Worldwide Leaders Sustainability
The Worldwide Leaders Sustainability strategy launched in November 2013 and transitioned to become a dedicated sustainability strategy in October 2016.
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The Worldwide Leaders Sustainability strategy launched in November 2013 and transitioned to become a dedicated sustainability strategy in October 2016. The strategy invests in 30-60 high-quality global companies that are particularly well positioned to contribute to, and benefit from, sustainable development.
Leaders simply means that this strategy is focused on companies with a market cap value of at least USD5 billion.
Strategy highlights: a focus on quality and sustainability
- Companies must contribute to sustainable development and make a net-positive impact to a more sustainable future. Portfolio Explorer >
- We invest in high-quality companies with exceptional cultures, strong franchises and resilient financials. How we pick companies >
- We avoid companies linked to harmful activities and engage and vote for positive change. Our position on harmful products >
- Our approach is long-term, bottom-up, high conviction and benchmark agnostic
- We focus on capital preservation as well as capital growth – we define risk as the permanent loss of client capital
Latest insights
Strategy update: Q1 2023
Worldwide Leaders Sustainability strategy update: 1 January - 31 March 2023
Another eye-opening quarter goes by in Financeland and we are again forced to contend with all kinds of governance, financial and economic failures which serve to highlight the perilous condition of the global economy and its capital markets.
From our position, we continue to see the world through the bottom-up lenses of our high-quality investee companies which inspire feelings of optimism and excitement. This is a jarring juxtaposition to news headlines which can drive despondency and paralysis.
A year ago, we were digesting the invasion of Ukraine and a boom in hydrocarbon fuels, alongside questions over the future of sustainable investing. This year, we are looking at bank runs and governance failures, and the denouement of long-term issues stemming from moral hazard and adverse selection. Our goal remains, as ever, to stay focused on high-quality management teams running sustainable and necessary franchises, driving human development forward with strong financials to allow these companies to weather any coming storms.
To that end, we took several steps this quarter to improve the quality of the strategy by reducing our cash balance and adding to positions across the portfolio. It feels comfortable to add to high-quality names, including CSL (Australia: Health Care), Mahindra & Mahindra (India: Consumer Discretionary), HDFC (India: Financials), OCBC Bank (Singapore: Financials), Hoya (Japan: Health Care) and WEG (Brazil: Industrials), among many others. In terms of divestments, we sold out of Techtronic Industries (Hong Kong: Industrials) as concerns over financial quality and governance emerged. We also divested Natura (Brazil: Consumer Staples), a Brazilian supplier of health and personal-care products, as we began to lose conviction in the quality of management and their ability to reverse the fortunes of the franchise and financials. We also trimmed our position size in Constellation Software (Canada: Information Technology) which has been a very good investment over the past few years but was beginning to look expensive. We believe these decisions improve the quality of the strategy at acceptable valuations.
While we don’t make macro predictions, it is hard to escape the feeling that current headlines sound ominously familiar to those of a decade and a half ago. From our perspective, we continue to meet with, analyse and invest in high-quality sustainability franchises, run by competent and honest people and with strong financials, as we believe this is the best way to protect and grow our clients’ capital over the long term.
Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.
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Strategy update: Q4 2022
Worldwide Leaders Sustainability strategy update: 1 October - 31 December 2022
Commentary on short-term market gyrations is always a good way to end up with egg on faces and yet there is plenty of it going around at the moment.
Talking heads seem to be getting excited by the idea that ‘inflation is slowing’ but macro analyses like these often commit the sin of relative comparison, and in doing so they ignore two key issues: firstly, what that means in real terms to real people (i.e. ‘lower inflation’ still means higher living costs) and secondly, what bearing that has on actual companies, operating on the ground, which are continuing to struggle to balance supply chain issues alongside demand concerns from what appears to be a slowing outlook across the board. For us, we continue to analyse investment opportunities by focusing heavily on high corporate quality and on good sustainability positioning for the long term.
