United StatesIt’s hard for me to believe that Impax is 25 years old.
Back in 1998, the largest wind turbines generated 1MW (vs 16MW today), the price of solar panels was the equivalent of around US$7 per watt (versus around US$0.16 per watt today),1 and the most common electric vehicles were golf buggies! At the time, the World Bank believed that the way to kick start the solar sector was to pump demand in (sunny) developing countries, so they set up a US$25m investment fund targeting India, Morocco and Kenya and appointed the newly minted Impax Asset Management to help them run it.
A few months later, Danish fund manager Michael Albrechtslund called me to ask for help with his project to launch a fund investing in environmental technology, which, in his view, was going to be “as big as the internet”. Bruce Jenkyn-Jones and I spent the summer of 1999 designing what may have been the world’s first green taxonomy to provide a framework for this new fund, and the launch (with €8m equivalent) of the Danish fund gave us our second mandate.
Since then, Impax has argued consistently that, on a finite planet with an expanding population seeking ever higher standards of living, the transition to a more sustainable economy is practically inevitable. It is our conviction that this transition will continue to provide excellent investment opportunities for red-blooded capitalists and ethically motivated investors alike.
The results of such investment activity have indeed been compelling (if not consistently so in all types of market!), often with measurable positive non-financial outcomes. And finally, as investment managers, there continue to be benefits to our portfolios – as well as to wider society – from our engagement with the companies we invest in to help improve how they are run, and with policymakers seeking to shape the rules for private markets activity.
Five key lessons
Alongside the celebrations to mark Impax reaching this anniversary, there’s been plenty of time to reflect both on what we’ve learned and where we’re heading. Looking back, five key lessons stand out.
First, it really is ‘all about the people’ and how they collaborate! Having hard-working, team-oriented colleagues has been both a privilege and a key source of strength. We have benefited from the advantage of having a clear mission focused on the transition to a more sustainable economy, which has helped to shape our distinctive culture. When capable people are willing to pull in the same direction and look out for each other, it’s amazing what can be achieved.
Second, ‘thinking global’ has helped enormously. Striving to identify investment opportunities around the world, but also designing the business to appeal to clients in multiple countries and to staff in North America, Asia and continental Europe has helped us build both a strong franchise and a scalable platform to underpin further growth.
Third, it is critical to focus on investment ideas that fit client requirements for risk and return. Many of our early peers fell by the wayside as they bet their firms on highly risky investment portfolios that ultimately lost money for clients.
Fourth, being crystal clear about how we treat ethical issues continues to be paramount. I’ve commented extensively elsewhere about how unhelpful ‘ESG’ can be. Instead of defaulting to ‘ESG speak’, we’ve long explained to our clients how we’re using a broad radar sweep of issues to improve our analysis of investment risk and return, while having a transparent approach to whether and how we incorporate investment beliefs into our investment work.
Fifth, we’ve seen real benefits in engaging both with companies we own and with policymakers who shape the rules and regulations that define markets. An ongoing dialogue with investees can help them reduce risks like those arising from climate change and optimise business strategy for the transition. Meanwhile discussions with regulators and other government agencies can help those agencies avoid pitfalls, such as the overly prescriptive use of green taxonomies in the regulation of investment funds.
Over 25 years we’ve also learned a great deal about sustainable development, and what it will take to achieve it while keeping the planet habitable. This should be the subject of a separate blog, though.
For now, let me thank our valued clients, colleagues, partners and others who have supported Impax in its journey to date. Please join me in celebrating this milestone in Impax’s history, which has been brought to life in a new interactive timeline.
1IEA, PV Info, Impax, US$ (2023)
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