Insights

Sashi Reddy and Sujaya Desai speak to Pensions & Investments about the importance of stewardship, and how we look for management teams who have the intention and ability to leave businesses in much better shape than they found them in.

We provide regular strategy updates including portfolio changes and proxy voting, and links to our investment rationales, latest articles, statements, webcasts and videos which explore our thinking on sustainable investment, including the challenges and issues we grapple with in our search for high-quality companies.

A round-up of news from the quarterly reports.

Prioritising long-term growth over short-term gains takes confidence and vision from high-quality management. Great stewardship through long-term decision making benefits businesses in myriad ways but it doesn’t manifest the same way in every company.

Every year we produce around 400 million tonnes of plastic waste worldwide. Of the seven billion tonnes of waste amassed to date, less than 10% of this has been recycled. The remaining 90% is buried in landfills, makes its way overseas to be burnt, or is lost into the environment where it can live for up to 400 years.

An insight into our collaborative engagement on conflict minerals in the semiconductor supply chain.

Climate change is one of our greatest threats. At Stewart Investors we consider it a key investment risk, and an investment opportunity.

Why Scope 3 emissions hide as much as they reveal, and what investors can do about it.

Pablo Berrutti, Senior Investment Specialist speaks to Joshua Scott of P&I.

Senior Investment Analyst Oliver Campbell discusses how we approach correlation risk.

In October 2022 the UK Financial Conduct Authority (FCA) published its much anticipated consultation on proposed Sustainability Disclosure Requirements, investment labels and restrictions on the use of sustainability-related terms in product naming and marketing.

In mid-2022, Project Drawdown announced 11 new solutions to their collection related to ocean resources, food production, methane management, and materials manufacturing and use.

The Indian subcontinent has been a fantastic investment destination over the last few decades. Investment returns in the subcontinent have been primarily driven by India since she liberalised her economy in 1991.

India is a region which demands patience but rewards patient investors through steady compounding of returns.

India is home to many high-quality companies. Our past decades of investing in the Indian subcontinent has demonstrated that exceptional businesses managed by competent, conservative stewards deliver disproportionately better returns through cycles.

Commuters on the London Underground would be familiar with the warning to “mind the gap”. The investment industry is in dire need of a similar warning but with an extra A – “Mind the GAAP”.

Jack Nelson speaks to the Investment Innovation Institute. In this insightful fireside chat, they discuss some of the common misconceptions about investing in emerging markets.

During Good Money Week in the UK, Senior Investment Analyst Chris McGoldrick sat down with Asset TV for a panel on active ownership.

We are thrilled that for the second year running, Stewart Investors has been recognised as a Responsible Investment Leader 2022 by the Responsible Investment Association Australasia (RIAA).

As the human effects of climate change continue to intensify around the world, asset owners and managers are rightly grappling with their responsibilities to help avoid catastrophe.

Portfolio Manager, Sujaya Desai, discusses energy efficient electrical motor manufacturer, WEG.

On a recent trip to Europe, Hanna Ranstrand visited various companies who are building their businesses through acquisitions. Here, Hanna discusses these companies in more detail.

Sashi Reddy discusses Watsco, the largest distributor of HVACR (heating, ventilation, air conditioning and refrigeration) products in North America.

How do the Stewart Investors team seek to address diversity? Sashi Reddy discusses the investment team’s approach, and why fostering diversity of thought is not just important but crucial in implementing the team’s investment philosophy for the long term.

We launched our first sustainable investment fund in 2005. At that time we were convinced all companies would need to adjust to operating in an increasingly carbon-constrained world, and more companies would need to develop solutions to make economies less carbon intensive. Our conviction has never waned, nor has the urgency of the carbon-reduction challenge.

Welcome to our climate report. In the report we share a baseline of our climate change-related risks, opportunities and impacts, from which our progress towards zero-carbon portfolios and operations can be assessed in the years ahead.

Finding there was a lack of information on smallholder farmer supply chains and their environmental impact, we commissioned research with NIRAS-LTS International to learn more.

