To celebrate International Women’s Day on 8 March, ESG Clarity asked female fund managers to share their favourite ESG stock
Elena Tedesco, global emerging markets co-portfolio manager at Federated Hermes:
“Duratex is the largest producer of industrialised wood panels, sanitaryware, metal taps and shower heads in the southern hemisphere. It manages forestry areas and uses best-in-class native area conservation and management practices. It has a long history of ESG commitment, encompassing goals to sustainably manage forests, use natural resources efficiently, preserve biodiversity and reduce pesticides, irrigation water and emissions.
“Duratex embraces many of the Sustainable Development Goals (SDGs) and has set clear targets to achieve its 2025 sustainability strategy, including the promise to reduce absolute Scope 1 GHG emissions at group level by 25%, and reduce emission intensity in its Panels and Deca and Hydra divisions.”
Audrey Ryan, manager of the Kames Ethical Equity Fund:
“Imagine you could predict the future? That’s literally one of the services that UK-listed information technology company Aveva Group Plc are trying to do for their clients using predictive maintenance.
“Rather than follow a simple calendar-based schedule, using the data generated from sensors on a physical asset, predictive maintenance uses machine learning to spot problems before they occur. Companies are better able to identify underperforming assets, plan and prioritise maintenance, reduce downtime, avoid costly (and possibly catastrophic) events and improve safety and regulatory compliance. Sensors and computer chips now measure and collect information from water treatment facilities to wind turbine gearboxes.”
Sue Noffke, manager of the Schroder Income Growth Fund:
“John Laing – a holding since 2015 and 2.9% position at the end of February – originates, invests in and manages greenfield infrastructure projects globally. Their projects have many positive impacts on societies; improving transport systems, generating renewable energy and providing social infrastructure such as hospitals and schools. John Laing delivers this while taking financial and construction risks away from the public sector. For example, John Laing’s light rail project in Australia increases public transport capacity whilst reducing congestion, the UK’s Intercity Express Programme delivers faster, energy efficient trains and wind farms reduce carbon emissions. We think John Laing can continue to deliver much-needed infrastructure while rewarding shareholders.”
Judith MacKenzie, partner and head of public equity at Downing:
“Tekmar is the global leader in cable protection systems for offshore wind farms. This sector is expected to grow by eight times over the next 10 years and by 20 times through to 2050. The core product provides a significant cost/benefit advantage to offshore wind farms which have a high incidence of cable failures without protection. We believe Tekmar’s leading market share in the sector, combined with the likelihood that all new global offshore windfarms will seek some form of cable protection, should generate significant value for shareholders over the long term.”
Julie Bech, co-manager of Nordea’s Global Gender Diversity strategy:
“L’Oréal has been strongly committed to ethics and equality for years. For example, it gives all mothers at least 14 weeks of paid leave – even if local maternity leave is shorter and unpaid. In addition, the company aims to provide all parents 10 days of paid vacation, no matter where in the world they work.
“Equal pay is also important to the company, and senior management wants to increase equality in areas where it is not in order. The aim is to have an equal number of men and women in the workforce and to include people from different social, cultural and ethnic backgrounds. In 2020, L’Oréal made the Bloomberg Gender Equality Index for the third year running.”
Harriet Parker, investment manager on the Liontrust sustainable investment team:
“Cardboard and paper packaging group Smurfit Kappa would be my pick. There has been a huge shift in the way consumers look at packaging, demanding less plastic, and more recyclable materials from producers. At the same time, we know consumers themselves don’t want to pay for this – they expect companies to pick up the tab. Consumer product companies are taking this responsibility seriously, with targets on making more packaging recyclable and compostable.
“Smurfit gets 75% of the fibres it uses from recycled sources, and the remaining 25% directly from its own plantations and third-party suppliers. We see value in Smurfit’s responsible resource management, operational efficiency and products.”
Patricia Ribeiro, senior portfolio manager for American Century Investments:
“In terms of ESG investing, one of my favourite companies is Sabesp. The company is the largest sewage and water treatment company in Brazil. It is 50% owned by the state of Sao Paulo, which has pledged accelerating sanitation investment. The company is a candidate for privatization, transferring the state’s shares to a holding company and introducing a private, long-term partner. We believe this would contribute significant efficiency gains. Growth in Brazil’s sanitation sector is strong. The company performs rigorous testing of water quality and has invested substantially in its pipe and connections infrastructure.”
Deirdre Cooper, portfolio manager of the Investec Global Environment Fund:
“In the Investec Global Environment Fund we invest in companies which are driving the transition to a low carbon world. Infineon Technologies is a company which does just that. Sustainable decarbonisation presents investors with a huge structural growth opportunity. It will require a complete change in how we generate electricity moving rapidly towards renewable energy sources dominated by wind and solar. We will continue to witness the rise of electric vehicles at the expense of internal combustion engines.
“Infineon is a market-leading power semiconductor company whose products will see structural growth because of all of these broad trends. Within renewable energy, Infineon supplies all top-ten wind turbine and solar inverter companies with power semiconductors and has a dominant market position in power semiconductors for electric vehicles. Its revenues have grown organically by an average 9% each year since 1999 and we expect this trend to continue.”
Maria Municchi, manager of the M&G sustainable Multi Asset Fund:
“One of our favourite impact stocks is Bright Horizons, the early education service provider. As a working mother of two, I know the value of quality childcare support and the impact that that has on both gender equality, career and family structures. Bright Horizons provides a viable option for working mothers, by providing short and long-term care for children of all ages. By offering customised childcare solutions, this not only leads to a positive impact but also helps support wider economic growth and helps address UN SDG Goal 5: Gender equality. Crucially, Bright Horizon has a strong business model, capital light structure and is very cash generative, which also makes it an attractive from an investment perspective.”
Abbie Llewellyn-Waters, manager of the Jupiter Global Sustainable Equities Fund:
“CSL is a global healthcare company providing vaccines and blood-based therapies (immunoglobins). With all products manufactured in state-of-the-art facilities, the company has a leading global position in a high barrier to entry market.
“Vaccination is key contributor to global health, underpinning herd immunity and preventing thousands of deaths a year. CSL provides a wide range of vaccines from tetanus to flu, and has recently donated use of its adjuvant technology – which helps create a stronger immune response in vaccines – to help the global fight against Coronavirus.
“Almost half of CSL’s 25,000 employees are female and close to 60% of all senior promotions were given to women. The company enables socio-economic gender equality through a skilled workforce with strong inclusion policies from flexible working to maternity pay.”
Sonal Sagar, manager of the Threadneedle UK Sustainable Equity Fund:
“Tekmar is a renewable energy company listed on AIM, which provides subsea cable and pipe protection systems. Cable failure accounts for approx. 80% of offshore wind insurance claims and Tekmar’s cables, which have a approx. 70% market share and account for over 60% of the company’s revenues, reduce the cost of installation and ongoing expenses.
“The company has strong Intellectual Property, a well invested portfolio and aligns with the UN’s Sustainable Development Goal 7 – Affordable and Clean Energy. Further, we believe there could be strong growth in offshore wind farms in China, increasing the potential customer base.”