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Impax Asset Management

PRI reporting framework 2019

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Objectives and strategies

SG 05. RI goals and objectives

05.1. Indicate if and how frequently your organisation sets and reviews objectives for its responsible investment activities.

05.2. Additional information. [Optional]

Impax's ESG policies and objectives are periodically assessed.

The strategic or top-down engagement objectives and targets are reviewed and established. The methodology and resource needs relating to responsible investment activities, ESG-analysis, engagement, proxy voting and impact measurement and reporting are continuously assessed and developed.


SG 06. Main goals/objectives this year

06.1. List the main responsible investment objectives that your organisation set for the reporting year.

Responsible investment processes

Key performance indicator

          On-going ESG-integration training in the investment team. KPI is the time spent on ESG-training / number of ESG-trained employees.
        

Progress achieved

The Impax investment team has grown in 2018 (3 new employees) and training of ESG integration has been provided. 

  • 3 new employees trained in ESG integration analysis. 
  • 1 comprehensive ESG training workshop conducted in 2018 for the entire investment team (highlighting emerging ESG issues)

Key performance indicator

          On-going ESG-integration training in the investment team. KPI is the time spent on engagement training / number of engagements.
        

Progress achieved

ESG engagement is conducted across the investment team during company meetings.

The Impax investment team has grown in 2018 (3 new employees) and training of ESG integration and engagement has been provided. 

  • 3 new employees trained regarding ESG engagement. 
  • 1 comprehensive ESG training workshop conducted in 2018 for the entire investment team (highlighting emerging ESG issues)
  • The number of engagements increased significantly year-on-year in 2018.

Key performance indicator

          "ESG and Engagement" is a standing agenda item at the Investment Committee meetings. 
"Engagement Database" and specific engagements circulated and available on Impax's intranet.
        

Progress achieved

Improved awareness about on-going and planned (strategic) and bottom-up engagements across the investment team and the firm.

 

Key performance indicator

          Prioritising key, impactful engagements (issue- and company-specific), increasing collaborative engagements to optimise time and resources.
        

Progress achieved

Increased levels of engagements in general in 2018. 

Key performance indicator

          ESG-analysis is fully incorporated into investment decision-making processes. Aim to continuously improve the ESG input (KPI).
        

Progress achieved

We aim to continuously stay ahead of emerging issues and risks facing our companies and continuously enhance the information we have about our companies through ESG analysis and engagement. In 2018 our strategic focus included understanding companies' cyber security, plastic and physical climate risk exposures, understanding and management. The 2019 current focus areas are global tax regime changes (incl. digital revenue taxes), physical climate risks (continued) and company pay-equity practices.

The on-going and permanent areas of focus are climate, diversity and ESG processes and transparency (especially for smaller companies).   

Financial performance of investments

Key performance indicator

          Link between ESG, sustainability and share price performance.
        

Progress achieved

We aim to continuously stay ahead of emerging issues and risks facing our companies and continuously enhance the information we can have about our companies, through ESG analysis and sustainability frameworks in order to mitigate risks and to generate investment outperformance.

  • Impax Lens. The investment universe identified with sub-sectors with high opportunities and low risks through the Impax Lens has  outperformed broader markets.
  • Pax World Global Women's Leadership Index (GWLI), an index of global companies that are leaders in advancing women through gender diversity on their boards and in management, and through other policies and programs, has demonstrated good performance vs broader markets. 
  • Impax ESG analysis. We regularly measure how companies with our proprietary ESG-scores perform in terms of share price returns. We have found over many years that companies with stronger ESG-ratings outperformed the weaker ones. We believe this is related to better company quality and structures, leading to better financial and operative performance, which can lead to stronger share price performance.

ESG characteristics of investments

Key performance indicator

          ESG-criteria and portfolio construction (portfolio position sizing).
        

Progress achieved

There are several ways in which ESG-criteria and sustainability aspects affect portfolio construction and sizing. 

  • Gender leadership. We overweight companies with favorable gender characteristics in the Pax Ellevate Global Women’s Leadership Fund. Further information can be found at https://paxworld.com/assets/pdfs/factsheets/fact_sheet_pax_ellevate.pdf?pwm=4995.
  • Carbon intensity/climate change. Both of the Pax ESG Beta funds, the Pax ESG Beta Quality Fund and the Pax ESG Beta Dividend Fund, include portfolio carbon intensity as a managed factor. Both funds are managed to keep carbon intensity at least 30% below that of the benchmark. Further information can be found at https://paxworld.com/assets/pdfs/factsheets/fact_sheet_esg_beta_dividend.pdf?pwm=8119 and https://paxworld.com/assets/pdfs/factsheets/fact_sheet_esg_beta_quality.pdf?pwm=1883.
  • ESG analysis. We cap (limit) the position sizes of companies that have weaker ESG-scores following our proprietary ESG-analysis, for risk management purposes (incl. for Impax's active thematic equity strategies). 

Key performance indicator

          Engagement focus on smaller companies that have not yet extensively developed sustainability processes and performance.
        