In the quarter, we took the opportunity to initiate a position in Roper Technologies (United States: Information Technology), which is a high-quality and diversified US industrial holding company, supplying vertical software as well as medical and water products. We also initiated a position in a well-known Japanese bicycle supplier at much more generous valuations. We added to positions in: Watsco (United States: Industrials), a well-stewarded heating, ventilation and air conditioning (HVAC) company positioned to benefit from environmental tailwinds. OCBC Bank (Singapore: Financials), a well-run, family-owned Singaporean bank, headquartered in a country known for its economic and macro-prudential stability and with operations in China, Hong Kong and Indonesia. HDFC (India: Financials), a well-run Indian financial institution. Graco (United States: Industrials), a well-run industrial supplier, and Copart (United States: Industrials), a supplier of online vehicle auctions and services to auto resellers.
We divested from Adobe (United States: Information Technology), which is a well-known software supplier, as we struggled to gain conviction in the franchise amid ongoing succession concerns. We trimmed positions in Texas Instruments (United States: Information Technology) and Synopsys (United States: Information Technology) on the back of geopolitical concerns. We also reduced positions in Coloplast (Denmark: Health Care), Constellation Software (Canada: Information Technology), Tata Consultancy Services (India: Information Technology), Arista Networks (United States: Information Technology) and Fortinet (United States: Information Technology); the general reasons behind these trims were strained relationships between valuations and growth outlooks.
As always, we struggle to make predictions (especially about the future). We continue to do what we always do: analyse and reassess the corporate quality and sustainability positioning of the strategy’s holdings and potential investments. We continue to examine the quality of management, franchise and financials as well as the company’s role in serving society, and balancing that with ecological footprints. Against all that, we are weighing up long-term growth potential and current valuations as we try to assess the likelihood of a good, long-term return for clients.
Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.
Strategy update: Q3 2022
Worldwide Leaders Sustainability strategy update: 1 July - 30 September 2022
Generally speaking, over the past quarter, a few high-level points are becoming clear. It seems that macro-economic and company-specific data and commentary continues to raise alarm bells and that the volume of geopolitical noise rises unabated. A final observation is that financial fundamentals are not yet being rewarded by the market which continues to focus on oil and gas: the only sector to post positive returns so far this year.
We have taken this opportunity to initiate three new positions in familiar companies including one of the highest-quality Swedish industrials globally and a high-quality US insurer now more reasonably valued. We have also taken a position in Beiersdorf (Germany: Consumer Staples) the family-owned home and personal care company.
We have taken the opportunity to add to Deutsche Post DHL Group (Germany: Industrials) and Natura (Brazil: Consumer Staples) as their share prices have fallen, and continue to build positions in resilient franchises such as Nestlé (Switzerland: Consumer Staples) and bioMérieux (France: Health Care).
At the same time, we have taken the opportunity to divest our holdings in Veeva Systems (United States: Health Care), the life-science, cloud computing company, as we felt that valuations were exceeding reasonable expectations of franchise growth. We have also trimmed positions in MonotaRO (Japan: Industrials), Synopsys (United States: Information Technology), Jack Henry & Associates (United States: Information Technology), Edwards Lifesciences (United States: Health Care) and Costco (United States: Consumer Staples) as valuations crept up. We believe these changes leave the portfolio in a more robust position in a difficult time for economies and markets.
Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.
Strategy update: Q2 2022
Worldwide Leaders Sustainability strategy update: 1 April - 30 June 2022
There is a lot of “macro” economic chatter going on right now, and while it is relevant to the investment environment, it is also somewhat noisy for bottom-up investors like us.
We remain focused on the quality of the management teams in which we invest. We have faith that they are capable of managing their franchises through, what will likely be, a stormy cycle. We believe that these franchises are necessary and have the strength to endure. Finally, we are confident that the balance sheets and financials underpinning these companies are built to last.
