Impax Asset Management executive believes its offering has suffered in Australia due to a lack of understanding around which asset class environmental equities fit into.
Speaking to Financial Standard, managing director of listed equities for Impax Asset Management Bruce Jenkyn-Jones touched on how institutional investors in Australia view environmental equities.
"While we are pleased with the take-up in Australia, what is interesting is the main reason we haven't had more take up is this question of which asset class does environmental equities sit within," Jenkyn-Jones said.
He explained an early super fund adopter of Impax's environmental equities approach made an allocation from its small caps strategy and put that money specifically into environmental markets.
"That's almost the essence of the challenge," Jenkyn-Jones said.
"It's almost easy to persuade people it's a good idea but it's not easy to help them see what job it does or how to fit it in in terms of allocation."
Most pension funds and super funds that invest with Impax, he said, assess environmental equities as a satellite to global equities.
"Pension funds are now having to address climate change risk, and that's another nudge to get them thinking about where it fits in," Jenkyn-Jones explained.
"There are examples around the world where pension funds and asset allocators have had to set up a bucket that might be called the ESG bucket or the impact bucket or the climate bucket."
He said that in terms of asset allocation those who have come to the conclusion that climate change is an important issue for them to address are finding ways to make that happen through investments.
Impax is a specialist investment manager for BNP Paribas Asset Management.
Impax is focussed on opportunistic strategies in alternative energy, energy efficiency, water, waste, food and agriculture related markets.
Jenkyn-Jones is based in the UK and was in Australia to speak with wholesale investors about BNP Paribas' environmental equity strategy, managing climate risk and environmental markets.