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Impax Asset Management

PRI reporting framework 2019

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Engagement

LEA 02. Reasoning for interaction on ESG issues

Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

02.4. Additional information. [Optional]

Impax views engagement as an integral part of the ESG-analysis and the broader investment process. Engagement is fully integrated in our investment process. As such, it is conducted internally through a combination of individual and collaborative initiatives as part of our on-going dialogue with companies. There are no resource reasons to outsource this valuable aspect of company analysis.


LEA 03. Process for identifying and prioritising engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagements.

Indicate the criteria used to identify and prioritise engagements for each type of engagement.
Type of engagement
Criteria used to identify/prioritise engagements
Individual / Internal engagements

Internal / Individual engagements

Collaborative engagements

Collaborative engagements

03.3. Additional information. [Optional]

Our stewardship and engagement work can be divided into the following types:

1. Promoting improved practices and transparency on ESG issues

We focus on engagement with companies to strengthen governance structures, introduce sustainability policies, processes and disclosures, for companies to manage effectively their most material ESG-risks. Impax has developed a proprietary cost-effective framework to advise companies on how to develop robust, material and cost-effective sustainability reporting.

2. Bottom-up company specific monitoring and dialogue

As part of our on-going, proprietary company-level ESG analysis, we identify company-specific issues and risks and actively engage with companies regarding these issues, as part of monitoring and managing risks.

3. Top-down strategic engagement priorities

Every year we assess and state the engagement priorities for the next 12 months, based on market developments and emerging ESG and sustainability issues that we have identified and that are relevant and material for our companies. We then identify the companies most exposed to the issues in question and focus our engagement on those companies. We engage with companies of all sizes, including larger companies with the intent of promoting best practices throughout an industry peer group.

We also initiate or support shareholder proposals at annual shareholders meetings to encourage greater corporate transparency around a company’s most significant environmental or social risks based on its sector and activities. In recent years, we have filed or co-filed shareholder proposals at companies on issues relating to climate change, gender diversity, sustainability reporting, pay equity and paid family leave.

While we assess our engagement priorities every year, they may not change annually; they are often of long-term nature.

4. Proxy voting

Our proxy voting is predominantly related to governance issues such as election of directors, board structures and management remuneration. When practicable, we seek to engage with the investee company before we vote against management’s recommendation on an AGM resolution. We also have a number of dialogues with companies during the year, to discuss and comment on proposed governance structures, by companies, well ahead of AGMs.

Engagements are conducted by the Impax investment team, together with other investors and clients and partners with or without a lead or coordination from responsible investment organisations. Collaborative engagements are conducted across a number of ESG issues and specific sectors and companies. Collaborative engagements can be prioritised where outreach may particularly benefit from a larger group of shareholder involvement or in cases where an issue is being escalated.

 


LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether you define specific objectives for your organisation’s engagement activities.
Individual / Internal engagements
Collaborative engagements

04.2. Additional information. [Optional]

ESG-analysis and engagement are fully integrated in our investment process. Engagement is used both to mitigate risk and to enhance value and investment opportunities. The investment team is involved in monitoring our companies and we have policies in place on how to escalate issues, if and when concerns arise.

Engagement allows us to:

  • Manage risks by proactively identifying and mitigating issues
  • Enhance company analysis; how companies respond to engagement is informative of their character
  • Strengthen investee companies over time; improving quality, processes, transparency and resilience

LEA 05. Process for identifying and prioritising collaborative engagement

Indicate if you monitor and/or review engagement outcomes.
Individual / Internal engagements
Collaborative engagements
Indicate if you do any of the following to monitor and review the progress of engagement activities.
Individual / Internal staff engagements
Collaborative engagements

05.3. Additional information [Optional]

We maintain an engagement database where the engagement issues, actions, timings and outcomes and current status are detailed. We review the database regularly and calenderise engagement follow-ups for unresolved issues.

