Positive screening for environmental activity
Companies must have at least 20% of revenues from environmental or resource efficiency activities to be part of the Impax investment universe. The entire universe is screened once a year to ensure that all companies still adhere to the minimum revenue target. Companies that no longer attain this minimum level of revenue are removed from the investable universe database.
Normative screening for UN Global Compact breaches
A third party ESG-research provider screens our investable universe every quarter to identify any potential UN Global Compact issues. Companies which are found to have minor issues are flagged and we monitor these particularly thoroughly and engage with these companies where relevant. Companies that are not compliant with the UN Global Compact principles are excluded from investment and excluded from our "A-list" or investable universe database. Companies involved in the production / manufacturing of cluster munitions or anti-personnel mines would also be screened out, as this constitutes as a human rights breach. We use external data providers to flag controversial business activities.
Screening of ESG criteria (ESG analysis)
ESG-analysis is an integral part of the Impax investment process. Our multi-step Listed Equities investment process incorporates ESG parameters into the investment analysis of companies through a thorough examination of company management/board structures, governance, ownership, corporate behaviour and Environmental and Social policies, processes and disclosures, following a materiality approach. We assign a proprietary ESG-rating for each company (Excellent, Good, Average, Fair and Excluded). If a company scores below a threshold-level, it will be automatically excluded from our investable universe, A-list and can not be traded in our trading systems. In addition, for Hong Kong and China-based companies, we have a further "governance tool" in place. We have identified five governance metrics that each company entering our investable universe must have in place. Finally, all companies must be approved by the Investment Committee on ESG-criteria before being admitted to the Impax universe of investable stocks.
We have a proprietary data analytics and risk tool (VIPER-analytics) that identifies and immediately flags any breaches to our screening rules and principles.