Pablo Berrutti, Senior Investment Specialist at Stewart Investors, speaks to Wouter Klijn of the [i3] Investment Innovation Institute in Australia to discuss the likelihood of fossil fuel-based companies making the transition to low carbon business models and pose the question whether companies’ quick retreat from Russia during the invasion of Ukraine is a vindication for ESG.

Some ESG data can be useful in certain circumstances, but can an over reliance on simplistic ESG scores be a dangerous strategy?

The emergence of trends that will likely shape the next decade, including cloud computing, automation, connectivity and artifical intelligence (AI), has created some appealing honeypots for investors to dip their paws into. These companies are often well positioned in the face of broad sustainability tailwinds and characterised by steady growth streams, so one can understand the allure.

We believe judgement is a better guide to voting than a rules-based approach. Our voting policy is based on a parsimonious set of principles and key considerations that in our judgement are likely to be applicable to all companies in the vast majority of circumstances.

We are delighted that Stewart Investors has won the inaugural Fund Manager of the Year – Sustainable Investing category at the 2022 Morningstar Australia Awards.

Today’s technology giants may have many admirable qualities, but should we question their ongoing contribution to sustainable development?

Heating and air conditioning usage account for a large percentage of the energy consumed in the average American home. By installing energy-efficient HVACR systems, Watsco, Inc. are assisting home owners to reduce their environmental footprint and tackle climate change.

Our interactive tool, Portfolio Explorer is helping us share how impactful companies are contributing to sustainable investments.

In a recent essay, Santa Fe economist Brian Arthur challenges economists to describe the world in more than algebraic terms. He believes they should extend their vocabulary (and minds) to include verbs, alongside their highly prized nouns, to allow the underlying processes, context and organic nature of complex systems to be described in full technicolour.

We invest in the shares of high quality companies that are well positioned to contribute to, and benefit from, sustainable development.

Diversity is an integral part of sustainable development and is important to us as investors, employers and as members of society.

Emerging markets have long been understood as geographies of uncertainty. Are good company stewards the answer?

Over the last decade, the role and prominence of technology companies in emerging markets has increased markedly. Emerging markets economies have proven themselves capable of producing truly world-leading tech firms. And as smartphone penetration has surged, the positive impact of technology on daily life in emerging markets has been very significant.

‘Payable Days’ is the number of days a company takes to pay its suppliers. Investors often learn in ‘Finance 101’ courses that the longer a company takes to pay its suppliers the stronger its bargaining power is with them. Consequently, this is considered as key evidence of a strong franchise. We beg to differ.

One of the key tenets of our investment philosophy has long been a focus on the cultures and people behind businesses. We believe that franchises that are successful over the long term are built on the backs of unique cultures that have the wherewithal to resist short-term pressure in favour of nurturing a sustainable business over decades, have the ability to think diversely about the opportunities ahead and the risks they might face, and the operational focus to deliver on their strategies year after year.

Why sustainable development and returns can be achieved in emerging markets.

Since our first sustainable development-focused strategy launched in 2005, human development has been a key focus area given our long history of investing in Asia Pacific and emerging markets.

In the sequel to Lewis Carroll’s ‘Alice in Wonderland’, Alice climbs ‘Through the Looking-Glass’ and finds another fantastical world, absent of reason and where everything is reversed. This crisis of logic is all too evident when in investing in Asia Pacific.

If asked to list climate change solutions, many of us would start with renewable energy. It is obviously a key one given the use of fossil fuels for energy is the largest contributor to greenhouse gas emissions globally.

We recognise the existence of inequality and institutional racism across the world – we share the horror felt by so many as we have witnessed events that highlight the inequality, prejudice and sheer injustice faced by members of the black community the world over.

We have often been asked how we narrow down a universe of 15,000 Asian and Emerging Markets companies to a portfolio of approximately 50. It’s a good question, particularly as now that we invest globally, giving us an investible universe of 65,000 companies, the challenge has become even starker.