Below are five companies the Sustainable Future team at Alliance Trust Investments has identified which demonstrate their investment philosophy in practice.
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Celldex Therapeutics (A4*)
Survival rates for people with cancer have doubled over the past 40 years. Innovation continues as biotechnology works on more effective cancer treatments using better targeted therapies and encouraging the body's immune system to fight tumours. Significant numbers of patients do not respond well to chemotherapy. Celldex is a biotechnology company listed in the US which specialises in developing more effective ways to treat breast and brain cancer.
Whitewave (A1*)
Whitewave is a US listed company that is exposed to the ‘healthy eating' category which is growing as demand shifts away from high fat and high salt foods towards healthier alternatives. We believe this shift will continue to have a pronounced effect on food companies, with healthier products taking up a larger share of this market. For example, one of the fastest growing segments over the past five years has been natural and organic. Whitewave make a broad range of organic drinks and foods including dairy substitutes and salads.
Kingspan PLC (A2*)
Kingspan generates 80% of its sales from insulation products and the rest from renewables and other building products. Insulation of buildings is one of the most cost-effective energy efficiency strategies and is seeing strong take up, in part driven by increasingly stringent building standards worldwide.
Kingspan has succeeded because of its investment in innovation and design which has allowed it to grow strongly while helping its clients attain ‘Outstanding' BREEAM ratings (BREEAM, BRE Environmental Assessment Method, is the world's foremost environmental assessment method and rating systems for buildings).
Continental (B2*)
Continental is exposed to two key themes that we believe will drive returns over the next five years - tightening emissions regulations and road safety. The UN Decade of Action for Road Safety, targets halving the forecast annual fatalities to 1.8m by 2020. Widespread use of active safety technologies represents the best chance of achieving these targets in our view and we believe Continental's above peer exposure to active safety technologies will deliver above peer growth.
Using integrated analysis from Kepler on the scale of the opportunity and engagement with the company's management team, and CSR staff to assess its strategy, we are confident that it will deliver solid returns in the medium term.
Novozymes (A2*)
Novozymes is all about resource efficiency - allowing consumers to wash laundry at lower temperatures, more effective take up of phosphate fertilisers in plants, and allowing chemical processes to occur at lower temperatures. This is achieved through the use of enzymes which can work at lower temperatures and reduce the energy intensity of numerous processes and save very meaningful amounts of CO2 emissions.
Please note these companies are held in the Sustainable Future equity funds, but are not necessarily represented in all of the funds. For example, the non-UK listed companies will not be held in the UK fund. A full list of all holdings in the funds is available in our Fund Centre.
*When analysing stocks for investment, we rate each company by the sustainability of the product (A-E) and by the quality of the management (1-5). This gives a score based on our 'Sustainability Matrix' which we use to identify whether a company is suitable for investment. You can read more about our sustainability matrix on page 4 of our Guide to the Sustainable Future range.
Important information: Please note the value of investments and any income from them can go down as well as up. Investors' capital is at risk and they may not get back what they originally invested. Examples of stocks are provided for general information only to demonstrate our investment philosophy. It is not a recommendation to buy or sell. Note that the view of the Manager may have changed since this article was written. This article is not intended as an investment recommendation and should not be treated as such. Instead it is intended as an example summary of the work we do looking at longer term changes we anticipate happening in the market which we analyse to inform our investment decisions. This analysis forms only part of what is considered in making an investment decision. Funds which undertake ethical screening to meet their investment aims are unable to invest in certain sectors and companies.