We are aware that the sustainability challenges and opportunities facing our companies are the key investment issues over the long term, and hence we remain mindful of the long term, especially while the short-term noise increases. This is how we have always invested and, when it comes to protecting and growing our clients’ capital, we believe these criteria are as important now as they ever have been.
We have taken the opportunity to initiate two new positions in the quarter. First is a Singaporean bank, OCBC Bank, which we have known for decades through our Asia funds. It is a well-governed, family-owned bank based in Singapore; a market known for its economic and macro-prudential discipline. OCBC also has subsidiaries and associates in Indonesia, Hong Kong and China, which we believe will help drive future profitability. The valuations here are not demanding, versus acceptable and reasonable long-term return expectations.
We have also re-invested in Nestlé (Switzerland) which is a consumer franchise that is well positioned for resilience and robust growth in a difficult inflationary environment. We have long said that there is no such thing as a perfect company and some of these ‘imperfect giants’ make compelling investment cases as they address broader franchise challenges: Nestlé falls into this category.
We have added to several positions in the quarter as soft share prices have presented some very exciting opportunities. Higher positions in companies such as Deutsche Post DHL Group (Germany), bioMérieux (France) and Watsco (United States) should add to portfolio resilience, while additions to Hamamatsu Photonics (Japan) and WEG (Brazil) should provide compelling longer-term growth opportunities.
We have sold out of Illumina (United States) and Ansys (United States). Increasingly Illumina was demonstrating franchise issues ranging from regulatory concerns (over their re-acquisition of early-cancer detection testing company, Grail) to patent lawsuits, and it became harder to assess its long-term franchise potential. For Ansys, while we have been invested for many years, we began to feel that the quality of management was deteriorating, as reflected by its growth struggles and declining financial quality.
As is always the case, the macro outlook remains opaque, and while there is plenty of economic noise out there, there is also plenty of comfort to be found in high-quality managements, strong and necessary sustainability franchises and resilient balance sheets and financials, all of which allow us to focus on the next decade (rather than the next quarter). These characteristics should provide resilience for the portfolio.
Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.
Proxy voting: Q1 2023
Worldwide Leaders Sustainability proxy voting: 1 January - 31 March 2023
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter, there were 75 resolutions from six companies to vote on. On behalf of clients, we voted against two resolutions.
We voted against the appointment of the auditor at Costco and Infineon Technologies as they have been in place for over 10 years and the companies' have given no information on intended rotation. We believe rotating an auditor on a relatively frequent basis (e.g. every 5-10 years) helps to ensure a fresh pair of eyes are examining the accounts and follows best practice. (two resolutions)
We supported a shareholder proposal relating to Costco which requested the company provide a report on the risks caused by state policies restricting reproductive health care beyond litigation and legal compliance. Following a meeting with the company to discuss this proposal, we understand that the company has already done the work on this for their employees, so it is not a big ask for them to publish it, and we believe it would be useful for shareholders to have more information and clarity on the technicalities of the company’s healthcare policy. (one resolution)
Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.
Proxy voting: Q4 2022
Worldwide Leaders Sustainability proxy voting: 1 October - 31 December 2022
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter there were 72 resolutions from eight companies to vote on. On behalf of clients, we voted against four resolutions.
We voted against the approval of CSL's remuneration report and the equity-based remuneration of the CEO. We believe their remuneration focuses on the shorter term rather than the longer term, and the absolute level of CEO pay, and the gap between median pay, is excessive. (two resolutions)
We voted against the appointment of the auditors at Coloplast and KLA Corporation, as they have been in place for over 10 years and the companies have given no information on intended rotation. We believe rotating an auditor on a relatively frequent basis (e.g. every 5-10 years) helps to ensure a fresh pair of eyes are examining the accounts, and follows best practice. (two resolutions)
We supported a shareholder proposal relating to KLA Corporation which requested the company report on how it intends to reduce greenhouse gas (GHG) emissions in alignment with the Paris Agreement. (one resolution)
Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.
