Sustainable investing is on the rise, and COVID-19 has only sharpened the focus of policy makers and investors alike on the need to drive sustainability. So what are the main themes that are driving the push for greater sustainability in investing?
COVID-19 has accelerated changes in work-from-home, transport, travel, education and shopping behaviours that have significant implications and potential for sustainable investors.
“Increasingly, we are seeing investors themselves, from the world’s biggest institutions to mum and dad superfund investors driving the move towards sustainable investing,” says Nicholas Condoleon, Portfolio Manager of the Ausbil Active Sustainable Equity Fund and Head of Research. “There is something in all of us, I think, that does crave a better future, and people are more active in allocating their wealth towards this goal, particularly in this pandemic environment.”
Themes like decarbonisation and global warming are driving a growing energy thematic that will eventually tip the scales toward alternative energy, most likely faster than previously thought. COVID-19 has seen a drive towards renewables as a policy lever, and also as renewable energy costs fall in comparison to fossil fuels. “There is a long ramp-up of opportunity here in the long switch to more renewable energy sources for long-term investors,” says Condoleon.
Associated industries and technologies are also prime for investment in this space. Sustainability in aged care, energy storage and batteries, public infrastructure that displaces private vehicles, electric vehicles and their components and metals, biotech and pharmaceuticals are all critical themes offering long, sustainable returns.
“The need for clean and sustainable food and protein sources, relieving increased urbanisation, and making technology, communications and education accessible to all are themes sustainable investors can believe in, and capture in companies that also perform well on ESG measures,” says Måns Carlsson, Head of ESG Research.
“The ageing population is another area where ESG and sustainable investment approaches are capturing themes like ageing-in-place, real estate dedicated to socially enhanced ageing, and service and medical industries that support the community’s evolving needs,” says Condoleon. This includes the need to increasingly democratise medicines and treatments, not just locally, but globally through biopharmaceutical companies with life-changing treatments essential for human progress.
“Decarbonisation of the economy, human rights and modern slavery in operations and supply chains, corporate governance, data security, culture and diversity, transparency and good governance, environmental citizenship and trust, fair work behaviour; these are all themes that are driving the greater expectations of investors,” says Carlsson. “We have seen a number of cases in the financials, materials, services, consumer discretionary and staples sectors recently that highlight the critical importance of trust and the social licence to operate, which companies can no longer ignore,” says Carlsson. With ESG and sustainable investment approaches, we can ensure we are not invested in companies that have lost their way on what really matters.
Click here for more information on how sustainable investing benefits the risk-return characteristics of your clients’ portfolios, and the themes that are delivering sustainable earnings for long-term investors.
Unless otherwise specified, any information contained in this publication is current as at the date of this report and is prepared by Ausbil Investment Management Limited (ABN 26 076 316 473 AFSL 229722) (Ausbil). Ausbil is the issuer of the Ausbil Active Sustainable Equity Fund (ARSN 623 141 784) (Fund). This report contains general information only and the information provided is factual only and does not constitute financial product advice. It does not take account of your individual objectives, financial situation or needs. Before acting on it, you should seek independent financial and tax advice about its appropriateness to your objectives, financial situation and needs. Securities and sectors mentioned in this monthly report are presented to illustrate companies and sectors in which the Fund has invested and should not be considered a recommendation to purchase, sell or hold any particular security. Holdings are subject to change daily. 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. Past performance is not a reliable indicator of future performance. Unless otherwise stated, performance figures are calculated net of fees and assume distributions are reinvested. Due to rounding the figures in the holdings, breakdowns may not add up to 100%. No guarantee or warranty is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information contained herein (any of which may change without notice) and should not be relied upon as a representation express or implied as to any future or current matter. You should consider the Product Disclosure Statement which is available at www.ausbil. com.au before acquiring or investing in the fund.
A short notice on the COVID-19 public health event, and how it can impact investments
Given the currently evolving issues around the Coronavirus (or Covid-19) globally, which has officially been designated a pandemic by the World Health Organisation, we wish to notify that, as with many firms, business may be disrupted. A public health crisis, pandemic, epidemic or outbreak of a contagious disease, such as the recent outbreak of Coronavirus (or Covid-19) in Australia, Italy, China, South Korea, the United States and other countries, could have an adverse impact on global, national and local economies, which in turn could negatively impact investment returns in any of Ausbil Investment Management Limited’s registered managed investment schemes (the Funds). Disruptions to commercial activity relating to the imposition of quarantines or travel restrictions (or more generally, an inability on behalf of authorities to contain this pandemic) may adversely impact any investment, including by delaying or causing supply chain disruptions or by causing staffing shortages. The outbreak of Coronavirus has contributed to, and may continue to contribute to, volatility in financial markets. The impact of a public health crisis such as the Coronavirus (or any future pandemic, epidemic or outbreak of a contagious disease) is difficult to predict, which presents material uncertainty and risk with respect to any investment or fund performance. You should consider the Product Disclosure Statement which is available at www.ausbil.com.au before acquiring or investing in the fund.