United StatesWe believe that companies whose products and services help meet society’s needs can capitalise on long-term structural drivers of opportunity. Where they show indications of strong corporate culture, our research suggests they could deliver better risk-adjusted returns for their investors.
We view companies that combine these two qualities as ‘Social Leaders’.
In this paper, we introduce how we identify these companies. Our approach leverages two deeply ingrained traditions at Impax: first, creating proprietary taxonomies to highlight pockets of investable opportunities; and second, developing a deep understanding of companies, including their workplace practices.
Identifying areas of opportunity
We have identified long-term, quantifiable secular trends that will shape global society for decades to come. These include ageing populations, urbanisation, rising income in emerging markets, increased incidence of chronic disease, transformational technology and artificial intelligence (AI).
The need for solutions to the challenges posed by these structural trends creates opportunities for innovative companies that are focused on the changing societal landscape. Through their products and services, these solution-providing companies contribute to meeting basic needs, broadening economic participation, and improving quality of life.
We have developed a classification system – the Impax Social Taxonomy – to identify these companies within the global investable universe.
Evaluating corporate culture
Although the concept of corporate culture is difficult to define and measure, we have identified workplace
factors that we believe to be material and combined them to create a proprietary framework, the Impax Corporate Culture Indicator.
Our analysis of companies’ policies and performance attempts to capture the value created by supportive
workplace environments, evident across regions and sectors. Companies scoring well on the Impax
Corporate Culture Indicator, as measured by these specific workplace factors, have been shown to have
delivered superior total shareholder returns to those with low scores.
An innovative approach
We believe that the specific proposition offered by the combination of the Impax Social Taxonomy and the Impax Corporate Culture Indicator tool is novel, so therefore are the opportunities that it represents.
As the transition to a more sustainable and inclusive economy progresses, it is our conviction that the opportunity set within Social Leaders will continue to expand.
References to specific securities are for illustrative purposes only and should not be considered as a recommendation to buy or sell. Nothing presented herein is intended to constitute investment advice and no investment decision should be made solely based on this information. Nothing presented should be construed as a recommendation to purchase or sell a particular type of security or follow any investment technique or strategy. Information presented herein reflects Impax Asset Management’s views at a particular time. Such views are subject to change at any point and Impax Asset Management shall not be obligated to provide any notice. Any forward-looking statements or forecasts are based on assumptions and actual results are expected to vary. While Impax Asset Management has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability or completeness of third-party information presented herein. No guarantee of investment performance is being provided and no inference to the contrary should be made.