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Sunday, April 11, 2021
Alternative Investments

Sustainable investing drives global businesses

The concept of sustainable business drives the global business community

Sustainable investing is the buzzword in investment now and an increasing number of global companies are recognizing and integrating the concept in their marketing strategies to better appeal to their customers. Sustainable investing includes the ESG principles – Environmental, Social and Governance. Large investors such as Canada Pension Plan Investment Board plan to implement the strategy in their business.

Last month, Mark Machin, president and chief executive officer of the C$328 billion (£193.50 billion) Canada Pension Plan Investment Board, championed the merits of sustainable investing in an annual report. He said that sustainable investing is the right approach for an organization that aims to deliver strong returns over decades. He added that ESG factors can be significant drivers — or barriers — to the success of the enterprises in which it invests.

Since large investors are doing it, many mainstream fund firms have followed suit. In a similar development, the UK’s Impax Asset Management has planned to merge with Pax World Management of the U.S. It hopes to complete the deal by February 2018. Founded 20 years back by Ian Simm, who is also the Chief Executive of the company, Impax Asset Management focuses exclusively on investments in environmental technology such as alternative energy and advanced transportation systems. Once the deal is struck, the two companies will handle assets worth £10.3 billion.

Simm intends to update the company’s shareholders on the merger process. At the time Impax Asset Management was established, there was no awareness of environmental, social, and governance or ESG principles. Simm believes that Impax, as a niche player focused purely on sustainable investing, is perfectly placed to sweep up assets from the world’s largest asset owners. He said that the company has already demonstrated that it can win business from asset owners looking for more compelling ideals in global equities and private equity buckets. He further said that the world is transitioning slowly to a more sustainable economy and his company’s investment thesis is continuing to play out.

On completion of the deal, Impax Asset Management will have about 70 people working in Europe and a further 60 in North America. Simm said that the company is going to roll out a strategy that it has been incubating for three years, called the global opportunities strategy, which is regarding taking a broad view on sustainable development. The company also plans to increase resources focused on assessing climate change investment risk.

Simm said that if capital can be used to help industries that are good for solving environmental problems, that should be encouraged, but most importantly, if industry is not making good returns, then it does not have a sustainable business.

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