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Impax Asset Management

PRI reporting framework 2019

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Outputs and outcomes

PE 14. ESG issues affected financial/ESG performance

14.1. Indicate whether your organisation measures how your approach to responsible investment in Private Equity investments has affected financial and/or ESG performance.

Describe the impact on:
Impact
Financial performance of investments
Describe the impact on:
Impact
ESG performance of investments

14.2. Describe how you are able to determine these outcomes.

ESG issues and full compliance with them are a prerequisite for the implementation and financial success of our renewable energy infrastructure projects.

Building, developing and operating renewable energy projects generates clean energy, allowing us to measure and report on carbon avoidance from our projects.

We report annually on renewable generation and carbon avoidance from our on-going renewable energy private equity projects:

https://www.impaxam.com/sites/default/files/Impax_Impact_Environmental_Impact_Report-2018.pdf

 

Impax's latest renewable energy fund "NEF III" has also been awarded the independently audited Novethic Energy and Ecological Transition for the Climate, (EETC), green label due to these three assessed pillars:

 

  • Pillar 1: Fund's objectives and methodologies for the selection of assets contributing to the energy and ecological transition.
  • Pillar 2: Consideration of ESG criteria in the construction and life of the portfolio
  • Pillar 3: Highlighting positive impact on energy and ecological transition

 

Having the right governance systems is imperative to the success of our portfolio investments and time is taken to establish these immediately after acquisition. Protocols are reviewed annually.

We rely on the local teams engaged to provide services to our investments and the monthly and annual reporting provides the information that we need to know if issues have been correctly addressed. We review performance annually.


PE 15. Examples of ESG issues that affected your PE investments

15.1. Provide examples of ESG issues that you identified in your potential and/or existing private equity investments during the reporting year.

Investment Stage
ESG issues

ESG issues

          Environmental impacts.
        
Sector(s)
          Small-scale hydro development (Norway).
        
Impact (or potential impact) on the investment

Small-scale hydro development (Norway) requires detailed environmental plans to be developed and approved by the relevant regulatory body (NVE). Relevant studies being completed as necessary to develop plan (for portfolio of assets).

Permitting delays, or amendments to detailed designs prior to (and monitoring during) construction.

Activities undertaken to influence the investment and its response

On-going engagement with local experts understanding issues relating to hydro project design and authorities during approval process and local stakeholders necessary to achieve approval.

Investment Stage
ESG issues

ESG issues

          Noise and environmental impacts.
        
Sector(s)
          Re-powering a wind farm in France.
        
Impact (or potential impact) on investment

Noise and other studies being undertaken to check the environmental impacts of the proposal and to obtain required permitting.

 

Activities undertaken to influence the investment and its response

Appointment of French development experts to manage the process as well as engagement with authorities and local stakeholders.

Investment Stage
ESG issues

ESG issues

          Governance structures for joint venture
        
Sector(s)
          Norwegian small-scale hydro development joint venture platform
        
Impact (or potential impact) on investment

Joint venture structure established with governance systems developed to ensure accountability, align interests, maintain control and independence (appointment of non-executive director).

Activities undertaken to influence the investment and its response

Assistance from local lawyers to assist with governance best practices for the structures being established.

15.2. Describe how you define and evaluate the materiality of ESG factors.

Environmental and social factors are material, as they have a direct effect on permitting, which is a prerequisite for successful renewable energy infrastructure projects.

ESG factors are identified and defined during the investment process through due diligence reports commissioned by expert advisers presented and analysed by our investment team and investment committee. Consideration goes beyond simply complying with the applicable environmental laws and other permitting procedures. These are integrated in the investment structuring and strategy building process and follow through into the business planning process. Our Investment Committee must approve all potential investments against our ESG-parameters and any breach prevents us from making an investment.

Material environmental factors will be required under permits which are necessary to develop and build renewable energy projects. Concessions must be awarded through transparent processes. We work through the environmental risk factors during the development and construction phase with dedicated experts and obtain the necessary reviews and sign off by regulatory bodies. During the operational phases these risks are usually reduced (as they have been considered thoroughly during the design process), so we outsource the ongoing responsibility to manage these to local teams who review regularly and ensure that we keep up with best practice. To date investments have been made in Europe and adhere to EU EIA Directive and Water Framework Directive. If a new build project has the potential to affect a Natura 2000 site protected under the Habitats Directive or Birds Directive, additional care is taken, and a more detailed assessment is completed to ensure no negative impact as a result of the build. We develop calendars to ensure that the requirements under permits are monitored with the correct frequency and with sufficient time to put the proper considerations in place. 

Social issues are considered during the management of portfolio companies and design of management reporting systems. Local communities are closely involved in the permitting phase of the projects we invest in and under EU-standard permitting procedures local citizens have a right to participate in the procedure. Where investments have employees we adhere to EU directives on social matters such as European Principles for the Environmental and Human Rights Law. We always insist that all applicable employment laws and health and safety regulations are duly observed, and comprehensive insurance policies are in place. Compliance checks are completed on all outsourced providers and suppliers engaged.

We seek to address and resolve any material governance issues prior to investing. Our preferred approach is to acquire 100% of the ownership interest in our targets, otherwise investments are structured so that we maintain control. Then we can implement straight forward oversight and governance systems. Compliance checks are completed on all counterparties we engage with and all suppliers adhere to anti money laundering policies. Quarterly board meetings at joint venture company levels ensure that enough time is dedicated to review governance issues. Annual review meetings identify any risk areas, whilst monthly investment meetings can implement regular reviews if issues arise in the meantime.


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