Please see the below article posted by Jupiter earlier this week from their Global Sustainable Equities Fund Manager, Abbie Llewellyn-Waters:
‘Several sustainable themes have continued to accelerate as a result of the Covid-19 crisis, said Abbie Llewellyn-Waters, Fund Manager, Global Sustainable Equities.
Firstly, momentum for environmental policy has gathered pace, despite the fragile state of the global economy. Policymakers have been quick to draw the link between the coronavirus and the environment – like viruses, greenhouse gases care little for borders. The debate around carbon policy, and specifically carbon tax, has notably accelerated. Abbie remarked on the recent write-downs and substantial price disparities within the oil sector as a further pressure point for tightening carbon policy.
There has also been important research quantifying pollution reduction, one of the few positives from this crisis, said Abbie. As a result of the global measures to combat Covid-19, the IEA expects global CO2 emissions this year to decrease to levels of 10 years ago. This is significant and could support the case for a more agile economic culture that includes more working from home. It is effectively an ‘investment-free’ solution to help deliver the legal commitments of the Paris Agreement.
There also continues to be strong momentum in human capital management within the sustainable companies that Abbie and the team focus on, with an increasing correlation between low staff turnover and high recurring revenue models.
Finally, another interesting new theme is the increasing attention on sustainable supply chain management. For years, efficiency has been the overriding aim in supply chains – “just enough, just in time”. Covid-19 has shifted the focus to security. While this has implications for working capital, it also offers new revenue opportunities. For example, infectious diseases have previously been mischaracterised as an issue mainly for developing markets. But a company Abbie recently spoke with highlighted that R&D investment into non-Covid infectious diseases in developed markets has already increased, which has the potential to create entirely new revenue streams not previously captured by analysts. All in all, Abbie expects the journey ahead to be much more complex than the markets rally suggests.’
Socially responsible investing has now gone mainstream and is a key focus for investors with a ‘put your money where your values are’ approach becoming more and more common.
ESG (Environmental, social and governance), which is a ‘set of standards for a company’s operations that socially conscious investors use to screen potential investments’ is now under the spotlight in this industry.
Keep your eye out for more blog content on this over the next few months as we at People and Business, develop our own ESG processes and scrutinise these criteria within the companies we use for our clients.
Andrew Lloyd
26/06/2020