WHEB Commentary

Seb Beloe

Impact Reporting: Delivering value with values


WHEB has long had an ambition to provide our investors and other stakeholders with a detailed account of the positive impact that our products are having in the world. We know our investors want to understand what impact their investments are having, and so the publication of our first annual impact report in April 2015 is principally for them.

In the report we cover the impacts that WHEB funds are having in tackling critical environmental challenges. For example:

  • WHEB’s infrastructure portfolio has generated estimated annual savings of nearly 74,000 tonnes of carbon dioxide through renewable energy projects.
  • Investing £1m in the FP WHEB Sustainability Fund has a carbon footprint that is nearly 70% lower than an equivalent investment in the MSCI World Index.
  • Annual air emissions were reduced by 400 metric tonnes through the products and services supplied by WHEB’s private equity portfolio companies; an amount equivalent to the emissions generated by the power consumption of 34,700 UK residents.
  • We also introduce a new framework for mapping economic activity ranging from ‘Degenerative’ activities on the one-hand through to ‘Breakthrough’ businesses on the other.

The full report provides a range of quantitative data on the contribution that each of our products makes in tackling key environmental and social issues. We see this data as useful, not just in demonstrating the integrity of our products, but because we think it underlines the opportunity facing these companies and the industries of which they are a part.

The world desperately needs more of the products and services that these businesses supply. Growth in areas such as water and waste treatment, energy efficiency, renewable energy, healthcare and education is critical in order to ensure the continued availability of scarce resources and manage an ageing global population.

For investors looking for growth, looking at these social and environmental themes is a good place to start.  The five year historical sales growth of companies with revenues from sustainability themes is over 10% compared with less than 8% for companies in the MSCI World Index. Looking forward over the next twelve months, the figures are even starker, with nearly sales growth of nearly 14% for companies with sustainability theme exposure and just over 8% for companies in the MSCI World Index[i].

The ‘old school’ view of sustainability investing argues that you have to trade-off financial value for your ‘values’. In reality, finding companies that have positive impact in the world is a route to identifying higher growth.  In effect, it is because of their positive social or environmental impact that these companies represent promising investment opportunities. In a world that isn’t growing very much, this could be very valuable indeed.

To read the full report, please click here.

 

[i] Bloomberg and WHEB internal analysis.

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