December 15, 2020
Impax Reports Positive Environmental Impact for 2019
Impax Asset Management is a U.K.-based global stock investment manager making a worldwide difference for the environment. It invests in companies pursuing positive environmental strategies with measurable outcomes, including wind farms, solar technology, and wastewater-reduction and -treatment techniques.
In 2016, Portico made a $20 million social impact first (SIF) investment in an Impax environment-focused strategy. The information below paints a picture of the positive environmental impact created by this investment during 2019 — through statistical outcomes and storytelling.
“This impact report is part of the return on investment for members who, in 2019, were invested in the ELCA Social Purpose Bond Fund or any of the Social Purpose Balanced Funds,*” said Erin Ripperger, Portico’s senior socially responsible investment analyst. “This is their opportunity to celebrate the many ways their investment had positive impact on the environment.”
Interestingly, impact in 2019 was lower than Impax reported for 2018 — in part, for good reason. According to Impax, as efforts to improve energy and natural resource efficiency take effect around the globe, the magnitude of incremental benefit delivered by Environmental Market technologies is reduced.
For example, the electricity grid in the US saw CO2 intensity fall by 5% in 2019 vs. 2018 (and in Europe it fell by 6%) due to lower dependence on carbon intensive fossil fuels such as coal. This means that improvements created by Impax and other such investors is smaller in comparison to the broader electricity network. But it also confirms Impax’s investment thesis — that environmental technologies will become more common over time.
Company Spotlight: Making Textiles From Wood
WHAT: Lenzing is a global company headquartered in Austria. It is included in in our Impax portfolio because it produces fibers and textiles, including the familiar TENCEL™, from sustainable sources with high levels of resource efficiency.
WHY: Land and water constraints are driving demand for sustainable fibers. Manufacturers increasingly want to buy these fibers because they reduce the overall negative environmental impact of their products.
HOW MUCH: Producing fibers from wood rather than cotton or manmade fibers like chemical feedstocks reduces energy and water use by up to 50% compared with conventional alternatives. In 2018, Lenzing fiber production led to the avoidance of 13 million tons of CO2 and saved 4.9 megaliters of water by displacing cotton or man-made fibers.
What is Social Impact First (SIF) Investing?
To help achieve measurable social impact, 14 of Portico’s 15 social purpose funds employ a form of positive social investing called social impact first (SIF) on up to 10% of fund assets (excluding the Portico Stock Index Social Purpose Fund). SIF investments accept a somewhat lower projected return and/or somewhat higher projected risk on up to 10% of the fund’s investments in order to invest in companies and organizations that support initiatives like affordable housing, reduced greenhouse emissions, and renewable energy.
“It’s been a Portico objective since 2015 to carefully and steadily increase the number of SIF investments made through our social purpose funds,” Ripperger said. “We make these investments to create solid financial returns for member investors and positive social outcomes important to member investors and the ELCA.”
For more information about all funds managed by Portico Benefit Services, please see the Investment Fund Descriptions for your retirement plan.
* The ELCA social purpose balanced funds were replaced by Portico social purpose target date funds (TDFs) in October 2020. Because these target date funds were created from Portico’s existing investment pools, all social purpose TDF investors remain participants in this Impax investment.
Information regarding Portico funds should not be considered as advice or as a recommendation to hold, purchase, or sell those financial products and does not take into account your particular investment objectives, financial situation, or needs. For more information about all funds managed by Portico Benefit Services, please see the Investment Fund Descriptions for your retirement plan on the Fund Options & Performance page of myPortico and speak with your tax, legal, or financial professional.
Members should carefully consider the target asset allocations, investment objectives, risks, charges, and expenses of any fund before investing in it. All funds, including the Portico funds, are subject to risk and uncertainty. Past performance is no guarantee of future performance. Funds managed by Portico Benefit Services, including the Portico funds and ELCA Participating Annuity Investment Fund, are not insured or guaranteed by the Federal Deposit Insurance Corporation, any other government agency, or the ELCA. Fund assets are invested in multiple sectors of the market. Sectors, like funds, may perform below expectations and lose money over short or extended periods. Review the Portico Investment Fund Descriptions and the Investment Memorandum for the ELCA Participating Annuity Trust for more information about the Portico funds.
Target date funds are designed for members expecting to retire around the year indicated in each fund’s name. When choosing a fund, members should consider whether they anticipate retiring significantly earlier or later than age 65, and select the target date fund that aligns with their expected retirement age. There are many considerations relevant to fund selection; members should choose the fund that best meets their individual circumstances and investment goals. Each fund’s asset allocation strategy becomes increasingly more conservative as it approaches the target date and beyond. Each fund’s investment risk changes over time as its asset allocation changes. The investment process used by the investment managers and the target asset allocation of the funds may change at any time, without notice.
Neither Portico Benefit Services nor the funds it manages are subject to registration, regulation, or reporting under the Investment Company Act of 1940, the Securities Act of 1933, the Employee Retirement Income Security Act of 1974 (ERISA), the Securities Exchange Act of 1934, the Investment Advisors Act of 1940, or state securities laws. Members, therefore, will not be afforded the protections of those laws and related regulations.