This report shows public data only. Is this your organisation? If so, login here to view your full report.

Impax Asset Management

PRI reporting framework 2019

Export Public Responses

You are in Direct - Listed Equity Incorporation » Outputs and outcomes

Outputs and outcomes

LEI 12. How ESG incorporation has influenced portfolio composition

12.1. Indicate how your ESG incorporation strategies have influenced the composition of your portfolio(s) or investment universe.

Describe any reduction in your starting investment universe or other effects.

In the US Active 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.

In the Pax Ellevate Global Women's Leadership Fund:

Excludes all companies with an MSCI ESG Intangible Value Assessment ranking of less than B or an MSCI ESG Controversies score of less than one, as well as companies that are involved in the manufacture/sale of weapons or manufacture tobacco products. In general, these exclusions may result in significant portions of several sub-industries from being available for investment: aerospace & defense, tobacco, leisure products (firearms) and coal & consumable fuels, among others.

In the active thematic equities and active global equities, (normative screening)

A handful of companies have been excluded from the investable universe due to UN Global Compact breaches (human rights breaches and corruption).

Specify the percentage reduction (+/- 5%)


Describe any alteration to your investment universe or other effects.

Environmentally themed active equity strategies

A company must derive at least 20% of its revenues (or other business activity indicator) from an environmental activity (alternative energy, energy efficiency, water, waste, sustainable food and agriculture and related markets) to be part of the Impax environmental universe. The Environmental Markets classification system is specifically defined by Impax, FTSE and an independent committee. This universe currently comprises c.1,600 companies.

Select which of these effects followed your ESG integration:

          More fundamental knowledge of our investee companies.

Describe the influence on composition or other effects

Pax MSCI EAFE ESG Leaders Index Fund:

Per MSCI, companies that are not existing constituents of the ESG Leaders Indexes must have an MSCI ESG Rating of BB or above and the MSCI ESG Controversies Score of 3 or above to be eligible for inclusion. In addition, companies with involvement in alcohol, gambling, tobacco, nuclear power and weapons are generally excluded.



12.2. Additional information.[Optional]

LEI 13. Examples of ESG issues that affected your investment view / performance

13.1. Provide examples of ESG issues that affected your investment view and/or performance during the reporting year.

ESG factor and explanation

ESG-quality and controversies, Hazardous waste management company, USA. 

The company’s environmental and social processes were below average, company faced an increasing amount of controversies and fines around toxic emissions, pricing issues, and aggressive accounting practices. Impax engaged regularly with the company to understand their circumstances and demanded improved processes and management systems to manage these risks (accounting practices, management of toxic emissions and related community relations, pricing issues). As part of the escalation process, Impax also engaged together with other institutional shareholders. The company remained noncommittal toward any substantial changes or improvements to pollution control processes citing their compliance with local regulations. Nor did the company take decisive steps to clarify and improve the pricing issues. The company had been a long term holding of Impax due to its successful business model, however, it began making non-ideal strategic decisions. The financial and strategic issues, coupled with the ongoing ESG risks and the company’s non-committal attitude toward ESG improvements in general, led Impax to sell out of the position in Q4 2016.

ESG incorporation strategy applied Integration

Impact on investment decision or performance

Exclusion from the environmental thematic investable universe.

In February 2018, the company had a big profit warning, shares fell c. 20% in one day. We considered whether this was a buying opportunity, as shares were significantly cheaper since we sold. The updated ESG-analysis revealed that all the issues identified several years before, had worsened; the pricing issues had been revealed to be much worse, actual fraudulent activities, company facing serious class action cases, the local community and air pollution issues were on-going, company had been fined several millions of dollars for inaction on toxic emissions, while the management team remained unchanged, and continued to enjoy excessive levels of compensation, compared to the deteriorating company financial and operational performance. The company was downgraded on ESG-basis and is now outside of the investable universe.

Very recently the management team left, due to very weak performance both operationally, strategically and financially and a new management team has arrived. We are now in the process of analysing and engaging with the company, to see whether the new management team will improve practices and approaches and whether the company might be upgraded on ESG-basis and become part of the active environmental equities investable universe again. 

ESG factor and explanation

Activity-based screening, firearm manufacturers and retailers. 

Up to March 2018, we only excluded gun manufacturers in the US Active Equities and ESG Beta Solution strategies and did not exclude retailers that sell firearms, primarily because most of these companies derive only a very small percentage of their revenues from firearms sales, which are not the focus of their business. However, in the wake of recent mass shootings events in the U.S., we changed this policy, as we no longer felt that it was consistent with our general weapons exclusion. As a result, as of March 2018 we no longer make a distinction between companies manufacturing firearms and companies selling firearms – we now exclude them both, even if revenues from selling firearms is a very small percentage of a retailer’s revenues.


ESG incorporation strategy applied Screening

Impact on investment decision or performance

Exclusion of firearm manufacturers and retailers in the US Active Equities and ESG Beta Solution strategies. 

ESG factor and explanation

ESG-quality, Energy-efficient HVAC systems manufacturer, USA. 

In the Impax US Large Cap active equity strategy 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.

ESG incorporation strategy applied Integration

Impact on investment decision or performance

Consistent strong ESG-quality and performance by the company, gave the portfolio managers of the Impax US Large Cap active equity strategy the confidence to make the company one of the largest active positions in the portfolio. 

ESG factor and explanation

ESG-quality (governance, labour management), Electric car manufacturer, USA. 

The company continues to have severe governance issues relating to oversight and accountability of the management team and the board, person risk, severe compensation misalignment, as well as on-going issues relating to management of staff. Company excluded on ESG-basis from the investable universe.   


ESG incorporation strategy applied Integration

Impact on investment decision or performance

Company was excluded on ESG-basis from the investable universe for the environmental thematic strategies and the global activity equity strategy. 

ESG factor and explanation

Thematic analysis of companies within "Fire suppression"

Analysis of companies active with "fire suppression", given the increasing frequency of forest and wild fires globally. Fires lead to serious air pollution and emissions, deforestation and destruction of property, assets and materials. Avoiding and suppressing fires can be viewed as environmental solutions.  

ESG incorporation strategy applied Thematic

Impact on investment decision or performance

We identified 10 listed companies with at least 20% of their revenues stemming from "fire suppression" activities and they were added to the investment universe of the environmental thematic equity strategies. 

13.2. Additional information.[Optional]