After the pandemic and post-Trump, a delayed COP26 will see climate change at the top of the global agenda in 2021, alongside a brighter spotlight being shone on persistent inequalities and biodiversity loss. Meanwhile, China unveils its Five-Year Plan, with environmental objectives expected to feature prominently. Here we examine our selection of the themes that will guide the transition to a more sustainable economy in 2021.

Every new year promises a fresh start, and few have needed a reboot as much as 2021. As the world begins to look beyond the COVID-19 pandemic and the end of the most disruptive US presidency in modern history, environmental and social challenges that loomed large in 2019 will only become more pressing.

The release of pent-up demand and continuing economic stimulus measures will help to strengthen the global economy in 2021. A return to multilateralism will lead to greater international focus on climate change and biodiversity loss. And continuing technological advances will encourage increasingly ambitious policies to deliver net-zero carbon commitments.

Against these positive forces will be the fiscal drag created by the unprecedented government spending to cushion economies against the impacts of COVID lockdowns. And, in many parts of the world, calls to ‘build back better’ are being ignored in favour of ‘build back quicker’.

But we have been encouraged that, even during a pandemic unprecedented in modern times, the public, policymakers and business have continued to pay attention to the sustainability themes that underpin our investment thesis. This bodes well for accelerated action to address environmental and social challenges that may have been relegated by COVID-19 but which are far from resolved.

The post-COVID economy

The most significant influence on the global economy in 2021 will be end of the disruption caused by the COVID-19 pandemic. To a large extent, the successful roll-out of vaccines should bring us closer towards business-as-usual – the resumption of international and domestic travel, recovery in hospitality, entertainment and sport, and something of a return to prior working patterns.

But the pandemic has irrevocably changed society and the economy. It has heightened awareness of the fragility of human society and our exposure to systemic risks caused by human-induced habitat degradation. It has exposed supply chain vulnerabilities and persistent gender, race and other social inequalities. And it has demonstrated the willingness of modern societies to bear enormous economic costs to protect health and well-being.

The societal, policy and economic responses to the pandemic will create a range of investment opportunities that are aligned with our investment thesis. Most visibly, homeworking has accelerated the uptake of digital technology and has altered working and travelling behaviour in ways that will have lasting effects. It has driven investment into business continuity, cloud computing and eBikes, for example.

The pandemic has also increased focus on industrial automation and supply chain technology and diversification, including a focus on local supply chains, and more sustainable food and water provision. It has also spurred investments in health and well-being, ranging from personal diagnostics, antiviral drugs and telemedicine to natural ingredients and nutrition. 

On the other side of the ledger, the post-COVID economy will see a smaller role for the travel and leisure industry, commercial real estate, and unsustainable and unhealthy food production. The linkages between air pollution and severe COVID-19 infection will add to pressure to curb the use of polluting fuels. The huge rise in plastics pollution caused by the combatting of the pandemic will also pose significant long-term challenges.

The return of US leadership

Responding to the pandemic will be the top priority for President-elect Joe Biden when he assumes office in January. But his victory also represents a dramatic change in how the US and the world will approach a range of sustainability challenges.

The re-election of Donald Trump would have seen a continuation of regulatory rollbacks in the United States and would have grievously strained international efforts to address climate change. By contrast, Biden made climate change a priority of his campaign, with a raft of policy proposals that were considerably more ambitious than those pursued by the Obama Administration. He has doubled down on that focus in the early days of the transition to a new administration, appointing Obama-era Secretary of State John Kerry as special presidential envoy for climate, a cabinet-level position.  

Domestically, the possible failure of the Democrats to take the Senate (pending two run-off races in Georgia in January) means that the Biden Administration will have limited room for legislative manoeuvre or significantly larger appropriations for the Biden Administration’s climate plan. Nonetheless, the White House has considerable executive powers to pursue its environmental objectives.

We would expect considerable policy support for electric vehicles, the pulling of regulatory levers to accelerate the decarbonisation of the US power sector, and a focus on the development of the technologies needed to achieve the deep decarbonisation of the economy, not least through the establishment of a climate-focused version of the hugely successful Advanced Research Projects Agency-Energy (ARPA-E).  We would also welcome a greater focus on the disclosure by companies of their climate-related financial risks ; earlier in 2020 Impax filed a petition with the US Securities and Exchange Commission requesting the regulator to require corporates to identify the locations of significant assets to allow improved assessment of physical climate risks.

However, even if the Democrats fail to win control of the Senate, we believe there is some potential for bipartisan legislation, whether a COVID-19 recovery bill or for infrastructure investment, that could contain significant climate measures. Biden consistently links climate action to job creation in a way that could tempt moderate Republican Senators into supporting climate-related legislation.

