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Sustainable development is the achievement of high levels of human development within global ecological limits. As investors, we focus on understanding the contributions individual companies make to sustainable development from the bottom-up. To do this well, we believe that qualitative assessments are as important as quantitative measures.
It is for this reason that we have developed our Portfolio Explorer to tell the stories of the companies we invest in across our regional and global strategies. These stories have been written by our investment team so that our clients and other stakeholders can see why we believe that the companies we invest in are making the world a better place.
We have provided four views of our strategies.
Map: Use this global view to find detailed company information including our investment rationales, risks and engagement priorities.
Sustainable Development Goals (SDGs): The 17 SDGs are globally agreed goals that countries have committed to achieving by 2030. The SDGs offer a vision for the future towards which sustainable investment efforts can be directed.
Climate solutions: We map companies to Project Drawdown’s 80 climate change solutions. Project Drawdown is a non-profit organisation providing analysis of the solutions which can help the world reach ‘drawdown’ – i.e. the future point in time when levels of greenhouse gases in the atmosphere stop climbing and start to decline. The solutions are diverse and cross-cutting, and show the systemic change needed to avoid catastrophic warming.
Human development pillars: We have developed our own 10 human development pillars inspired by the UN Human Development Index that we believe are essential for lifting people out of poverty and empowering them to achieve their potential.
Our investment strategy seeks to invest in companies who contribute to, and benefit from sustainable development. Fundamentally, this means investing in companies who are providing solutions to the sustainable development challenge. They do this either through the products and services they sell, and increasingly their supply chain and direct operations. Our best companies do all three. We call this a company’s sustainability positioning.
We have no proprietary models or ‘black boxes’ for assessing sustainability positioning, but we can analyse as broad a range of quantitative and qualitative factors as possible. To do so, we use rigorous bottom-up analysis supplemented by credible third-party frameworks and external research to assess companies’ sustainability characteristics.
We use a range of frameworks and hope to use more with time. Most commonly we have used:
These frameworks and others, as well as our own bottom-up analysis all lean on measurable and reportable outcomes as the evidence we need for determining a company’s sustainability positioning and contribution to sustainable development.
We assess the contribution by:
Our Portfolio Explorer focuses on Project Drawdown’s climate solutions and the Human Development Pillars.
Contributions cannot always be quantitatively measured, and when they can, the measures may not adequately reflect how meaningful the solution is, either to the company or in addressing the issue. A company making solar panels makes an obvious contribution (unless it does not – for example, where there are accusations of forced labour) however, that company relies on essential components and technologies without which it could not manufacture any solar panels at all. Often we find that the companies providing these supporting and enabling technologies offer the most compelling investments. When considering the sustainable development contribution of companies we assess whether the contribution is:
Since we only invest in companies contributing to and benefitting from sustainable development, all companies we invest in make contributions to one or more sustainable development objectives. We believe these contributions are powerful drivers for future earnings growth as well as reducing risks, which is the same reason we avoid companies who face significant headwinds from the economic transitions needed for sustainable development.
The four views in our Portfolio Explorer; Map, Sustainable Development Goals, climate solutions and human development pillars, provide information about each company’s contributions.