Insights

Impax Asset Management

Two powerful forces have reshaped global markets in 2026. First, the conflict in the Middle East has led to surging energy prices and supply disruptions. Second, the rapid adoption of AI is driving an extraordinary capital investment cycle in data centres resulting in a new era of energy demand. Combined, these forces have reinforced the structural case for investment in energy security, energy and resource efficiency, electrification, and the more efficient digitalisation of economies. 

Energy security and efficiency: Back on the agenda

Governments around the world have stopped thinking about energy as a commodity and started treating it as a matter of national security. The conflict in the Middle East this year closed the Strait of Hormuz, choking off ~20% of the world’s oil supply. The head of the International Energy Agency called it “the greatest global energy security challenge in history.”¹ This shock served as a wake-up call: energy security and efficiency are paramount. According to Wood MacKenzie energy capex spending reached US$3.3 trillion in 2025, and is on track to exceed US$3.8 trillion by 2030 with power supply and grid infrastructure dominating spending.² 

The opportunity is wider and more persistent than just renewables. As the cost of energy rises, the payback period declines on investments. Companies that modernise and fortify grids, expand renewable generation, and improve energy efficiency are not riding a policy trend — they are responding to economic drivers. Japan, of course, demonstrated this during the 1970s oil shock, reducing the energy required per unit of GDP by 30% between 1973 and 1988 but prioritising efficiency in industry, households, commercial buildings and appliance. The Impax Environmental Market taxonomy covers this Energy Efficiency theme across many of these areas — identifying companies providing efficiency solutions across Building Energy Efficiency, Consumer Energy Efficiency, Power Storage, Smart Grids and Efficient Lighting.

Case studies³:

• Siemens Energy (Smart & Efficient Grids, Germany) 
  Siemens Energy plays a critical role in enabling the energy transition by modernising grids, improving energy efficiency and expanding renewable energy capacity. Its three main segments are ‘Grid Technologies’, ‘Gas Services’ and ‘Transformation of Industry’, complemented by a majority stake in the wind turbine manufacturer Siemens Gamesa.
• Hubbell (Smart & Efficient Grids, US) 
  Hubbell designs, manufactures and sells electrical and electronic products for a broad range of non-residential, industrial, utility and residential applications. Products include connectors, electric transmission and distribution products and specialised industrial equipment. Hubbell’s products help improve building energy efficiency and resilience and efficiency of power grids.
• Trane Technologies (Building Energy Efficiency, US) 
  Trane supplies more efficient heating, ventilation & air conditioning (HVAC) solutions across commercial, residential and public applications. Trane’s building energy management solutions help owners manage energy costs
  and maximize the bottom line while enabling a reduction in greenhouse gas emissions.

AI is rewriting the rules of power demand

The artificial intelligence boom is not just a technology revolution — it’s also fuelling a surge in energy  demand. Every AI query, new data centre, and model training run contributes to an electricity demand at a scale the world has never seen. As a result, power demand is growing at its fastest pace in decades, with grid operators and energy companies scrambling to keep up. 

Our expertise is in identifying the companies that can reduce this energy demand and “bend the power curve”. We have identified some key levers in making AI compute, and digitalisation more broadly, more efficient, through 1) more efficient compute - companies enabling faster, more powerful processing for AI workloads through advanced semiconductors, cloud computing and design tools, 2) reducing AI’s power — through advanced cooling, connectivity, and system efficiency solutions and 3) efficiency and delivery of power supply — firms modernizing power infrastructure and grid systems to ensure reliable, efficient energy delivery for AI-driven demand.

Solving these challenges is not new for the Leaders strategy: the portfolio has long held positions across this entire value chain, anticipating the intersection of tech and energy. For investors, it means exposure to AI’s growth without betting on just a handful of tech mega caps — instead, you own the critical enablers of that potential growth, companies with fundamental demand and resilient business models benefitting from AI’s rise. 

Case studies3:

• Synopsis (Efficient IT, US) 
  Synopsys is a leader in electronic design automation (EDA), providing advanced technologies for chip design and verification and solutions that increases design efficiency. In short, their design tools help semiconductors use energy more efficiently.
• Amphenol (Cloud Computing, US) Amphenol is a global leader in connectivity solutions, supplying components across automotive, industrial, data centre, consumer electronics, aerospace, and medical sectors. Some of its products support the electrification and decarbonisation of vehicles and play into the secular trend of increased electronic content, thus enabling the transition to connect,
  “internet of everything” technology.
• Hoya (Efficient IT, Japan) 
  Hoya’s mask blanks are used in EUV (Extreme Ultraviolet) lithography for advanced semiconductors while its glass substrates are used in high-capacity HDDs that enable cloud computing.

Why Leaders, and why now?

After a period in which markets were dominated by a narrow group of mega-cap technology companies “The Magnificent Seven”, conditions are shifting 
in the strategy’s favour. The market’s attention is broadening to themes like renewable energy, efficiency, and infrastructure — areas that form this strategy’s core holdings. The secular growth drivers behind environmental markets — electrification, grid modernisation, resource efficiency — are intensifying. Meanwhile, we believe many stocks in these sectors still trade at attractive valuations, which we believe presents a favourable entry point. 

We believe that the next decade will be shaped by the forces that are already impacting the global economy: the explosive growth of artificial intelligence and the fundamental realignment of energy geopolitics. Each of these forces, on its own, would represent a significant investment theme. Together, we believe they point towards a single, compelling opportunity — the companies building and running the essential systems that the modern world cannot function without.

^{1 “IEA head Birol reaffirms that world facing biggest energy crisis in history” Reuters, April 2026
2 Wood Mackenzie, April 2026
3 The specific securities identified and described are for informational purposes only and do not represent recommendations.}