(pictured: Ian Simm)
For big super funds and other fiduciary investors, today is an important day, hopefully. The eagerly awaited UN Climate Change Conference starts in Paris. Ian Simm, chief executive of Impax Asset Management, spoke last week about the latest developments in ESG investing.
Simm was visiting Australia from London for the ASFA conference in Brisbane, at which he spoke, ahead of the Paris conference, which runs from November 30-Devember 11. He was very optimistic about the outcome.
Simm said: “Unlike previous attempts to come with an attempt to replace the Kyoto protocol, “There have been some very encouraging developments in recent months.
“In particular the US and China have both come out with encouraging positions in regard to their own domestic policy – completely different ways of addressing the issue domestically but they both point to the reduction of greenhouse gas emissions over time…
“The European Union has got a firm, ambitious commitment and it has done since the 1990s. Put those three blocs together and you’ve got a good percentage of the world, in principal, ready to sign up.”
According to the ‘Financial Standard’ industry newsletter earlier this month, the Catholic Super fund’s chief executive and Investor Group on Climate Change (IGCC) chair, Frank Pegan, Australian and New Zealand institutional investors will be committing their support for sound climate policies at the Paris conference.
Pegan said he expected COP21 (the 21st Conference of Parties) will universally agree on a framework aiming to keep global warming below two degrees Celsius for at least the next five to 15 years. It would hopefully address the embarrassment of the 2009 climate conference in Copenhagen where carbon taxes were widely opposed.
“Each nation has been asked to make their commitment back to the UN. COP’s going to come out say all these countries have made their commitments, and they’ll ask for corporations and businesses to back it up,” Pegan told Financial Standard.
Meanwhile, Impax’s Simm, an expert on ESG matters, said in an interview in Sydney last week that “environmental technology” was a rapid growth area in a world which was showing sluggish growth elsewhere. In the US, in fact, valuations had become “quite high”, he said.
“Copenhagen was such a disaster. Hopefully, six years later, we’ll get it right.”
In terms of how technological developments were having a potentially huge impact on environmental issues, such as climate change, Simm said, the electric car would have a big impact and in many other fields, such as using satellite information in agriculture, there would be opportunities and benefits.
“At the same time, we continue to have problems with air pollution,” he said. “Plus, is the drought in California, which is a big problem, due to human activity? There is no doubt some [environmental problems) are.”
From an investment manager’s perspective, the opportunities include: alternative energy companies, water supply companies, waste management, and food and agriculture development.
“Investors under-appreciate the growth rates of these new markets,” Simm said. “They tend to think that things will just get better of their own accord.”