We are pleased to present our newest engagement report, which showcases the results of our global engagement activities in 2020.
In 2020, we executed 300 engagement meetings:
Our newest report showcases key milestones achieved through company engagements, including that of a Chinese water infrastructure and technology provider that is more aware of its physical climate risks due to our analysis of its exposures and ongoing dialogue, and that of an energy efficiency provider that is better poised to reap the many business benefits of a more diverse workplace by welcoming two female directors to its board of directors at our encouragement.
Impax buys company securities that we believe are well-positioned to add value over the long term, as we make the needed transition to a more sustainable, low-carbon economy. We expect the companies in which we invest to adapt intelligently to changing conditions, but no company is perfect, and sometimes we believe companies can do more to avoid the risks and embrace the opportunities associated with the transition to a more sustainable future.
Engagement helps us better understand the companies in which we invest, and it allows the companies to understand our decisions better; buy and sell decisions convey little information by themselves. Engagement also helps us determine how companies understand their own risk and opportunity landscapes and helps us improve our pricing of risks — particularly emerging ones such as physical climate risks and water availability. Finally, because companies that focus on environmental, social and governance factors often tend to outperform those that are less sustainably focused, successful engagements can at times make companies even better investments.1
This engagement report also includes commentary on how the global pandemic and social unrest changed engagement in 2020; details on the shareholder resolutions we filed — 67% of which we withdrew after successful dialogue with the companies in question; and our proxy voting record. We are one of the few firms that reads every word of the many proxies we review each year — they average 85 pages — and we vote on 100% of them.
In ShareAction’s “Voting Matters 2020” report,* Impax’s voting record ranked first out of 60 of the world’s largest asset managers on 102 shareholder resolutions on climate change, climate-related lobbying and social issues.
In Morningstar’s 2020 proxy voting report,** Impax’s support for key ESG resolutions exceeded the conventional funds’ average and sustainable funds’ average by wide margins.
The public policy realm of engagement kept us busy during 2020. This report details our efforts to influence outcomes that support solutions to environmental and social challenges, including:
- our push for ambitious national action on climate change solutions in the UK and Europe,
- our support for initiatives to “green” the financial system by introducing effective regulatory frameworks for sustainable finance,
- our request for the U.S. Securities and Exchange Commission (SEC) to require companies to disclose the precise locations of their significant assets so that investors, analysts and financial markets can better assess the physical risks they face connected with climate change,
- our participation in the European Union’s effort to develop a regulatory framework for sustainable finance, and
- our letter to the SEC opposing a proposed rule to significantly curtail shareholder resolutions.
Bringing about change often seems to take a long, slow arc to completion, but with ice sheets collapsing, resources diminishing and inequality widening, there is new urgency to deliver the major changes needed to transition to a more sustainable economy and a growing recognition of the crucial role the financial sector can play in accelerating that transition. We are committed to helping shape this important work.
1 Julie Gorte, “The Financial Impact of Diversity,” Impax Asset Management, July 16, 2020.
*Jeanne Martin, Lauren Peacock, Martin Buttle, Rachel Hargreaves and Xavier Lerin, “Voting Matters 2020,” ShareAction, December 2020.
**Jackie Cook, Jon Hale, “Sustainable Fund Proxy Votes Show a Range of Support for ESG Measures,” Morningstar Research, December 2020. (Conventional funds defined by Morningstar as funds offered by the 20 largest U.S stock fund managers. Sustainable funds include open-ended and exchange-traded funds available in the U.S. that are tagged as “sustainable investments” by Morningstar.)