Seek sustainable leaders in emerging markets
Take a sustainable approach to investing in emerging markets through a fund that seeks best-in-class sustainability and attractive return potential. Draw on our extensive heritage and vast resources in emerging markets to help your clients tap into sustainable opportunities, manage risks and align their financial goals with their values.
Building a sustainable portfolio
Approximately 100 portfolio managers and analysts across eight locations conduct several thousand company meetings a year to identify companies with effective governance, superior management of environmental and social issues, and durable business models. We use a four-step approach to build a sustainable portfolio.
Exclude unsustainable industries
We exclude certain industries based on norms and principles.
Exclude unsustainable companies
We exclude the stocks with the worst rankings on our risk profile.
Identify sustainable leaders
We invest in companies identified by our analysts as sustainable leaders, or as demonstrating improving sustainability characteristics.
Engage with companies
We engage to understand how companies approach ESG issues, influence behaviour and encourage best practice
Good governance pays off in a crisis
As long-term investors, we view governance as an essential driver of any investment decision. The Covid-19 crisis has highlighted the importance of a strong balance sheet and sound capital allocation decisions, which allow companies to continue to fund both day-to-day operations and the dividend, and put them in a position to come out of the crisis with a stronger position in their respective industries.
This drives us to three types of companies:
Stock exchanges: These de facto monopolies have low capital intensity, little or no debt, and are gateways for governance in their local market.
IT services: These businesses are more labour intensive but still capital-light, so are able to keep their labour forces intact without much strain on the business.
Consumer businesses: We like several strong consumer businesses with zero-debt balance sheets.
Prudent management of capital has always been important, especially in emerging markets. The crisis really highlights the difference between management teams that have paid lip service to this idea, and those that have tried to build a business for the very long term.