Whichever way the Senate majority falls, the outlook for the clean energy sector looks very positive. It is worth remembering that the industry managed to thrive in the last few years, despite the policies of the Trump Administration. Meanwhile, we believe the Biden Administration’s re-tightening of environmental legislation will accelerate opportunities for companies within our Environmental Markets universe.

It is on the international stage, meanwhile, where US presidents have much more freedom, and Biden has pledged to make rejoining the Paris Agreement one of his first acts as President. This will provide an invaluable boost to the international effort to address climate change.

COP26 and the road to net zero

Even before the US presidential election, 2020 had seen a growing drumbeat of net-zero emissions commitments from the likes of the EU, China, Japan and South Korea. With the US on board, these pledges now cover more than two-thirds of global GDP and have set the stage for a step-change in efforts to reduce greenhouse gas emissions. Those national and supranational goals are finding their echo in a growing wave of corporate commitments to cut emissions. Both trends are underpinned by rising public concerns about climate and continuing innovation that is delivering increasingly cost-effective low-carbon technologies.

Momentum will continue to build as we approach the landmark COP26 climate talks, to be held in Glasgow, Scotland in November 2021. Governments are due to submit revised national emissions targets and plans setting out their ambitions for the next crucial decade.  The Paris Agreement envisages that these pledges (known as ‘Nationally Determined Contributions’ or NDCs) should be more ambitious than those first set out in the run-up to the original negotiations in 2015. 

In December 2020, the UK as COP26 hosts set a high benchmark for this process by committing to reduce its emissions by at least 68% by 2030 compared to 1990 levels.  The new target is in line with the Climate Change Committee’s recommended pathway to net zero and increases the level of reductions needed over the next decade by 50%, requiring huge changes across all sectors of the economy. 

We will be looking for two related developments from the COP26 process. The first is that countries elaborate credible sectoral roadmaps that demonstrate how their net-zero goals and shorter-term targets will actually be delivered. These will set out the detailed policy choices that countries will make, on a sector-by-sector basis, on the pathway to net zero. Without such detail, the private sector will struggle to invest in decarbonisation.

The second is for more clarity on the contribution of the financial sector to net zero. Here, COP26 is likely to herald wider adoption of the recommendations by the Task Force on Climate-related Financial Disclosures which require corporates and financial institutions to set out the climate policy and physical risk scenarios they anticipate, and how they plan to respond to them.

As investors focused on the sustainability transition, we expect this process to identify further opportunities from “creative destruction” on the road to a decarbonised economy. A net-zero world will not simply be a low-carbon version of the current economy: some incumbent companies and existing sectors will wither; new technologies, business models and industry sectors will emerge. 

China looks to the next five years

In September 2020, China’s unexpected commitment to reach net-zero carbon by 2060, added to international momentum behind climate action. All eyes will be on the unveiling of Beijing’s next Five-Year Plan, which covers 2021 to 2025, at the National People’s Congress in March.

The plan is likely to boost spending on national defence, technological self-sufficiency and public welfare, in pursuit of the Communist Party’s goal of building a “great modern socialist nation”. But environmental objectives will also feature prominently, in the context of the government’s efforts to address near-term local pollution, its desires to build the strategic low-carbon industries of the future and to put the country on a net-zero trajectory.

There is however a tension. The country’s power sector, as represented by the China Electricity Council, is calling for the aggressive expansion of coal-fired generation and finding a receptive audience among local governments eager to deliver economic growth.

However, Beijing is pushing in the opposite direction, with power sector reforms, pollution-related curbs on industry production and the introduction of carbon pricing all likely to weigh on the economics of fossil generation. In addition, the government has committed to invest US$15 trillion in renewables over the next 40 years, and its green financing framework is encouraging the banking system to shift lending in that direction.

A growing focus on China’s green economy has made many bellwether stocks expensive. However, the depth and breadth of the country’s long-term decarbonisation means that considerable opportunities will continue to present themselves.

A spotlight on biodiversity

One positive consequence of the COVID-19 pandemic could be a greater focus on the crisis facing biodiversity around the world. There are clear links between the greater contact between wild animals and human populations triggered by habitat loss and the spread of zoonotic diseases such as SARS-CoV-2.

In May 2021, the Convention on Biological Diversity, delayed from October, will take place in Kunming, China. Many governments are pushing for new global goals on biodiversity protection, in response to the rapidly unfolding mass extinction event that is threatening an estimated 1 million species.

