Veteran to Helm Impax’s Nordic Strategy
Copenhagen-based Kristensen will account for regional variations in effort to deepen direct institutional relationships with sustainability-focused manager.
The Nordic region deserves its reputation for leadership in sustainable investment, but it takes a local to understand the nuances that can lead to quite different priorities among its asset owners.
Magnus Kristensen, who recently joined sustainability-focused Impax Asset Management as Head of Nordics, is well aware of the differences and commonalities between institutional investors across the region’s five countries. And he’ll be using two decades of experience in Nordic business development to strengthen Impax’s direct relationships, building on a strategy that has been gaining momentum over the last couple of years.
“It’s fair to say there is a certain cultural fit across the region,” he said. “Nevertheless, the landscape looks very different from each country.”
Kristensen, who joins from a similar role at Federated Hermes – following spells at Jyske Bank and Neuberger Berman – reports to Client Group Co-head Paul Voûte, who has made deepening institutional relationships a priority since taking up his role in 2022.
“One of our overarching objectives has been to grow our direct client base. Historically, we’ve used a range of distribution channels, including sub-advisory partnerships. But more recently we’ve been trying to broaden our direct relationships,” said Voûte, acknowledging that this historical reliance applied particularly in Denmark, where Kristensen will be based.
His predecessor, Viktoria von Kunow, will now focus on developing relationships with Impax clients in Germany, Austria and Switzerland.
Impax manages assets worth £36.9 billion (US$48.6 billion) across listed and private markets strategies, specialising in the investment opportunities arising from the transition to a more sustainable global economy.
Diverse attitudes
To illustrate diversity across the Nordic region, Kristensen points to structural differences – such as the size and nature of pension schemes – but also other factors driven by national political and economic realities.
The latter can explain different attitudes on key sustainable investment issues, such as allocations to armaments and energy, shaped both by past and more recent events.
Approaches to the energy transition are inevitably informed by historical legacy. Sweden and Finland both still rely on nuclear energy for around a third of their electricity needs, while Iceland is largely dependent on hydropower and geothermal power. Norway’s oil wealth is well known, while Denmark is home to Ørsted, one of the few national energy companies to have convincingly embraced renewable sources.
“You’ll see the same [diversity] around armaments, where you will have countries like Sweden and Finland, who both only recently joined NATO, which means that a domestic defence industry has been part of their heritage for years. But there are other countries where armament business investment is not, even today, acceptable,” said Kristensen.
These and other differences must be accommodated by asset managers, he acknowledged.
“You can’t necessarily take a large mutual fund and expect it to fit everybody. There will always be clients who wish to access certain themes via a segregated mandate, which is why separate accounts are a common solution available to institutional investors.”
Commitment to engagement
One way in which the region’s investors have moved in a similar direction is their evolution from the earliest days of ethical investment – which were defined in terms of exclusion, i.e. what not to invest in.
That has been largely – although not entirely – superseded by a commitment to engagement with investee firms to improve sustainability performance and address ESG risks, as well as seeking out capital allocation opportunities that can deliver social and environmental impact.
A group of Danish pension schemes agreed to form an engagement coalition in 2022 to combine their efforts to influence US retail giant Amazon’s approach to labour rights.
And asset owners across the Nordic region have also deployed resources individually and in partnership to address nature-related risks, participating in stewardship programmes such as Nature Action 100 and the Principles for Responsible Investment’s Spring initiative.
Investment in forestry and other natural resources is an established component of the Nordic portfolio but, according to Kristensen, growing awareness of the scale of nature-related risks and dependencies is bringing the theme into the mainstream.
“The pure equity side of biodiversity and nature-related investments will be changing from just being side pockets of clients’ investments to being a part of core equity allocations,” he added.
Sustainability credentials
Collectively, these trends pose a steep challenge to asset managers, who must demonstrate their investment and sustainability credentials across stewardship and capital allocation.
“The intensity around sustainability is not going away,” said Voûte. “The institutional client base wants more reporting, more activity, and more engagement with companies around themes like biodiversity and the net zero transition. That’s where we feel we’ve got an edge.”
To round out its offering across asset classes, Impax has been on the acquisition trail. In July, it bought the European assets of fixed income manager SKY Harbor Capital Management and completed its acquisition of Danish fixed income manager Absalon Corporate Credit, which serves European institutional investors and Danish high net worth individuals. Kristensen will share Impax’s new Danish office near Copenhagen with four Absalon portfolio managers.
Impax’s long-term investment in sustainability expertise also comes in the form of its development of the tools, frameworks and reporting capabilities that shape its strategies and communicate their outcomes to clients. It has also led to the growth of the firm’s global policy advocacy team, which has expanded in recognition of the growing importance of this area in driving sustainability objectives.
“There are many nuances when it comes to sustainable investment,” said Kristensen. “It’s just not enough to showcase your Scope 1, 2 and 3 emissions; you need to be able to show how you’re able to invest in the transition to a sustainable economy.”
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