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AP7 increases allocation to Impax mandate

Swedish national pension fund expands position in green impact strategy


Natalie Kenway

Sweden’s AP national pension fund AP7 has increased its exposure to a portfolio run by sustainable group Impax Asset Management

The €60bn pension fund initially plunged €48.5m into a green impact mandate managed by Impax after a “lengthy tendering process” in 2018, and has now increased this to €135.8m.

This means the position has grown from 0.8% to 2.3% of the AP7 portfolio.

Impax, which partners with BNP Paribas Asset Management for the distribution of its strategies, said in an announcement the mandate is aligned with AP7’s objectives to invest in ways that would “likely advance environmental and sustainability goals“, and as part of the deal Impax contributes as a strategic partner to AP7’s Green Impact Objective.

Real-world impact

Hans Löfgreen, senior portfolio manager at AP7, commented: “We are pleased to increase the size of the mandate awarded to Impax. AP7 has the stated ambition to develop, together with managers, methods to measure the sustainability benefits of investments.

“We have been able to successfully partner with Impax to develop metrics and methodologies that measure the real-world impact of our investments.”

The Impax strategy aims to deliver sustainable, above market returns over the long-term by identifying misprice companies that address several long-term macroeconomic themes: growing populations, rising living standards, increasing urbanisation, rising consumption and the depletion of limited natural resources.

Impax added companies are selected where more than 20% of the underlying revenue is generated by sales of environmental products or services in the energy efficiency, renewable energy, water, waste and sustainable food and agriculture markets.

Robust investor interest

Lisa Beauvilain, head of sustainability and ESG at Impax, said: “The two groups have embarked on a partnership project to help solve environmental challenges by working to develop thought-leadership across the investment community in relation to impact measurement and investing.

“Impax will further develop the measurement of the environmental impact of AP7’s Green Impact Mandate with the two organisations becoming dialogue partners.

“Despite market volatility arising from the unfolding Covid-19 crisis, investor interest in positive environmental impact has remained robust with institutions seeking to align their assets with long term opportunities arising from the transition to a more sustainable economy.”

Impax runs £18.1bn in assets under management, as at 30 June 2020, and is listed on the London Stock Exchange.

Pension funds grow ESG investments

This is the second announcement in a week from a pension fund that has increased its exposure to responsible investments.

Our sister publication ESG Clarity reported Scottish Widows has become the first investor in BlackRock’s new fund designed for the transition to a low carbon economy with an initial allocation of £2bn of its pension portfolios.

The Authorised Contractual Scheme (ACS) Climate Transition World Equity fund is managed by Jonathan Adams.

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