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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 » (C) Implementation: Integration of ESG factors

(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the ESG factors you systematically research as part of your investment analysis and the proportion of actively managed listed equity portfolios that is impacted by this analysis.

ESG issues

Proportion impacted by analysis
Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]

ESG-analysis is an integral part of the Impax investment process. Our actively-managed Listed Equities investment process incorporates ESG-parameters into the fundamental investment analysis of the companies in our investable universe. Our smart beta investment processes systematically incorporate proprietary ESG ratings alongside financial factors in portfolio construction through optimization.

As part of the ESG-analysis, we write a proprietary ESG-report. We review the ESG analysis periodically and if a material event occurs.

The ESG reports are available for the entire investment team in our research system, the "Portal" and in the risk management and portfolio review as well as portfolio construction materials.

ESG issues are a standing agenda item at the Investment Committee meetings and during the portfolio review meetings for the various listed equity strategies.

Impax's externally disclosed ESG policy:

https://www.impaxam.com/sites/default/files/Impax_ESG_Policy_2019_0.pdf


LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on a robust analysis.

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

09.3. Indicate how frequently third party ESG ratings that inform your ESG integration strategy are updated.

09.4. Indicate how frequently you review internal research that builds your ESG integration strategy.

09.5. Describe how ESG information is held and used by your portfolio managers.

          All ESG information is available in our research system "Portal", universe and market data databases and in Portfolio Review Meeting (PRM) documents.
        

09.6. Additional information.[Optional]

ESG-analysis is an integral part of the Impax investment process. Our actively-managed Listed Equities investment process incorporates ESG-parameters into the fundamental investment analysis of the companies in our investable universe. Our smart beta investment processes systematically incorporate proprietary ESG ratings alongside financial factors in portfolio construction through optimization.

As part of the active equity strategies' ESG-analysis, we write a proprietary ESG-report. We review the ESG analysis periodically and if a material event occurs.

The ESG reports are available for the entire investment team in our research system, the "Portal" and in the risk management and portfolio review as well as portfolio construction materials.

ESG issues are a standing agenda item at the Investment Committee meetings and during the portfolio review meetings for the various listed equity strategies.


LEI 10. Aspects of analysis ESG information is integrated into

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

10.1. Indicate which aspects of investment analysis you integrate material ESG information into.

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

10.2. Indicate which methods are part of your process to integrate ESG information into fair value/fundamental analysis and/or portfolio construction.

10.3. Describe how you integrate ESG information into portfolio weighting.

Impax Thematic active environmental strategies and Active Global Equities:

We conduct detailed, proprietary financial and ESG-analysis of companies considered for the investable universe and review the ESG-analysis periodically. We assign a proprietary ESG-rating for each company. If a company scores below our threshold-level, it is excluded from our investable universe. 

Our portfolio construction process takes ESG into account. Companies with ESG-scores below a certain level have their position sizes capped in the portfolios for risk management purposes. Companies with strong ESG-scores or with improving ESG-profiles, can give conviction to the portfolio manager to increase the position-sizes in the portfolio. 

The lead analysts can adjust the WACC on companies based on ESG factors.

Impax US Large Cap Active Equities:

We integrate ESG-data provided by the Sustainability Research team to inform stock selection and position sizing. For example, based on internal ESG-research, the portfolio managers have the confidence to make a global diversified industrial manufacturing company one of the largest active positions in the portfolio. This company is a leader in energy-efficient HVAC systems and has set targets for improving key sustainability issues, including GHG emissions, water and waste. It demonstrates strong gender diversity on the board and in senior management.

10.4. Describe the methods you have used to adjust the income forecast / valuation tool

The lead analysts of the Impax thematic active environmental strategies and active global equities can apply a higher WACC (weighted average cost of capital) on companies with higher company or sector-specific ESG risks and adjust financial and operative forecasts based on ESG-factors, risks or opportunities (e.g. water scarcity) or financial provisions (or estimated provisions) made by companies for e.g. pollution litigation or an asbestos class-action.

10.6. Additional information. [OPTIONAL]


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