Impact investing is gaining momentum, especially in liquid asset classes.
Many investors are not only interested in making superior, long-term, risk-adjusted returns, but in also ensuring that their investments have a positive impact on the environment.
We started reporting quantified impact metrics for our small cap strategy five years ago. Judging from the positive feedback we have received, clients are finding it helpful to understand the link between our investments in companies delivering environmental products and services and the environmental outcome of their business activities.
As interest in measuring impact has grown, techniques and methodologies have proliferated. This is exciting, but it has also led to growing confusion and questions on what these numbers really mean. In our 2019 Environmental Impact Report we continue to report on metrics which naturally emerge from our investment philosophy, whilst also identifying three external frameworks which we consider to be the most insightful in terms of putting our portfolio companies impact into a meaningful context:
- CO2 avoided in context of the Paris Agreement
- The UN Sustainable Development Goals (SDGs)
- Investment product context using the Impact Management Project framework (IMP)
Delivering meaningful impact reporting is a complex process that requires specialist expertise to understand scrutinise the data involved. In this report we measure the impact of three of our listed equities strategies – Global Leaders, Specialists and Asia Pacific – and our real assets strategy –Impax Renewable Energy Infrastructure.
When we started this process, few of the companies in which we invest had the systems in place to capture and report the data we sought. Today, while data quality varies, it is improving. Our methodology has evolved to adapt to the improvements in the data available and will continue to do so. Impax is committed to investing the time and resources necessary to demonstrate the positive impact of our investments as we work to maximise returns for our clients.