WHEB Asset Management has come on leaps and bounds since bringing in the Henderson team in May 2012. A year on, Alex Blackburne sat down with managing partner George Latham and founding partner Clare Brook to speak about its success.
This article originally appeared in The Guide to Sustainable Investment 2013.
WHEB Asset Management has come a long way in a relatively short space of time. Launched in 2009, its flagship Sustainability Fund has gone from strength to strength, and is now considered one of the most attractive options in an increasingly attractive positive investment market.
For the first three years of the fund’s existence, it grew steadily. Its philosophy of only investing in companies that provide solutions to some of the most urgent sustainability challenges had allowed it to grow to £29m in size by the end of 2011.
By this point, WHEB was ready to expand. It began looking for a new recruit – a fund manager who could aid this expansion, and who could eventually take over the running of the business. It was around this time that Henderson Global Investors had decided to close its sustainable and responsible investment (SRI) arm – a move that some said marked a “backward step” for the sector – leaving its SRI team unemployed and looking for work.
You can probably guess what happened next.
There are instances in life where one has to sit back and marvel at the way the universe seems to connect everything in one big, intergalactic jigsaw. Had one of these two occurrences been just a few months earlier or later, it’s unlikely that a partnership between WHEB and the former Henderson team would have come about.
As it is, the two combined officially in May 2012, and have not looked back.
“We’ve recruited the best team in the sector”, says founding partner Clare Brook, speaking at the firm’s office near Manchester Square in London.
“We’ve put together a super team. As any follower of Premier League football knows, if you invest in the best players, you’re going to start getting really good results. So our performance has really started to take off. We’re outperforming our one-, three- and six-month benchmarks and a lot of people have started to notice how performance has started to improve since we put the new team in place.”
People want to invest in global sustainability strategies covering both social and environmental themes that take a long-term approach to creating value
And notice they have. Blue & Green Tomorrow conducted a survey at the back end of 2012 among financial advisers that are members of the Ethical Investment Association, asking them which asset managers they use most often.
WHEB’s popularity increase was second only to Royal London – rising from joint 26th place in 2010 with 3% of advisers using it, to joint 12th last year with a third of EIA members now saying they invest some of their clients’ money into its Sustainability Fund.
“We’re starting to get some mainstream ratings agencies grading us very highly, and we think what they’re picking up on is a) the heritage and experience of the team, and b) the robustness of the investment process”, adds Brook.
“Success breeds success. People have started to see we’re getting the assets in and that we are living up to the hype that they had hoped of us when the new team joined.
“We think that this fund is the answer to what people have been looking for. It’s performing well and it’s actually investing in the sort of companies that people interested in sustainability want to see in their fund.”
But it’s not only the arrival of the Henderson team that has kicked WHEB’s progress on. Its fund’s positive focus on nine key sustainability themes – resource efficiency, water management, cleaner energy, environmental services, sustainable transport, safety, wellbeing, education and health – has allowed it to surge ahead of many competitors in the ethical fund market that perhaps rely too much on excluding harmful and destructive industries, rather than focusing on investing in innovative, clean technologies, for example.
Any company WHEB invests in has to have at least a third of its revenue or profits coming from one or more of the nine themes (the average for the fund as a whole is over 80% coming from the themes), and the fund managers have to be comfortable that the rest of the business is not pulling in the opposite direction.
And it’s the focus on companies providing solutions that has driven WHEB’s popularity in the past year.
Managing partner George Latham, ex-Henderson, says, “People want to invest in global sustainability strategies covering both social and environmental themes that take a long-term approach to creating value.
“People are interested in looking for logical reasons why a strategy can and should outperform over a longer period of time that goes beyond the idea that somebody’s going to get up and sprinkle some magic dust over the portfolio. So many investment funds are sold on the basis of some single person’s charisma and most recent track record, which I think is wrong.
“Traditionally, most evidence shows that very few people are able to continue with the magic dust approach for a long period of time.”
At a time when transparency in the ethical investment market is perhaps lacking, WHEB’s decision to publish every single one of its fund’s holdings on its website, along with a five-line rationale as to why each fits in with its themes, also sets it apart from many of its competitors. All funds – ethical or otherwise – have this kind of information readily available. For the vast majority, it’s not a question of how easy it is to publish it; it’s a conscious decision not to.
A report by responsible investment campaigners ShareAction (then called FairPensions) from December ranked 20 of the largest ethical investment houses on their responsibility, transparency, accountability and stewardship. WHEB came joint second, alongside Standard Life and behind F&C Investments. Only nine of the 20 published a full list of their holdings.
But WHEB’s transparency doesn’t stop there.
Latham adds, “Another thing we do, which I think is very unusual, is we have a level of external governance looking at our fund – that’s the eyes and ears of the customer in a way.
“That investment advisory committee sits down with us, and challenges us on whether our stock selection actually fits into one of our themes. In an extreme situation, they can say they don’t agree.
“But what would happen if we then said we don’t care? What we do, which is new to us and fairly unique, is publish the minutes of each meeting. So if we were to have that situation, then that would be very public.”
