Virtually all companies held in WHEB’s investment strategy have philanthropic programmes aimed at tackling poverty in their local communities and around the world. One example of this is Xylem’s Watermark programme which seeks to ‘provide and protect safe water resources for communities in need around the world and educate people about water issues’. The programme supports volunteer projects in Xylem’s local communities with 180,000 hours volunteered by Xylem employees from 2016-2018. The programme also works with six non-profit partners around the world. 4.2 million people around the world have been reached by the programme.
Royal DSM NV manufactures nutritional and pharmaceutical ingredients, and speciality chemicals and is in WHEB’s ‘Environmental Services’ investment theme. The company has developed a portfolio of products to address the nutritional requirements of a variety of the world’s most at-risk populations. One programme, works with the NGO Vitamin Angels to deliver essential vitamins in children under five and to pregnant and new mothers. To date Vitamin Angels has provided 70 million children in 70 countries with vitamin A. The goals is to reach 50 million mothers by 2030.
At the end of 2019, 34% of WHEB’s investment strategy was invested in companies supporting SDG 3 ‘Good Health and Well-being’. One of these companies is Varian Medical Systems. Varian manufactures software and hardware to treat cancer. These include radiotherapy machines as well as proton therapy machines that are particularly effective in treating childhood cancers.
In 2017, the ‘Halcyon’ radiotherapy machine was launched which was specifically designed to provide highly efficient treatment for hospitals and clinics anywhere in the world. As well as being more energy efficient, approximately 45% of total orders have been from emerging markets such as Brazil, Morocco, China, India and South Africa. The machine is particularly well-suited to resource-limited settings in these markets and many of the machines are going to hospitals for use on patients who have not had access to radiotherapy before.
WHEB’s investment strategy currently has two investments in our ‘Education’ investment theme representing 3% of the total strategy.
One investment is in Grand Canyon Education which provides a variety of services to support university education. The business is located in Arizona in the United States and primarily supports Grand Canyon University with 19,000 places on campus and a further 70,000 enrolled on-line. The university is very popular with lower income groups having kept tuition fees flat for the last ten years. The quality of the education is nonetheless very good with no academic programmes failing the US’s gainful employment guidelines and course completion rates of >90%.
Cerner sells software and IT to hospitals and other healthcare facilities to improve efficiency and health outcomes. The company has the higher proportion (42%) of women in senior leadership positions within the organisation. In 2019 the company was also acknowledged by Forbes as one of the best US employers for diversity.
10% of the strategy is invested in companies that directly support SDG 6 ‘Clean Water and Sanitation’.
One of the companies in the strategy is China Water Affairs which is involved in supplying tap water in the People’s Republic of China. The company is growing rapidly in response to the Government’s push to provide potable water across the country. China Water Affairs currently provides tap water across 50 Chinese cities and has a target to double their city coverage and capacity by the end of 2020.
Approximately 6% of WHEB’s strategy is invested in companies that support SDG 7 ‘Affordable and Clean Energy’.
Companies that support SDG 7 include manufacturers and operators of renewable energy equipment such as TPI Composites. TPI Composites is a specialised manufacturer of composite materials primarily for the wind turbine industry. The company is an outsourced manufacturer of wind turbine blades and is also building capacity in the US to manufacture lightweight body parts for electric buses.
WHEB’s focus on high quality businesses means that a high proportion of companies in the strategy are companies with a strong culture and high quality employee relations. One example is Autodesk which makes software enabling designers to factor in environmental criteria into their product designs. The company is certified as a ‘Great Place to Work’ with 91% of employees saying it is a great place to work
15% of WHEB’s investment strategy is invested in companies that support SDG 9 ‘Industry, Innovation and Infrastructure.
This goal is supported by companies that help to improve the energy and resource efficiency in manufacturing companies through more efficient and more automated equipment and processes. Companies like Daifuku support this goal through the sale of warehouse and factory automation equiptment. Companies that provide environmental consulting and advice as well as companies that help make infrastructure and buildings safer are also considered to support SDG 9.
Centene is a US company focused on providing managed healthcare services to clients in the US. The company focuses in particular on individuals and families who receive healthcare support through Government programmes principally Medicaid and Medicare. The company serves 12.3 million beneficiaries in the US focusing almost exclusively on poor and disadvantaged communities many of whom would not be able to access healthcare services without Centene’s presence in their community.
27% of WHEB’s investment strategy is invested in companies that support SDG 11 ‘Sustainable Cities and Communities’.
This includes companies that are helping to deliver low carbon logistics and transport such as the US business Aptiv plc. Aptiv is a manufacturer of vehicle components. The company provides products and services that support advanced safety features including automation and signal and power solutions used in hybrid and electric vehicles.
This includes companies that support the ‘circular economy’ through, for example the use of recycled materials. One such company is DSM that has developed a solvent free resin that enables the recycling of carpets and mattresses. Among its other products is Akulon® a high-performance polymer used in sports equipment that is manufactured from waste materials such as disused fishing nets.
The strategy invests in a range of other companies that support SDG 12 such as businesses that undertake safety testing for consumer products and that manufacture materials and equipment used in pollution control.
6% of WHEB’s strategy is invested in companies providing products and services that directly increase the amount of renewable energy that is generated and sold around the world.
In addition, the strategy is also invested in companies like DSM and Kingspan that, as part of RE100, have committed to sourcing 100% of their energy from renewable resources.
Another group of companies including Autodesk, Ecolab, DSM, Johnson Controls, Kingspan, Linde and Smurfit Kappa have all agreed carbon reduction targets with the Science Based Targets Initiative.
Relatively few companies in the WHEB strategy have a direct relationship with the marine environment. This was a subject that we discussed at WHEB’s Independent Advisory Committee (see http://www.whebgroup.com/media/2019/03/20190223-Summary-minutes.pdf). One company that does support cleaner and healthier oceans is Renishaw plc. which has supplied equipment to enable researchers to accurately assess the proportion of microplastics in oceanwater.
The WHEB strategy is invested in one company that uses wood in their production processes. Smurfit Kappa, a manufacture of recycled cardboard packaging, uses wood to supplement their recycled cardboard operations. The company announced in 2020 that 99.8% of the virgin wood fibre that they produce or purchase is Chain of Custody certified under Forest Stewardship Council® (FSC), Programme for the Endorsement of Forest Certification™ (PEFC) or the Sustainable Forestry Initiative® (SFI).
The 2020 ‘World’s Most Ethical Companies’ list selected by the Ethisphere Institute cited 132 companies for their role in influencing and driving positive change in the business community and societies around the world. Of these companies, five are companies that are held in WHEB’s investment strategy. These seven are Aptiv, Ecolab, Johnson Controls, Premier, and TE Connectivity.
Several of the companies that are held in WHEB’s investment strategy are themselves active supporters of the UN’s Sustainable Development Goals. For example, US healthcare business CVS Health has developed a ‘Transform Health’ 2030 strategy that is explicitly aligned to support the SDGs. In their 2019 Corporate Social Responsibility Report they set out eight goals that they believe they are actively supporting through their business operations and through the products and services that they sell.