Impax Asset Management, a London-based sustainable investment firm, is receiving more inquiries from Asian institutions interested in socially responsible investing (SRI).
Just £50 million ($80 million) out of its £2.2 billion in assets is sourced from Asia-Pacific institutions, with half from Australia.
But several factors – such as the improving economy and recent pushes by the Chinese government towards cleaner forms of energy – have led to an uptick in queries from the region's institutions, says Bruce Jenkyn-Jones, a managing director at Impax. Family offices and insurance companies are among the investors in question.
He acknowledges that the requests for meetings are hardly coming in at a breakneck pace. “It’s starting to happen slowly,” Jenkyn-Jones says.
Impax, 25% owned by BNP Paribas Investment Partners (BNPP IP), is working with the French group’s distribution platform to increase its Asia-sourced assets in the next five years, but declined to specify a target.
In addition to meeting with family offices in Hong Kong late last month, Impax visited insurers in Taiwan and is planning a trip to Japan later this year.
“Japan has been quiet for a few years, but that may pick up,” Jenkyn-Jones says, noting that government stimulus measures known as Abenomics have reinvigorated the investor community there.
While Asian allocations will increase, he expects Australia to still make up the bulk of the firm’s Asia-Pacific-sourced assets in the future.
“Our Asia-Pacific asset base will grow, and the easiest way [for that to happen] is through Australia,” says Jenkyn-Jones, noting the high percentage of superannuation fund investors that focus on SRI.
BNPP IP also sells Impax funds to investors in Korea and New Zealand.
The firm does not have current plans to partner with other distributors in Asia, a spokeswoman says, but she adds that Impax is looking “out for opportunities that could compliment existing relationships”.
Institutional fundraising for firms focused on ESG (environmental, social and governance) and SRI can prove challenging. These strategies are still considered very niche and, as such, many institutions only make small allocations. The firm’s average client globally has 5% of its portfolio in SRI-type investments.
“The issue a lot of investors face is where to fit these investments in their asset allocation plans,” Jenkyn-Jones says.
Yet he suggests there is a shift occurring in their behaviour, partially due to the growing regional awareness of moving away from fossil fuels towards alternative energy sources, such as water, wind and solar power.
The number of high-growth companies in China alone focused on energy optimisation, renewable energy, resource/waste recovery and water, food, agriculture and forestry markets is increasing rapidly.
While a significant portion of Impax’s investee companies will continue to be European-based, opportunities in the mainland are too good to ignore, Jenkyn-Jones says. He cites wind company China Longyuan Power Group and Huaneng Renewables Corp as examples.
Oscar Yang, a Hong Kong-based analyst for Impax, researches Asian companies for the firm. Depending on how quickly the firm’s Asia-Pacific assets grow, it may consider hiring more staff in Hong Kong further down the line.