Brook says that before Latham and the Henderson team joined WHEB, the Sustainability Fund did actually have a holding that was contested by the advisory committee. It was swiftly sold.
WHEB’s combining of finance and sustainability has led to a prosperous past few months. What’s clear is that its management team is 100% behind its strategy (each of its partners have put more than half their own personal wealth into the fund alongside its clients) – something that perhaps wouldn’t be the case at larger investment houses, and something that has unquestionably benefitted both the performance of the fund, and its attractiveness to investors.
For now, its Sustainability Fund – now around £48m in size – will remain its one and only investment vehicle. But neither Brook nor Latham rule out expansion in the future. The pair are ambitious with their future growth plans, but who can blame them?
After the whirlwind 12 months enjoyed by everyone at WHEB, the only way – surely – is up.
2017 Was the Most Expensive Year Ever for U.S. Natural Disaster Damage
Devastating natural disasters dominated last year’s headlines and made many wonder how the affected areas could ever recover. According to data from the U.S. National Oceanic and Atmospheric Administration (NOAA), the storms and other weather events that caused the destruction were extremely costly.
Specifically, the natural disasters recorded last year caused so much damage that the associated losses made 2017 the most expensive year on record in the 38-year history of keeping such data. The following are several reasons that 2017 made headlines for this notorious distinction.
Over a Dozen Events With Losses Totalling More Than $1 Billion Each
The NOAA reports that in total, the recorded losses equaled $306 billion, which is $90 billion more than the amount associated with 2005, the previous record holder. One of the primary reasons the dollar amount climbed so high last year is that 16 individual events cost more than $1 billion each.
Global Warming Contributed to Hurricane Harvey
Hurricane Harvey, one of two Category-4 hurricanes that made landfall in 2017, was a particularly expensive natural disaster. Nearly 800,000 people needed assistance after the storm. Hurricane Harvey alone cost $125 billion, with some estimates even higher than that. So far, the only hurricane more expensive than Harvey was Katrina.
Before Hurricane Harvey hit, scientists speculated climate change could make it worse. They discussed how rising ocean temperatures make hurricanes more intense, and warmer atmospheres have higher amounts of water vapor, causing larger rainfall totals.
Since then, a new study published in “Environmental Research Letters” confirmed climate change was indeed a factor that gave Hurricane Harvey more power. It found environmental conditions associated with global warming made the storm more severe and increase the likelihood of similar events.
That same study also compared today’s storms with ones from 1900. It found that compared to those earlier weather phenomena, Hurricane Harvey’s rainfall was 15 percent more intense and three times as likely to happen now versus in 1900.
Warming oceans are one of the contributing factors. Specifically, the ocean’s surface temperature associated with the region where Hurricane Harvey quickly transformed from a tropical storm into a Category 4 hurricane has become about 1 degree Fahrenheit warmer over the past few decades.
Michael Mann, a climatologist from Penn State University, believes that due to a relationship known as the Clausius-Clapeyron equation, there was about 3-5 percent more moisture in the air, which caused more rain. To complicate matters even more, global warming made sea levels rise by more than 6 inches in the Houston area over the past few decades. Mann also believes global warming caused the stationery summer weather patterns that made Hurricane Harvey stop moving and saturate the area with rain. Mann clarifies although global warming didn’t cause Hurricane Harvey as a whole, it exacerbated several factors of the storm.
Also, statistics collected by the Environmental Protection Agency (EPA) from 1901-2015 found the precipitation levels in the contiguous 48 states had gone up by 0.17 inches per decade. The EPA notes the increase is expected because rainfall totals tend to go up as the Earth’s surface temperatures rise and additional evaporation occurs.
The EPA’s measurements about surface temperature indicate for the same timespan mentioned above for precipitation, the temperatures have gotten 0.14 Fahrenheit hotter per decade. Also, although the global surface temperature went up by 0.15 Fahrenheit during the same period, the temperature rise has been faster in the United States compared to the rest of the world since the 1970s.
Severe Storms Cause a Loss of Productivity
Many people don’t immediately think of one important factor when discussing the aftermath of natural disasters: the adverse impact on productivity. Businesses and members of the workforce in Houston, Miami and other cities hit by Hurricanes Harvey and Irma suffered losses that may total between $150-200 billion when both damage and sacrificed productivity are accounted for, according to estimates from Moody’s Analytics.
Some workers who decide to leave their homes before storms arrive delay returning after the immediate danger has passed. As a result of their absences, a labor-force shortage may occur. News sources posted stories highlighting that the Houston area might not have enough construction workers to handle necessary rebuilding efforts after Hurricane Harvey.
It’s not hard to imagine the impact heavy storms could have on business operations. However, companies that offer goods to help people prepare for hurricanes and similar disasters often find the market wants what they provide. While watching the paths of current storms, people tend to recall storms that took place years ago and see them as reminders to get prepared for what could happen.
Longer and More Disastrous Wildfires Require More Resources to Fight
The wildfires that ripped through millions of acres in the western region of the United States this year also made substantial contributions to the 2017 disaster-related expenses. The U.S. Forest Service, which is within the U.S. Department of Agriculture, reported 2017 as its costliest year ever and saw total expenditures exceeding $2 billion.
