It was announced yesterday that Pax World Management, LLC, one of the venerable names in the SRI and ESG market, has entered into an agreement to be acquired by Impax Asset Management Group plc. The press release with initial details can be found here.
It is our continuing belief at RIS that this is not unique or an aberration but in fact a further expression of the forces at work in the industry as ESG and impact move toward center stage. Whereas this used to be a cloistered market that provided safe space for modestly sized asset management boutiques to operate unmolested, the mainstream move we are experiencing is bringing in some of the largest players in the asset management industry into the frame. In what is (finally) a viable market for ESG, competition is now driven by Porter’s five forces, and so scale and reach, diversity and deep pockets matter more than ever before.
In the “traditional” asset management marketplace, there have always been small boutiques players with unique value propositions, and the same will hold as the ESG marketplace takes on the attributes of, or really merges with, the traditional marketplace. But, the real asset growth comes from scale players, or boutiques that become scale players. We expect to see more activity like Impax/Pax, Trillium/Portfolio 21 and Eaton Vance/Calvert in the coming months and years, which in our view is as evidentiary as anything that ESG and impact are no longer at the fringe and powerful and seasoned market forces will be driving asset growth going forward.