Welcome to Impact @ Impax 2021. This is our seventh annual publication which discloses the quantified environmental benefits linked to our clients’ investments in our portfolio companies.

We are delighted to share our annual update on the impact of investment strategies managed by Impax.

Every strategy is designed to intentionally allocate clients’ capital towards those companies we expect to benefit as the global economy transitions to a more sustainable model. This impact report demonstrates how this intention has been translated into action.

The growth of Impax’s client base in recent years is tremendously exciting, primarily as an indicator of investors’ willingness to reallocate assets towards a lower carbon economy, and we are proud of the achievements in emission avoidance demonstrated year on year in this report.

Evolving our impact reporting

In the context of the broader industry debate on avoided emissions, we have sought to improve our net carbon reporting that we introduced in 2015. For greater transparency, this year we have included the emissions and avoidance data behind the net carbon figures.

By way of a benchmark, we include a “global economy” carbon intensity comparison which reflects total emissions divided by invested assets. We have removed the “2°C aligned economy” as an additional benchmark, to focus our comparison on today’s economy and the overarching net zero target. We have also separated out Scope 1, 2 and 3 emissions to give additional context to our reporting (see figure 1).

These figures refer to the past. Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you have invested. Solar and wind emissions factors were taken from estimates provided by IPCC using the median lifecycle emissions. Hydro uses the NVE emission figures. Asian Opportunities AUM and holdings are as at 31 March 2021. 3Source: Estimated total emissions 2020 [GtCO2e] (orange bar) Global Carbon project, source Carbon brief using 2020 figures. Global emissions decreased by 7% in 2020 caused by COVID-19 confinement measures in place. Significant previous decreases were 0.5 (1981, 2009), 0.7 (1992), and 0.9 (1945) billion tonnes of CO2. At the same time, we saw an expansion of global financial AUM in 2020. This, together with the first point, decreased the carbon emission intensity of the global economy portfolio per US$10M by ~14.5% in 2020. Black bar reflects the range of estimates of value invested. Global AUM for 2020 as provided by PwC for the low figure and Global Wealth for 2020 as provided by Credit Suisse for the high figure. ⁴Impax Asset Management, 31 December 2020. Impax’s impact methodology is based on equity value. ⁵No scope 3 emissions data available.

Expanding our scope

This year, our reporting expands again to cover our private markets New Energy strategy and all six of our listed equity Environmental Markets strategies. It also introduces carbon and Sustainable Development Goal (SDG) analysis of our four Sustainability Lens strategies.

For each strategy, we consider its specific investment objective when selecting the most relevant impact metrics to display. Take water impact reporting, for example, which we have enhanced to deliver greater detail on water provided, treated and saved.

Aligning with the UN SDGs

As in 2020, we have mapped Impax’s equity strategies to the UN Sustainable Development Goals (SDGs) to indicate their level of alignment with this framework. We do so by identifying the proportion of portfolio companies’ revenues related to activities described by the targets within each Goal.

Impax’s investment process does not identify alignment with SDGs as a specific objective. Instead, the nature of Impax’s investment philosophy results in some meaningful exposure within the Environmental Markets strategies as well as those with emerging market exposure.

Contributing to the transition

Although our portfolio companies will continue to generate emissions for some time, we are not hiding entrenched emitters from the old carbon energy system behind a selection of renewable names. A net zero economy does not require every company, portfolio or person to emit no emissions at all.

Our impact reporting shows the contribution Impax portfolios are making to the transition to a lower carbon economy. The faster the better, as far as we are concerned.

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