The agency anticipates the costs will grow, especially when they take past data into account. In 1995, the U.S. Forest Service spent 16 percent of its annual budget for wildfire-fighting costs, but in 2015, the amount ballooned to 52 percent. The sheer number of wildfires last year didn’t help matters either. Between January 1 and November 24 last year, 54,858 fires broke out.
2017: Among the Three Hottest Years Recorded
People cause the majority of wildfires, but climate change acts as another notable contributor. In addition to affecting hurricane intensity, rising temperatures help fires spread and make them harder to extinguish.
Data collected by the National Interagency Fire Center and published by the EPA highlighted a correlation between the largest wildfires and the warmest years on record. The extent of damage caused by wildfires has gotten worse since the 1980s, but became particularly severe starting in 2000 during a period characterized by some of the warmest years the U.S. ever recorded.
Things haven’t changed for the better, either. In mid-December of 2017, the World Meteorological Organization released a statement announcing the year would likely end as one of the three warmest years ever recorded. A notable finding since the group looks at global land and ocean temperature, not just statistics associated with the United States.
Not all the most financially impactful weather events in 2017 were hurricanes and wildfires. Some of the other issues that cost over $1 billion included a hailstorm in Colorado, tornados in several regions of the U.S. and substantial flooding throughout Missouri and Arkansas.
Although numerous factors gave these natural disasters momentum, scientists know climate change was a defining force — a reality that should worry just about everyone.
How to be More eco-Responsible in 2018
Nowadays, more and more people are talking about being more eco-responsible. There is a constant growth of information regarding the importance of being aware of ecological issues and the methods of using eco-friendly necessities on daily basis.
Have you been considering becoming more eco-responsible after the New Year? If so, here are some useful tips that could help you make the difference in the following year:
1. Energy – produce it, save it
If you’re building a house or planning to expand your living space, think before deciding on the final square footage. Maybe you don’t really need that much space. Unnecessary square footage will force you to spend more building materials, but it will also result in having to use extra heating, air-conditioning, and electricity in it.
It’s even better if you seek professional help to reduce energy consumption. An energy audit can provide you some great piece of advice on how to save on your energy bills.
While buying appliances such as a refrigerator or a dishwasher, make sure they have “Energy Star” label on, as it means they are energy-efficient.
Regarding the production of energy, you can power your home with renewable energy. The most common way is to install rooftop solar panels. They can be used for producing electricity, as well as heat for the house. If powering the whole home is a big step for you, try with solar oven then – they trap the sunlight in order to heat food! Solar air conditioning is another interesting thing to try out – instead of providing you with heat, it cools your house!
2. Don’t be just another tourist
Think about the environment, as well your own enjoyment – try not to travel too far, as most forms of transport contribute to the climate change. Choose the most environmentally friendly means of transport that you can, as well as environmentally friendly accommodation. If you can go to a destination that is being recommended as an eco-travel destination – even better! Interesting countries such as Zambia, Vietnam or Nicaragua are among these destinations that are famous for its sustainability efforts.
3. Let your beauty be also eco-friendly
We all want to look beautiful. Unfortunately, sometimes (or very often) it comes with a price. Cruelty-free cosmetics are making its way on the world market but be careful with the labels – just because it says a product hasn’t been tested on animals, it doesn’t mean that some of the product’s ingredients haven’t been tested on some poor animal.
To be sure which companies definitely stay away from the cruel testing on animals, check PETA Bunny list of cosmetic companies just to make sure which ones are truly and completely cruelty-free.
It’s also important if a brand uses toxic ingredients. Brands such as Tata Harper Skincare or Dr Bronner’s use only organic ingredients and biodegradable packaging, as well as being cruelty-free. Of course, this list is longer, so you’ll have to do some online research.
4. Know thy recycling
People often make mistakes while wanting to do something good for the environment. For example, plastic grocery bags, take-out containers, paper coffee cups and shredded paper cannot be recycled in your curb for many reasons, so don’t throw them into recycling bins. The same applies to pizza boxes, household glass, ceramics, and pottery – whether they are contaminated by grease or difficult to recycle, they just can’t go through the usual recycling process.
People usually forget to do is to rinse plastic and metal containers – they always have some residue, so be thorough. Also, bottle caps are allowed, too, so don’t separate them from the bottles. However, yard waste isn’t recyclable, so any yard waste or junk you are unsure of – just contact rubbish removal services instead of piling it up in public containers or in your own yard.
5. Fashion can be both eco-friendly and cool
Believe it or not, there are actually places where you can buy clothes that are eco-friendly, sustainable, as well as ethical. And they look cool, too! Companies like Everlane are very transparent about where their clothes are manufactured and how the price is set. PACT is another great company that uses non-GMO, organic cotton and non-toxic dyes for their clothing, while simultaneously using renewable energy factories. Soko is a company that uses natural and recycled materials in making their clothes and jewelry.
All in all
The truth is – being eco-responsible can be done in many ways. There are tons of small things we could change when it comes to our habits that would make a positive influence on the environment. The point is to start doing research on things that can be done by every person and it can start with the only thing that person has the control of – their own household.
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