Some collaborative engagements with a large number of participants or for example with a fairly general objective, can be harder to monitor, revisit and re-define, but generally collaborative are monitored similarly to Impax's own engagements. 


LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

06.3. Additional information. [Optional]

The Impax investment team has established internal processes and uses various external research tools to monitor our investee companies regarding their financial, operational, strategic, sustainability and governance developments that highlight possible areas of concerns and priorities for engagement.

Where material concerns or anomalies at an investee company have been confirmed, the Impax investment team will intervene and escalate matters in order to mitigate risks and preserve shareholder value.

We will immediately contact the investee company management team and where relevant and possible members of the company board. Typically, we would request a conference call with the management team, to discuss the concern in detail. We would also contact the company's brokers for information.

If the investee company is unresponsive to engagement or we view, upon clarification with the management team, that the company is taking an approach that is significantly increasing shareholder risks and the company is unwilling to consider less risky approaches, we would escalate our activities as follows:

  • Intervene or engage together with other institutions on the issue
  • Feeding back to company's advisors especially regarding voting matters
  • Highlighting the issue and/or joint-engaging regarding the issue through institutional platforms like the PRI
  • Filing or co-filing resolutions at General Meetings

We believe that we can be more constructive and ultimately in the long-term more influential with our investee companies, if we maintain good relations and where possible interact and engage directly with the company on specific concerns.

Ultimately, if the interventions were not successful and we consider that the risk profile of the company has significantly deteriorated or company strategy or governance structures have altered, to a degree where the return outlook and the company strategy and quality no longer meet our expectations, the company would be excluded from our investable universe and/or sold.


LEA 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation's engagements are shared with investment decision-makers.

Type of engagement

Insights shared

Individual / Internal staff engagements

Collaborative engagements

07.2. Indicate the practices used to ensure information and insights collected through engagements are shared with investment decision-makers.

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

07.4. Additional information. [Optional]

ESG-analysis and engagement are fully integrated in our investment process. The investment team is involved in monitoring our companies. Our Investment Committee meetings have a standing agenda item “ESG and Engagement”, to continuously inform and discuss engagement issues across the investment teams.

We have disclosed a detailed Stewardship Statement on our website, describing our approach to engagement, proxy voting, managing conflicts of interest and communicating our Stewardship: https://www.impaxam.com/sites/default/files/Impax_UK_Stewardship_Code_Statement_03_2019_0.pdf

 

We also publicly report on our engagement and proxy voting outcomes:

 

Engagement Report: https://www.impaxam.com/investment-philosophy/engagement

Stewardship Activities: https://www.impaxam.com/sites/default/files/Impax_Stewardship_Reporting_2018_0.pdf

 

Further information regarding Pax World Funds’ engagement work can be found here:

Annual Sustainability Report:

https://paxworld.com/pax-world-impact-report/ 

 

Spotlight on Engagement: Climate Change:

https://paxworld.com/spotlight-on-engagement-climate-change/

 

Spotlight on Engagement: Gender Diversity:

https://paxworld.com/spotlight-on-engagement-gender-diversity/

 

Pax World Funds – proxy voting history by fund:

https://paxworld.com/funds/proxy-voting/


LEA 08. Tracking number of engagements

08.1. Indicate if you track the number of your engagement activities.

Type of engagement
Tracking engagements

Individual / Internal staff engagements

Collaborative engagements

08.2. Additional information. [OPTIONAL]

We maintain an engagement database where the engagement issues, actions, timings, outcomes and next steps are detailed. We review the database regularly and if an issue remains unresolved, we follow-up with the company in question.

We also disclose publicly the number and types of engagements done during a year.

Impax Engagement and Stewardship Activities in 2018: https://www.impaxam.com/sites/default/files/Impax_Stewardship_Reporting_2018_0.pdf

Pax World Funds' Annual Sustainability Report: https://paxworld.com/pax-world-impact-report/ 

Pax World Funds' proxy voting history by fund: https://paxworld.com/funds/proxy-voting/

 


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