Progress achieved

We have been able to get c. 2-3 smaller companies per year to launch materially-based sustainability processes, based on our engagements of "cost-effective, but robust sustainability frameworks". Hence these companies' ESG-ratings have also improved (both Impax's proprietary ESG ratings and external ESG research providers' ESG ratings). We also actively engage with companies on governance structure improvements, which can also improve companies' ESG scores. 

Other description (1)

          Measuring positive environmental impact in three of our active thematic environmental equity strategies, reporting enhancements.
        

Key performance indicator

          KPIs: Metrics: 1. Net carbon emissions, 2. renewable energy generated, 3. water saved and treated, 4. materials recycled and recovered.
        

Progress achieved

Impax has developed an impact measurement framework for measuring positive environmental impact through investee companies' end products and services. The impact KPIs are: 1. Net carbon emissions, 2. renewable energy generated, 3. water saved and treated, 4. materials recycled and recovered (and 5. carbon displaced for our Asian strategy only). 

The Net Carbon Emissions calculation entails a full carbon footprinting (all direct and indirect emissions) and calculating the carbon emissions avoided through the production and sales of environmental products and services, during the one-year measurement period, by our investee companies. In 2018, the three thematic environmental investment strategies on which impact measurement is conducted, had more carbon avoided than emitted in aggregate or net terms by the investee companies. This methodology, measurement and data has been externally assured by EY.

In 2018, we added impact measurement for one new strategy, including one new impact metric. We additionally calculated how this net carbon avoidance compared to investments into portfolios representing the "global economy today" and the "2-degree global economy" that the Paris Climate Agreement requires, for comparison.

We also mapped how our environmental sub-sectors and strategies align to the UN Sustainable Development Goals (SDGs).

Methodology and Impact Report 2018: https://www.impaxam.com/media-centre/white-papers/environmental-impact-report-2018

 

 

Other activities

Key performance indicator

          Participation in collaborative engagements, initiatives and organisations.
        

Progress achieved

As a member of IIGCC, INCR/Ceres and ICCR, Impax continues to take part in engagements with governments and policy makers to introduce stable, predictable, and clear environmental policies to encourage environmental investment. In 2018 we became part of the IIGCC climate scenario analysis working group.

In 2018, Impax joined the "As You Sow" Plastic Solutions Investor Alliance; an engagement programme focused on reduction of single-use plastic packaging and improved packaging management by mainly global consumer product companies. This sets best practice standards for disclosures and performance against recyclability and reduction targets.

In 2018, Impax was also part of a Global Reporting Initiative (GRI) working group, setting new standards for corporate reporting of data and management of waste and materials.

In addition, Impax was active with several other organisations and initiatives in 2018; Ceres (Coalition for Environmentally Responsible Economies), Interfaith Center on Corporate Responsibility (ICCR), The Investor Network on Climate Risk (INCR), The Forum for Sustainable and Responsible Investment (USSIF), NH Businesses for Social Responsibility (NHBSR), United Nations Environment Programme Finance Initiatives (UNEP FI). 

Key performance indicator

          Regular educational sessions on ESG and sustainable investing for investors, students and other groups.
        

Progress achieved

- Teach-in for Chinese and Japanese investor delegations regarding ESG and integration into investment process in 2018.

- Teach-in for Dutch, Finnish and UK-based student groups regarding ESG, engagement and impact measurement.

 

Key performance indicator

          Impax White Papers on sustainable investment practices.
        

Progress achieved

In 2018, Impax published the following reports and White papers on sustainability topics and best practices: 

  • Impax and Pax World Funds Spotlight on Gender Diversity Engagement

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

  • Impax and Pax World Funds Spotlight on Climate Change Engagement

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

  • Impax 2018 Whitepaper on Smart Carbon (managing carbon risks more effectively, looking beyond carbon footprinting):

           https://www.impaxam.com/sites/default/files/white-paper-Impaxs-SmartCarbonTM-strategy.pdf

  • Impax Impact Report 2018 (measuring positive environmental impact):

           https://www.impaxam.com/media-centre/white-papers/environmental-impact-report-2018

  • Impax 2018 Report on Investment Risk Management

           https://www.impaxam.com/sites/default/files/white-paper-Beyond_ESG_investment_risk_through_a_lens.pdf

  • Impax 2018 Report on Investing in Asian Environmental Markets

           ​https://www.impaxam.com/sites/default/files/white-paper-Investing_in_Asian_Environmental_Markets.pdf

Key performance indicator

          Regular client seminars and presentations on ESG and sustainability topics
        

Progress achieved

London and US-based seminars to clients and investors demonstrating how ESG and sustainability analysis and engagement is used in practice in the Impax investment process, with a case study of the future of transport, risks and opportunities in the plastics value chain, managing carbon and climate risks in portfolios ("Smart Carbon"), managing water risks in portfolios, learning and best practices around impact measurement and reporting and the mapping and interpretation of UN SDGs.

06.2. Additional information.


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