Good practice examples

Impax Asset Management has been a pioneer in the development of investing in the transition to a more sustainable global economy. The Group was founded in 1998 with the belief that capital markets will be shaped profoundly by global sustainability challenges, particularly climate change, environmental pollution, natural resource constraints and human capital issues such as diversity, inclusion and gender equity. Furthermore, these trends will drive growth for well-positioned companies and create risks for those unable or unwilling to adapt. Fundamental analysis which incorporates long-term risks, including environmental, social and governance (ESG) factors, accordingly enhances investment decisions.

Impax invests in companies and assets that are well-positioned to benefit from the shift to a more sustainable global economy. The Group seeks higher quality companies with strong business models and governance that demonstrate sound management of risk. Impax offers a well-rounded suite of investment solutions spanning multiple asset classes aiming to deliver superior risk adjusted returns over the medium to long term.

Impax’s mission is to generate superior, risk-adjusted investment returns from opportunities arising from the transition for clients with a medium- to long-term horizon. They also aim to contribute to the development of a sustainable society, particularly by supporting or undertaking relevant research and engaging or collaborating with others as well as providing a stimulating, collaborative and supportive workplace for their staff.

“Impax invests in companies and assets that are well-positioned to benefit from the shift to a more sustainable economy. This isn’t a sub-set of our business, it is our full focus. Which means we have an investment team with experience that spans many years of investing in these types of companies and understand the challenges/risks and opportunities specific to them.”

Defining sustainable development goals in terms of investment opportunities to persuade large asset owners to commit capital

Impax has been defining and developing the “Environmental Markets” taxonomy for more than 20 years to encourage the commitment of capital to sustainable development; in 2008 index company FTSE adopted Impax’s taxonomy to create a classification system and Environmental Markets Index Series. They analyse, calculate and maintain the exact percentage of "Environmental Revenue" for each company in the universe.

Pioneering “Impact” measurement frameworks

To assist asset owners, quantify the environmental impact of their portfolios, Impax has pioneered methods to quantify the environmental impact of portfolio companies. Developed in 2015 and updated annually, Impax’s environmental impact measurement and reporting methodology produces net carbon emissions, renewable energy generation, water savings and materials recovery and recycling for the companies the Group invests in. Impax has also developed a mapping methodology to explain how its strategies align with SDGs and provide detailed evidence on how the companies in its investment portfolios are having a positive impact on the environment, the primary focus of Impax’s investment strategies. The mapping is intended to identify the SDGs that are relevant and implementable by the private sector.

The company uses the Impact Management Project (IMP) framework to measure and disclose the impact performance of its individual portfolio companies. Impax also convene a Practitioner Community of over 2 000 organizations to debate and find consensus on technical topics, as well as share best practices. They also facilitate the IMP Structured Network - a collaboration of organizations that, through their specific and complementary expertise, are coordinating efforts to provide complete standards for impact measurement, management and reporting.

Helping companies that are leading sustainable development to improve

Impax engages with investee companies to help them strengthen their business plans, risk management and disclosure related to sustainability, including governance. In 2019 the Group undertook proactive ESG engagement initiatives, which resulted in many companies improving their performance, for example contributing to industry-wide reporting protocols such as the Carbon Disclosure Project.

Generating and contributing to academic and cross-sector research to resolve challenging issues related to the sustainable economy

Impax is committed to producing research that addresses complex issues relating to the sustainable economy. For instance, they partnered with the Grantham Institute and Imperial College Business School to develop a ‘Smart Carbon’ methodology, which is a quantitative tool to measure and manage climate change investment risk. Impax was among the first investors globally to develop the Impax Global Women's Leadership Index, which comprises the highest rated companies in the world in advancing women that meet key ESG standards, according to Impax Gender Analytics.

Impax has grown steadily over the years, and in the last four years that growth has really accelerated. With AUM of £18.1 billion in June 2020, a record high, and an attractive pipeline of new business, Impax has demonstrated that backing companies leading the transition to a more sustainable economy can produce market-beating returns.