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Population growth, resource scarcity, environmental degradation, and a myriad of social issues are increasingly motivating investors to examine the social and environmental impact of the companies they invest in.
Companies must also adapt in response to these pressures. Those on the negative side of the ledger face increased costs, tougher operating conditions and reduced investor demand, while companies enabling a shift to a more sustainable economy are more likely to thrive. This in turn is driving rapid growth in the US$500 billion global impact investing market, and is evidenced by the increase in articles, conferences and products that focus on creating a positive impact on society and the environment.
WHEB Asset Management (‘WHEB’), a boutique investment manager based in the UK, is right in the sweet spot of this structural tailwind. WHEB’s global investment strategy is managed by a team regarded as pioneers in sustainability-themed investing, and is available in Australia via the Pengana WHEB Sustainable Impact Fund.
Let’s examine what makes WHEB’s process different:
- Focus on companies providing solutions to sustainability challenges
WHEB only invests in companies whose goods or services solve a sustainability challenge. These challenges are condensed into five environmental themes (cleaner energy, environmental services, resource efficiency, sustainable transport and water management), and four social themes (education, health, safety, and well-being).
Integrated financial and ESG analysis
Aided by a deep understanding of trends in sustainability, WHEB conducts detailed financial analysis which incorporates environmental, social and governance (ESG) issues. The team believe that this more holistic assessment and understanding of potential investments provides a stronger basis on which to identify quality companies with superior long-term growth prospects.
- Creating value via engagement and voting
WHEB engages directly with companies to generate additional insights into company practices or particular issues. This feeds into their investment decisions and provides an opportunity to influence corporate management and performance, or even the direction of future policy in order to promote sustainable development and to create favourable operating environments for the companies they invest in.
Measuring investors’ positive impact
WHEB have developed a bespoke methodology to measure the environmental and social impact of their investments and publish an annual impact report. This has enabled the development of an impact calculator which allows individual investors to measure the impact of their investment in the fund. For example, $10,000 invested over 2017 helped avoid 6 tonnes of CO2 emissions, cleaned and distributed 10,400 litres of water for reuse, and saved $1,200 of costs in healthcare systems.
WHEB released their latest impact report, Prosperity with Purpose on 3 June. You can view the report here.
 Global Impact Investing Network (1 April 2019). Sizing the Impact Investing Market.
Pengana Capital Limited (ABN 30 103 800 568, Australian Financial Services Licence No. 226566) (“Pengana”) is the issuer of units in the Pengana WHEB Sustainable Impact Fund (ARSN 121 915 526) (“the Fund”). A Product Disclosure Statement for the Fund (“PDS”) is available and can be obtained from www.pengana.com or by contacting Pengana on (02) 8524 9900. A person who is considering investing in the Fund should obtain the PDS and should consider the PDS carefully and consult with their financial adviser to determine whether the Fund is appropriate for them before deciding whether to invest in, or to continue to hold, units in the Fund.