainable practicesacross Environment, Social and Governance (ESG) theme)This product is suitable for investors who are seeking*:• Capital appreciation over long term • Investments in companies demonstrating sustainable practices across Environment, Social and Governance (ESG) parameters. *Investors should consult their financial advisers if in doubt about whetherthe product is suitable for them. Investors understand that their principal will be at high risk

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