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Impax Asset Management

PRI reporting framework 2019

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

For the Active US Equities and ESG Beta Solutions, we seek to avoid investing in companies:

  • Involved in the manufacture/sale of weapons; 
  • Manufacture tobacco products; 
  • Whose primary business is coal mining and production; 
  • Whose sole or majority operations are in oil sands; 
  • Whose reliance on coal, in the case of utilities, is above the national average, unless that utility has demonstrated a significant commitment to renewables and is reducing its dependence on coal.

Screened by

Description

Thematic Environmental Active Equities:

Our thematic listed equity funds seek out mis-priced companies that are set to benefit from the long-term trends of climate change, inadequate infrastructure, environmental constraints, changing demographics, urbanisation and the resultant increases in resource scarcity. Investment is focused on a small number of deeply researched global equity strategies across alternative energy, energy efficiency, water, waste and sustainable food. We positively screen for companies active in these areas, with a min. 20% of revenues.

US Equities:

Our actively managed US listed equity funds use positive or best-in-class criteria. The result, we believe, is an increased level of scrutiny that helps us construct investment portfolios made up of better-managed companies that are leaders in their industries, meet positive standards of corporate responsibility and are more focused on the long term.

 

 

Screened by

          Companies involved in the production / manufacturing of cluster munitions or anti-personnel mines would be screened out, as this constitutes a human rights breach.
        

Description

Thematic Active Equities and Global Active Equities:

The investable thematic environmental and global listed equity universes are screened on a normative-basis by a third party ESG-research provider on a quarterly basis, in order to ensure that none of our investee companies are in breach of any of the ten UN Global Compact Principles. We will not invest in companies that breach fundamental issues such as Human Rights, Labour Rights or are involved with corrupt practices.

Companies involved in the production / manufacturing of cluster munitions or anti-personnel mines would also be screened out, as this constitutes a de facto human rights breach.

 

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

The screening criteria are established by a deliberative process incorporating portfolio management, sustainability research, and senior management staff. Clients and beneficiaries are notified when substantive changes are made.

 

 


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

          Third party independent committee verifies bi-annually the continued validity of the environmental inclusion criteria and definitions, underpinning our positively screened thematic environmental investment universe.
        

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]

Positive screening for environmental activity (active thematic equities)

Companies must have at least 20% of revenues from environmental or resource efficiency activities to be part of the Impax investment universe. Impax has dedicated staff developing and maintaining the 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. There is a third party independent committee that verifies bi-annually the continued validity of the environmental inclusion criteria and definitions, underpinning our positively screened investment universe.

Positive screening on ESG-criteria, best-in-class (US active equities)

Our actively managed US equity funds use positive or best-in-class criteria. The result, we believe, is an increased level of scrutiny that helps us construct investment portfolios made up of better-managed companies that are leaders in their industries, meet positive standards of corporate responsibility and are more focused on the long term.

Normative screening (active thematic equities and active global equities)

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) - across all equity strategies:

Impax's proprietary and integrated ESG-analysis is an integral part of the Impax investment process. Companies in our investable universe are ESG-analysed at a minimum annually. Our multi-step  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 produce a proprietary ESG-report for each company. In addition, for Hong Kong and China-based companies, we have a further "governance tool" in place and we have identified five governance metrics that each company entering our investable universe must have in place. 


LEI 06. Processes to ensure fund criteria are not breached

06.1. Indicate which processes your organisation uses to ensure fund criteria are not breached.

          Third party independent committee verifies bi-annually the continued validity of the environmental inclusion criteria and definitions, underpinning our positively screened environmental investment universe.
        

06.2. If breaches of fund screening criteria are identified - describe the process followed to correct those breaches.

Impax has developed systematic compliance procedures for our trading system to ensure that fund criteria are not breached. The system leverages IT infrastructure, compliance functions and checks across several departments to ensure compliance.

Positive screening for environmental activity (active thematic equities)

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. There is a third party independent committee verifies bi-annually the continued validity of the environmental inclusion criteria and definitions, underpinning our positively screened environmental investment universe.   

Normative screening (active thematic equities and active global equities)

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 the investable universe. 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) - (all equity strategies)

Impax's proprietary and integrated ESG-analysis is an integral part of the Impax investment process. Our 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 produce a proprietary ESG-report for each company. If companies do not attain the required ESG quality, they will be excluded from our investable universe 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. 

We have a proprietary data analytics and risk tool that identifies and immediately flags any breaches to our screening rules and principles.

 

06.3. Additional information.[Optional]


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