Global SRI: spotlight shines on sustainability

05/06/2018

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Hamish Chamberlayne, Portfolio Manager for Janus Henderson’s Global Sustainable Equity Strategy, discusses 2018’s news flow and the long-term trends that are shaping his investing.

Q. What are your key observations about 2018 to date?

There is strong evidence that investment trends continue to favour those companies transforming the world for the better. Our belief is only those companies that are committed to building a sustainable economy are likely to thrive in an environment that is rapidly evolving. News flow this year bears witness to continuing momentum in clean tech investment. China plans to invest $368 billion into renewable energy projects by 2020, and it is now the world’s largest electric vehicle (EV) market. In the Middle East, SoftBank’s Vision Fund, which invests in disruptive future technologies, has announced it will help back a $200bn 200GW solar power development in Saudi Arabia. On the topic of plastic pollution, the BBC Blue Planet II series received world-wide acclaim for highlighting the terrible impact that plastic is having on our oceans. Our strategy has very little exposure to companies contributing to these issues, but we will be engaging with the few holdings where there is some plastics usage in their products.

Q. What are the key themes that are shaping the markets in which you invest?

Taking a broad view of the market, it is apparent that the fastest growth subsectors are increasingly aligned with sustainability. We are finding exciting opportunities in areas such as cloud computing and artificial intelligence, the electrification of transport, energy efficiency, smart cities, industry 4.0, sustainable infrastructure, financial services, education and research, and healthcare. We view these as long-term trends that should transcend both economic and political cycles, giving us confidence in the duration of future growth. As well as aiming to select stocks for their positive impact on the environment or society, we also avoid investing in those companies that we view as having unsustainable business practices or as having a negative impact on our world. For example, our strategy is deliberately low carbon. We strongly believe the death knell has sounded for big oil, given overwhelming scientific consensus that burning fossil fuels is driving irreversible climate change. Oil is also the primary raw material in plastic production.

Q. Where are you currently seeing the most opportunities?

Our strategy remains skewed towards the Knowledge & Technology and Efficiency themes, where we continue to identify compelling investments. Many of our investments are addressing more than one of our sustainability themes. For example, semiconductor companies are having a transformative impact on many areas. These include medical technology and health diagnostics, electric and autonomous cars, smart cities and factory automation, renewable energy and energy efficiency, and water and environmental services. Semiconductors are the backbone of a smart and connected world, and the industry is evolving from serving computing and smartphone markets to being adopted in a growing number of industrial and Internet of Things applications.
 
 
Glossary:
 
Gigawatt = a measure of power that is the equivalent of a billion watts
 
Industry 4.0 = a name for the current trend of automation and data exchange in manufacturing technologies. It includes the Internet of Things.
Internet of Things = the interconnection via the internet of computing devices embedded in everyday objects, enabling them to send and receive data.
 
Low carbon strategy = a strategy that seeks to limit its exposure to companies that produce fossil fuels, or that burn fossil fuels significantly within their business and supply chains. The burning of fossil fuels produces carbon dioxide, one of the major gases identified by scientists as causing climate change.

SRI = sustainable and responsible investing
Sustainable economy = economic development that attempts to satisfy the needs of humans but in a manner that helps sustain natural resources and the environment for future generations.
 
 

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

The information in this article does not qualify as an investment recommendation.

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