Think you know sustainable investing? 3 investment funds that might make you think again…
As we approach our September birthday, celebrating 20 years of Holden & Partners, it’s worth reflecting on one of the biggest changes we have seen in the sustainable investment sector, and that is one of image.
The chances are if you had mentioned sustainable investment 20 years ago it would have brought to mind environmental protestors and images of windfarms. Take a look at how the Guardian illustrated an investment article back in 2008; sustainable investment was something for dedicated ‘tree huggers’ it seems…
Flash forward to today and the sustainable investment market is considerably bigger. There is a much broader range of investments available, but also a greater understanding that Environmental, Social and Governance (ESG) investing covers a wide spectrum of topics aimed at creating a fairer, cleaner world for all.
At Holden & Partners our investment approach uses the UN Sustainable Development Goals (SDGs) as our North Star and we look to ensure the investments in our sustainable portfolios are supporting the diverse agenda they cover. The 17 SDGs provide a powerful and urgent call to action across all aspects of international development ranging from ending poverty, to tackling climate change, to creating equal opportunities by 2030, take a look at our guide if you would like to know more here.
To see how diverse ESG investing is in practice, here is just a selection of the companies that are included in our portfolios right now and the SDGs they contribute towards. If you’re new to sustainable investment, there might be some surprises among them; from software to pest control, the ESG landscape is bigger than many people imagine.
1) Schroder GSV
Software AG (SDG 9 – Industry, Innovation and Infrastructure)
Software AG is a German multinational software company that provides digital transformation software solutions to businesses. The company’s software products and services help businesses to integrate and connect data, systems, and devices, as well as to analyse and optimize business processes. Software AG partnered with Maccabi, the leading Health Maintenance Organisation in Israel, to help in their digital transformation which played a significant role in Israel’s COVID vaccination success.
Software AG is committed to innovation, investing heavily in research and development in new clean technology solutions, including the participation in a number of high-impact, sustainably-minded research projects. As part of their sustainability strategy, Software AG have set a target for R&D investment to account for at least 15% of total revenue through to 2025. They have committed to aligning at least 80% of their research projects with the United Nations Sustainable Development Goals (SDGs) by 2025; ensuring their technology can support broader global sustainability efforts.
The company is also committed to sustainability, with a focus on reducing its carbon footprint and promoting sustainable business practices. Software companies have been known for having poor diversity and inclusion practices historically, however Software AG have been shown to perform particularly well regarding human capital. They have committed to countering the shortage of IT professionals in Germany through partnerships with higher education institutions to foster digital expertise in young people.
Sanofi (SDG 3 – Good Health and Wellbeing)
Sanofi is a global pharmaceutical company based in France. It is one of the largest pharmaceutical companies in the world, with a focus on research, development, manufacturing and marketing of prescription drugs, vaccines, and consumer healthcare products. Sanofi operates in more than 170 countries, and its products are used to treat a wide range of medical conditions, including diabetes, cancer, cardiovascular and infectious diseases. The company has a strong commitment to innovation, investing heavily in research and development to create new treatments and therapies to improve patient outcomes.
Sanofi have strong access to healthcare initiatives, they are committed to providing 30 essential medicines to 40 of the world’s poorest countries, increasing access to 650 million people for these life changing medicines. They do not file or enforce patents in low-income countries as to not restrict availability of vaccines, and any “profit” is reinvested in training initiatives and healthcare access programmes in these countries to make the system ultimately self-sufficient.
In recent years Sanofi has taken several positive steps in terms of product quality and safety, including implementing robust product quality measures such as supply chain risk mitigation programs, supplier certification, and responsible marketing practices. In terms of human capital, they have a strong focus on training and diversity and inclusion, with a talent pipeline strategy and robust training opportunities for attracting and retaining talent. The company has a net zero carbon emissions target for 2050 which has been validated by the Science Based Targets initiative.
2) Ninety One UK Sustainable Equity
Agronomics (SDG 12 – Responsible Consumption and Production)
Agronomics is a London-listed holding company focused on investing in cellular agriculture – the production of agricultural products (particularly cultivated meat) directly from cell cultures rather than via traditional agriculture methods. The business aims to address, and capitalise on, the need to transform the global agri-food system to produce the 50% more food needed for the 10bn global population forecast by 2050, and to address the 18% of emissions caused by livestock and their by-products.
Agronomics estimates that the production of meat globally will double by 2050 to >500bn kg per annum. This is unsustainable using today’s farming methods in multiple ways, including land required, biodiversity loss, pesticide and fertiliser consumption and application, build-up of antibiotic resistance, and emissions. The company invests in emerging technologies that address this challenge and others associated with agriculture. While still a nascent technology, cellular meat production is far less damaging to the earth’s natural capital than conventional livestock production.
Pod Point (SDG 11 – Sustainable Cities and Wellbeing)
Pod Point, one of the UK’s leading providers of electric-vehicle (EV) charging solutions, listed in November 2021 to fund its growth plans. It seeks to meet the needs of drivers and business partners across four key markets that it defines as Home, Workplace, Destination and En-route. As the demand for EVs increases, the opportunity for the UK leader in charging looks compelling and, as charging infrastructure expands, Pod Point will have the potential to offer additional services, including to optimise the electricity grid and provide energy cost savings for customers. More recently, auto-sector supply-chain disruption has dampened charger installation rates. However, from a structural-growth perspective, it is encouraging that EVs’ share of total car sales is very strong currently.
Pod Point is building out a smart network of EV charge points. This will assist the mass adoption of EVs, and could also facilitate enhanced grid management. Surface transport is the largest carbon emitter in the UK, accounting for 22% of total emissions and 113m tonnes of CO2. Pod Point contributes to the shift to cleaner transport not only by building a charging infrastructure in the UK, but also by providing multiple options to suit customers – including at-home charging solutions, as well as at work, in car parks and at points on journeys.
3) Royal London Sustainable Leaders Trust
Thermo Fisher Scientific (SDG 3 – Good Health and Wellbeing)
The company helps its customers accelerate scientific research, solve analytical challenges, improve patient diagnosis and therapy, deliver medicines, and increase productivity. It achieves this through the provision of equipment, software and services to pharmaceutical and biotech companies, hospitals, labs, universities, and government agencies.
During Covid the company was a key player in advancing research, testing, and developing vaccines to combat the virus. In 2021 over 11 billion diagnostic tests were enabled and over one million patients a day received medicines it helped manufacture. In addition to this the company is actively pursuing ways to make its business more environmentally sustainable, designing greener product ranges by minimising the use of hazardous chemicals, waste, and raw materials. Over 60 of its sites reached 100% renewable energy usage by the end of 2021, and 24 are certified as zero-waste. Both its end products and services, and its operations, contribute to a cleaner and healthier society.
Rentokil Initial (SDG 11 – Sustainable Cities & Communities)
Rentokil Initial is a world leader in commercial pest control and hygiene services. According to the WHO, every year there are more than 700,000 deaths from diseases caused by parasites, viruses, and bacteria. Pest control allows for the mitigation of harmful attacks on crops and people, preventing and controlling the spread of diseases from product infestation by rodents, birds, and insects. Hygiene services provided by the company help prevent and control the development and the transmission of disease.
Rentokil Initial also increasingly focuses on innovation around non-toxic and sustainable solutions and is committed to reach net zero from its operations by the end of 2040. Rentokil Initial’s products and services protect people from the dangers of pest-borne disease and reduce the risks of poor hygiene and airborne pollution, enhancing lives, and contributing to a healthier society.
If you are interested in sustainable investing talk to us today.