Impax reports ‘improved’ sentiment on ESG-focused investment despite heavy outflows

Lars Mucklejohn
9 April 2024

Data published by Morningstar in January found that sustainable funds saw their first net redemptions ever in the last quarter of 2023.

ESG-focused Impax Asset Management has noted “improved” investor sentiment in recent months, despite the sector grappling with heavy outflows from sustainable funds.

The company reported in a stock market update on Tuesday that its assets under management (AUM) totalled £39.6bn on 31 March 2024, up 1.3 per cent from the end of the previous quarter.

However, Impax’s net flows came in at negative £1.71bn during the first quarter of 2024, from negative £988m in the final three months of last year.

Impax has been affected by the shift away from ESG over the past couple of years, with its share price down 70 per cent since its peak at the end of December 2021.

Its most recent annual results reported a 28 per cent drop in pretax profit to £52.1m, also driven by rising costs.

The strong performance of oil and gas firms after the war in Ukraine and regulatory issues have made investors question the ‘environmental, social and governance’ label.

Analysts say the sector has likely reached a “saturation point” after years of investors scrambling to pump cash into responsible investment strategies.

Impax’s chief executive Ian Simm said on Tuesday: “I am pleased to be able to report another quarter of rising AUM in the context of sustained positive market sentiment.

“Although our net flows were moderately negative, the outflows were overwhelmingly from a small number of intermediary clients largely representing European private wealth, and we again recorded an increase in the number of institutional clients, and no segregated mandate terminations.

“Following nearly two years of relative headwinds, asset owner sentiment around the transition to a more sustainable economy and associated areas of Impax expertise has improved in recent months. Looking ahead, we continue to develop a healthy pipeline of potential new business and to expand our distribution capabilities around the world.”