Transcript Presentation 3

Climate Change &
Investor Risk: The Known Unknowns
SRI In the Rockies: November 4th, 2015
Ian Simm, Founder & Chief Executive
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Look out for system-wide risk !
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BP share price before and after Gulf of Mexico spill
110
BP
Global Oil & Gas Producers Index
100
Price (Rebased to 100)
90
80
70
60
50
40
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Sources: FactSet, BP share price (GBP) & FTSE All World / Oil & Gas Producers Index
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US Listed Coal Producers have underperformed since
2011
180.00
160.00
S&P 500
S&P 500 Energy
Coal
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
For sources please see page 42.
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The key investment risk is society’s response, not the
weather
Source of risk
Timescale of material
portfolio impact
Investment response
 Insurance
2040+
Climate Change
Storm
Society’s
response to
Climate Change
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Government
intervention
Changing
consumption
patterns
 Diversification
 Portfolio management
‘’Hold’’
2020 2025
‘’Sell’’
‘’Buy’’
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Net impact more relevant than carbon footprint
KINGSPAN PLC
Kingspan’s high-efficiency insulation provides
an attractive net carbon emission solution.
CO2 EMISSIONS (M TONNES/YEAR)
However, the carbon emitted by its manufacturing
process would exclude it from many “Low Carbon”
strategies.
+0.1
-1.7
Gross Emissions:
Manufacturing
Avoidance in use
-1.6
Net
Emissions
Source: Kingspan
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A model of carbon pricing - SEE IMPAX’S WEBSITE !!
Supply 2
Price
($/tonne)
Carbon
price (T)
Retail
Price
Wholesale
Price
Supply 1
“Stranded
Assets”
Demand
Cumulative Market
Volume (tonnes)
Source : Impax Asset Management
* The analysis holds irrespective of how “carbon pricing” is implemented
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Summary of carbon pricing impact
 Industry volume
 Wholesale energy prices
 Retail energy prices
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Energy efficiency markets (EE): Major investment
opportunities
EE construction materials
Smart grid
2020/19E:
US$
2020E: US$
57bn3
245bn2
LED
2018E: US$
26bn4
1BaML,
2014. 2Transparency Market Research, Navigant Research, 2014 3GTM research, 2014. 4Aixtron, 2014
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Renewable Energy – “explosive” growth to continue
FORECAST EUROPEAN UNION NET CAPACITY ADDITIONS (GW)
121
110
Carbon Capture and Storage
(CCS)
79
Gas
Other renewables
Wind and solar
Nuclear
-27
-52
-50
2016-2020
2021-2025
Coal and oil
2026-2030
Source: International Energy Agency statistics (2015)
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Optimising an equity portfolio for carbon price risk
Model inputs:
A Energy Index
B Energy Efficiency Stocks
Portfolio
Optimisation
Model
New Global
Equity Index
Global Equity Index minus A and B
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Important information
Disclaimer
This document has been prepared by Impax Asset Management Limited (Impax, authorised and regulated by the Financial Conduct Authority). The information and any opinions contained in
this document have been compiled in good faith, but no representation or warranty, express or implied, is made to their accuracy, completeness or correctness. Impax, its officers, employees,
representatives and agents expressly advise that they shall not be liable in any respect whatsoever for any loss or damage, whether direct, indirect, consequential or otherwise however arising
(whether in negligence or otherwise) out of or in connection with the contents of or any omissions from this document. This document does not constitute an offer to sell, purchase, subscribe
for or otherwise invest in units or shares of any fund managed by Impax. It may not be relied upon as constituting any form of investment advice and prospective investors are advised to
ensure that they obtain appropriate independent professional advice before making any investment in any such Fund. Any offering is made only pursuant to the relevant offering document
and the relevant subscription application, all of which must be read in their entirety. Prospective investors should review the offering memorandum , including the risk factors in the offering
memorandum, before making a decision to invest. Past performance of a fund is no guarantee as to its performance in the future. This presentation is not an advertisement and is not
intended for public use or distribution.
Impax is a wholly owned subsidiary of Impax Asset Management Group plc, whose shares are listed on the Alternative Market of the London Stock Exchange. Authorised and regulated by the
Financial Conduct Authority. Registered in England and Wales, number 03583839. Registered Investment Adviser with the SEC.
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