I have had the privilege of connecting with many of you for some 18 years and this message, alas, will be my final one prior to my retirement at the end of January.
The first thing I want to say is how happy I am to be handing over my duties as President of Impax Asset Management LLC to Ed Farrington, currently our Head of Distribution for North America. When Ed joined us a little over two years ago, it was with the knowledge that he would be stepping into my shoes upon my retirement. I couldn’t be more pleased as Ed is not only an experienced, capable leader but an excellent human being who exemplifies the culture and values we strive to live by at Impax. So, I leave you in very good hands and believe Ed will serve you faithfully and capably over the years ahead.
The second thing I want to say is thank you. Thank you for putting your faith in us to manage your investments over the years. I hope and trust our focus on the risks and opportunities arising from the transition to a more sustainable economy has resulted in competitive returns over the medium- to long-term. I hope as well that our efforts to engage with companies in our portfolios has encouraged positive change and resulted in meaningful real-world impact.
As investors, it is important that we understand the risks and opportunities confronting the global economy as it transitions to a more sustainable model. Those risks and opportunities often involve critical environmental and social issues — from climate change to gender equality, from biodiversity to diversity, equity and inclusion — that are among the great challenges of our time. We need to confront those challenges as human beings, as parents, as citizens, and of course as investors.
We also need to confront our critics when they seek to misrepresent what we are doing. Over the past year or so, we have witnessed an attack on ESG — on so-called “woke” corporations and “woke” capitalism — from certain political quarters. Some of these political attacks have even advocated that funds incorporating ESG factors, or funds that avoid investing in fossil fuels, or funds that consider issues such as diversity, equity and inclusion, should actually be removed from public retirement plans. Some have advocated that fund managers and plan sponsors should not even be allowed to consider such factors — which I assume means you’re not even allowed to think about them.
These attacks are remarkably shortsighted, ill-informed, and contrary to the basic principles underlying a market economy, which should encourage rather than curtail investment choices and should champion rather than undermine the freedom to invest.
Fiduciaries like ourselves who care for and manage other people’s money, are duty-bound to consider all factors that are likely to be material. To ignore such factors — or worse, to substitute the views of politicians and government officials for those of trained investment professionals — would not only lead to sub-par investment results over time but, in our view, is a clear breach of fiduciary duty.
The global economy is in transition; a new era of opportunity and risk is before us. Clearly, investors and those acting on their behalf need to understand these trends, and to evaluate these opportunities and risks, whether they label them “ESG” or not. Restricting choice is not the answer; expanding it is. Ignoring issues is not the answer; understanding them is. Closing our minds is not the answer; opening them is.
I have been privileged for the past 18 years to lead a group of people whose minds are always open, whose focus is always on doing what is right and what is best for our shareholders, who care about the future and about making it better. They also care about each other, creating a team culture here at Impax that I truly believe is what sets us apart. So, my final thank you is to my colleagues — it has been the great privilege of my life to work with you, to learn from you, to serve you.
My best wishes to all of you, always.
Joseph F. Keefe
President, Impax North America