PI Partnership
When investing, we therefore look for companies on the right side of this massive economic change that will start by reflecting previ- ously externalised carbon costs. For example, software company Adobe set an ambitious 100% renewable energy goal several years ago. Adobe plans to achieve its climate goals without having to rely on unbundled renewable energy credits or carbon offsets, which is important in our view. It is also a key enabler of companies decar- bonising their everyday operations, by digitalising documents. As an example, for every 1 million transactions using Adobe Sign instead of traditional print, sign, or scan, over 27 million gallons of water, 1.5 million pounds of waste, and 1 million metric tonnes of CO₂ is avoided. As mass digitalisation accelerates, we think Ado- be’s software is poised to benefit from that transition.
Social equality
While combating climate change will undoubtedly be a major theme in 2021, not just for ESG but for the world economy in gen- eral, social equality will also be of vital importance. For the team, understanding how human capital is supported and by extension, how social equality is addressed by the companies we look to invest in, is a critical element of our investment framework. While there has been progress on the climate emergency, the situation with respect to social goals has sadly deteriorated across the globe. Deep inequalities have been unveiled by Covid-19. The pandemic has set back progress against global poverty by a decade. The heav- iest toll from Covid-19 has fallen on the most marginalised, both in fatality rates and in economic impact. The UN and the World Bank have warned of hundreds of millions of people being pushed back
into extreme poverty. It is also important to note that initial ine- quality makes disadvantaged groups suffer disproportionately from the adverse effects of climate change, resulting in greater subsequent inequality. The physical victims of flooding and extreme weather events are mainly in less developed countries². And this is not just a developing markets issue. Unemployment rates have skyrocketed globally. In some countries jobless figures have spiked to the worst levels since records began. Typically, those who can least afford to become unemployed have been the worst hit. As we saw in the US last year, this inequality gap goes some way to explaining how the deaths of George Floyd and Breonna Taylor became sparks to ignite a wildfire of unrest fanned by economic and social isolation.
US child poverty is already among the highest in the world, reach- ing 21.2% in 2019, higher than Romania or Mexico, according to the OECD³. Legislation is now planned to address this, by expand- ing cash benefits to families as part of Biden’s $1.9trn (£1.3trn) eco- nomic relief package.
As with climate change, how companies respond to the urgent social issue of poverty will be critical to their future success. Our research shows a clear correlation between inclusive cultures and alpha creation. An example of a company taking social equality seriously is consumer goods manufacturer Unilever. It is now requiring its suppliers to meet the living wage for their employees by 2030. Given Unilever’s global footprint, from tea picking to palm oil, this is no mean feat. As Unilever chief executive Alan Jope said: “Without a healthy society, there cannot be a healthy business.”⁴
1)
https://www.bbc.co.uk/news/science-environment-56042029 2)
https://www.un.org/esa/desa/papers/2017/wp152_2017.pdf 3)
https://data.oecd.org/inequality/poverty-rate.htm 4)
https://www.unilever.com/news/press-releases/2021/
unilever-commits-to-help-build-a-more-inclusive-society.html
This communication is intended for investment professionals and is not for the use or benefit of other persons, including retail investors. This communication is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. Every effort is made to ensure the accuracy of any information provided but no assurances or warranties are given. Issued in the UK by Jupiter Asset Management Limited, registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. (JAMI, the Management Company), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier. No part of this communication may be reproduced in any manner without the prior permission of JAM.
March 2021 portfolio institutional roundtable: Responsible investing
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