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Henderson: investing ethically in ‘productivity’

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On Friday we published an interview with Hamish Chamberlayne, Investment Manager for the SRI funds of Henderson Global Investors. Today we take a closer look at those funds.

1. What type of fund/s do you manage and what are their ‘objectives’?

The Henderson Global Care Growth Fund and the Henderson Global Care Managed Fund. Both funds are OEICs (open-ended investment companies). The Global Care Growth Fund invests in equities and focuses on companies that are growing sustainably and that have the potential to generate sustainable returns. The Global Care Managed Fund is a multi-asset fund that has an allocation to global equities, UK equities, and fixed income securities.

2. Who is the fund manager?

The co-managers are Nick Anderson and Hamish Chamberlayne.

3. What are the criteria you use for investing in a company?

We invest based around ten sustainability themes, and these are derived from the four ‘mega’ themes of population growth, ageing populations, climate change, and resource constraints. It is important to note that there is a delicate balance between environmental and social sustainability. The global economy is highly dependent on abundant and cheap energy. Also there is a need to maintain high productivity in order to generate enough wealth to care for ageing populations. Fossil fuels are an incredibly productive energy source and reducing dependence on them, while at the same time maintaining social cohesion, represents an enormous challenge.

Of our ten sustainability themes, five are environmental and five are social. Our five environmental themes are Cleaner Energy, Water Management, Sustainable Transport, Efficiency, and Environmental Services. Our five social themes are Health, Knowledge & Technology, Quality of Life, Safety, and Social Property & Finance. There is one common thread to all these themes – productivity. The only way to collectively achieve a sustainable global economy is to find productivity solutions for both environmental and social issues. It is not just enough to increase the efficiency with which energy is consumed, or to replace carbon-intense energy sources with renewable sources. There is a need to improve the quality and effectiveness of healthcare and the sustainability of consumer products.

4. Do you use positive or negative screening?

We use both positive and negative selection criteria. To be included in the portfolio (positive selection) the investment under consideration must fit one of the ten sustainability themes previously described. In addition, all companies assessed for inclusion must demonstrate acceptable management of long-term strategic risks and opportunities, including environmental, social and corporate governance (ESG) considerations. Rising expectations of business conduct from regulators, customers, employees and society at large are making corporate responsibility (CR) of strategic importance for modern management. Our evaluation provides a rigorous way of understanding performance in these areas, revealing value or risk often ignored by conventional investors.

Our negative ethical investment criteria are used to screen out companies that adversely affect the environment, people, and animals. We avoid businesses related to oil, mining, tobacco, armaments, gambling, the fur trade, genetic engineering, and pornography, among other things. We do not invest in companies that support the activities of oppressive regimes or those guilty of irresponsible marketing practices. For a full list of our funds’ positive and negative investment criteria please refer to our website. The links are as follows:

Henderson Global Care Growth Fund: HGi.co/bzc5

Henderson Institutional Global Care Managed Fund: HGi.co/bzc6

5. Are there any disruptive technologies that you include in your fund?

The funds have many investments in companies that are developing disruptive technologies. Efficiency is currently a major theme for us. We have found several attractive investment opportunities in firms that have strong competitive positions and where we think returns are sustainable.

6. How old are the funds and what are their sizes?

The Henderson Global Care Growth Fund was launched in August 1991 (I and A Share Classes) and has £403.55m of assets under management (AUM). The Henderson Institutional Global Care Managed Fund was launched in October 2000 (I Share Class) and July 2002 (A Share Class) which has £209.90m of AUM.

Figures are as at 31 May 2015, source Henderson Global Investors.

7. What has been the performance of the fund over the past five years?

Henderson Global Care Growth Fund

Henderson Institutional Global Care Managed

Source: at 31 March 2015. © 2015 Morningstar. All Rights Reserved, nav-nav, UK sterling, net income reinvested. Discrete performance data may change due to final dividend information being received after the end of the performance period. Performance is shown net of fees.

Please note that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

8. You offer a wide range of investment funds as an organisation, and not all of them are marketed as ‘sustainable’ or ‘ethical’. How seriously does your firm take sustainable or ethical investment across the suite of funds?

Henderson has a strong commitment to sustainable and responsible investment across all its funds. As a company, we are a founding signatory to the UN Principles for Responsible Investment and implement the principles through the integration of environmental, social and governance (ESG) issues into our investment decision-making and ownership practices. Henderson employs an internal Governance and Responsible Investment Team to work closely with all the investment teams to help facilitate this. The firm subscribes to a wide range of specialist external research on ESG issues and makes this information available to all its fund managers. Furthermore, ESG data is integrated into all risk reporting and fund oversight processes.

9. From a personal perspective, why should people ‘consider’ sustainable investment in its broadest sense (ethical, environmental, clean, etc)? We recognise you can’t give advice, but would welcome your view in terms of considering investing sustainably generally.

We think ethical constraints and financial targets need not be mutually exclusive goals. In fact, we think there is a strong argument as to why a sustainable approach investment can potentially result in superior long-term returns. We tend to invest in mid-sized companies that are developing innovative products or services with the aim of increasing productivity, whether it is in the supply of energy or the delivery of healthcare. These companies have strategies aligned with the long-term themes that are shaping our world and thus we expect them to grow faster and more sustainably than the rest of the market.

Sustainability runs through our investment process. We are looking for quality, well-governed businesses, and those which benefit from a clear alignment of management and shareholder interests. We seek to identify those businesses with sustainable competitive advantages, judicious capital allocation, and sustainable cash flows. We believe that by investing in these types of businesses at the right price we should be able to make money for our investors.

10. With the current volatility in stock markets globally would you have any final comments for our readers about being an investor?

The Henderson Global Sustainable and Responsible Investment Funds adopt a long-term approach to investment. We would encourage potential investors to consider it as a ‘foundation holding’ over a reasonably long investment horizon.

The fund may struggle on a relative basis during periods when large oil, tobacco, and pharmaceutical companies perform well at the same time. However, such periods are usually short-lived and may present some compelling investment opportunities if the prices of our favoured companies have fallen back or appear more attractive to us from a valuation perspective.

Fund specific risks:

Where the Funds invest in assets (including cash) which are denominated in currencies other than the base currency then currency exchange rate movements may cause the value of investments to fall as well as rise.

Funds may be unable to invest in certain sectors and companies due to the ethical screening that they undertake. This may mean that they are more sensitive to price swings than other funds. 

Important information:

Please read all scheme documents before investing. Before entering into an investment agreement in respect of an investment referred to in this document, you should consult your own professional and/or investment adviser.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change.

If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially.

Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.

Any investment application will be made solely on the basis of the information contained in the Prospectus (including all relevant covering documents), which will contain investment restrictions. This document is intended as a summary only and potential investors must read the prospectus, and where relevant, the key investor information document before investing.

Issued in the UK by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management Limited (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), Henderson Alternative Investment Advisor Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. Telephone calls may be recorded and monitored. Ref: 34U

Photo: images money via Flickr

Economy

How Going Green Can Save A Company Money

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going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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Energy

5 Easy Things You Can Do to Make Your Home More Sustainable

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sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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