There is a growing body of analysis of the economic risk posed by biodiversity loss. For example, the World Economic Forum and PwC estimate that more than half of global GDP – some $44trn – is moderately or highly dependent on nature. Impax has joined an initiative to establish a new Task Force on Nature-related Financial Disclosures, that aims to apply lessons from climate-risk disclosure to this key issue.

Thus far, biodiversity presents more of a risk than an opportunity for an investor such as Impax. However, we are already starting to see potential opportunities in technology solutions to improve the monitoring of threatened biodiverse ecosystems, and to improve the traceability of commodities associated with deforestation, which are likely to pave the way for other opportunities across supply chains.


We believe – and certainly strongly hope – that 2021 will represent something of a return to normality after a profoundly abnormal 2020. However, that normality involves the acceleration of the climate crisis, the continuing over-exploitation of natural resources and unsustainable social challenges. Addressing these issues will continue to create enormous economic opportunities for the right companies.

Ian Simm

Founder & CEO

Ian Simm is the Founder and Chief Executive of Impax Asset Management Group plc, one of the world’s leading investment managers dedicated to investing in the transition to a more sustainable economy. Prior to Impax, Ian was an engagement manager at McKinsey & Company advising clients on environmental strategy.

Outside Impax, Ian is a member of the UK government’s Net Zero Innovation Board, which provides strategic oversight of public sector funding of energy innovation programmes, and is a board member of the Institutional Investors Group on Climate Change, the European membership body for investor collaboration on addressing climate change. He is also a commissioner with the Energy Transitions Commission, a global coalition of leaders developing transition roadmaps to achieve net-zero emissions. Between 2013 and 2018, he was a board member of the Natural Environment Research Council (NERC), the UK’s leading funding agency for environmental science. He supports charities in the clean energy, healthcare and a range of scientific and environmental sectors. 

Ian has a first-class honours degree in physics from Cambridge University and a Master’s in Public Administration from Harvard University. In the last century he initiated and led an expedition to complete the first summer crossing of the Sahara Desert by tandem bicycle.

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Joseph Keefe


Joe is President of Impax Asset Management LLC, the North American division of Impax Asset Management Group and investment adviser to Pax World Funds. Based in the Portsmouth office, he is responsible for US managed strategies as well as distribution of Impax’s full capabilities across North America.

Prior to joining the firm in May 2005, Joe was President of NewCircle Communications, a strategic consulting and communications firm specializing in corporate social responsibility and public policy communications. He served as Senior Advisor for Strategic Social Policy at Calvert Group from 2003-2005 and as Executive Vice President and General Counsel of Citizens Advisers from 1997-2000. He is a former member of the Board of Directors (2000-2006) of US SIF, the trade association representing asset managers and investors engaged in sustainable investing throughout the United States. Before entering the investment management industry, Joe worked in private law practice for 16 years.

Joe holds a Juris Doctor from the University of Virginia School of Law and a Bachelor of Arts in philosophy from the College of the Holy Cross.

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Bruce Jenkyn-Jones

Chief Investment Officer (CIO), Listed Equities, Executive Director

Bruce serves as Impax’s Chief Investment Officer, Listed Equities. He is responsible for supervising and overseeing investment process, policy and performance, regulatory oversight, and leads product design within Listed Equities and development as well as the application of Impax’s investment thesis across the Listed Equities product range.

Bruce is Chairman of the Listed Equities Investment Committee, and serves as Co-Portfolio Manager of Impax’s Specialists and Climate strategies.

Bruce joined Impax in 1999 where he worked initially on venture capital investments before developing the listed equities business.  Before joining Impax, Bruce worked as a utilities analyst at Bankers Trust and as an environmental consultant for Environmental Resources Management (ERM).

Bruce has an MBA from IESE (Barcelona), an MSc in Environmental Technology from Imperial College and a degree in Chemistry from Oxford.

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Lisa Beauvilain

Head of Sustainability & ESG, Executive Director

Lisa is responsible for the development and oversight of Impax’s Sustainability and Environmental, Social and Governance (ESG) analysis, including overseeing stewardship work in the Listed Equity team. She is the Chair of Impax’s ESG, Sustainability Lens and Environmental Committees and also Co-Heads Impax’s impact investment work.

Lisa joined Impax in 2010. She started working in the financial industry in 1999 and previously worked as an executive director in the Investment Management Division of Goldman Sachs in London. Lisa has also worked as an independent consultant, focusing on environmental policy research and analysis.

She is active within working groups and advisory councils relating to impact investing, water, governance and ESG standard setting with several external industry organisations.

Lisa has an MSc in Environment and Development from the London School of Economics as well as an MSc in Finance from the Hanken School of Economics, Finland.

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