Proxy voting: Q3 2022
Worldwide Leaders Sustainability proxy voting: 1 July - 30 September 2022
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter there were 48 resolutions from four companies to vote on. On behalf of clients, we did not vote against any resolutions.
Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.
Proxy voting: Q2 2022
Worldwide Leaders Sustainability proxy voting: 1 April - 30 June 2022
During the quarter, there were 338 resolutions from 27 companies to vote on. On behalf of clients, we voted against 32 and abstained on four resolutions.
We voted against Adobe’s execution remuneration, as we believe the CEO's total remuneration is high compared to the median employee. We voted against the appointment of the auditor, as they have been in place for over 10 years and the company has given no information on intended rotation. We believe rotating an auditor on a relatively frequent basis (e.g. every 5-10 years) helps to ensure a fresh pair of eyes are examining the accounts, and following best practice. (two resolutions)
We voted against Ansys’ executive remuneration, as we believe it is subject to adjustments to facilitate payments to management. We voted against the appointment of the auditor, as per our comments on auditor rotation above. (two resolutions)
We voted against the appointment of the auditor at Arista Networks, Cognex, Constellation Software, Expeditors, Fastenal, Fortinet, Graco and Old Dominion Freight Line, as per our comments on auditor rotation above. (eight resolutions)
We voted against Edwards Lifesciences’ execution remuneration, as we believe there is an over reliance on options resulting in outsized pay for their CEO. We voted against the appointment of the auditor, as per our comments on auditor rotation above. (two resolutions)
We voted against Illumina’s executive remuneration as they have changed the goalposts of their long-term incentive plan in light of COVID-19. We voted against the appointment of the auditor, as per our comments on auditor rotation above. (two resolutions)
We voted against Knorr-Bremse’s remuneration report due to adjustments made to executive remuneration in relation to the impact of COVID-19. (one resolution)
We voted against Philips’ remuneration report as we believe it is unnecessarily complex and is subject to repeated adjustments to facilitate payments to management. (one resolution)
We voted against Natura's request to adopt cumulative voting and to recast votes for an amended slate of directors. We do not believe these requests are in shareholders’ interests. Unfortunately, due to an operational voting error, we abstained from voting on the company’s remuneration policy and the election of a candidate to the supervisory council. We had intended to vote for the remuneration policy, but had flagged areas to follow up with the company on. Our voting intention was to abstain from voting on the establishment of a supervisory council and a separate election for board members. This error did not have a material impact on the results of the meeting. (two resolutions against, two resolutions abstained)
We voted against amendments to Synopsys’ equity incentive plan due to uncertainties over greater stock based compensation grants. We voted against the appointment of the auditor, as per our comments on auditor rotation above. (two resolutions)
We voted against Texas Instruments’ executive remuneration, as we believe the absolute pay-outs for the CEO are high compared to other executive directors and the median employee. We voted against the appointment of the auditor, as per our comments on auditor rotation above. (two resolutions)
We voted against amendments to Veeva System’s equity incentive plan which would have given authority to the administrator to reprice options without shareholder approval. We voted against the appointment of the auditor, as per our comments on auditor rotation above. (two resolutions)
We voted against WEG’s request to adopt cumulative voting and to recast votes for the amended board and supervisory council slate. We do not believe these requests are in shareholders’ interests. We abstained from voting for a minority candidate as we prefer to support the Board. (three resolutions against, two resolutions abstained)
We supported a shareholder proposal relating to Constellation Software which requested the company prepare a report on its plans to identify, address, mitigate and dismantle racial disparities within its workforce. (one resolution)
We supported a shareholder proposal relating to Fortinet which requested the company eliminate its supermajority vote provisions. Supermajority vote requirements can impede shareholders’ abilities to vote on resolutions that are in their interests. (one resolution)
We supported shareholder proposals relating to Edwards Lifesciences, Illumina and Texas Instruments which would enable shareholders with a combined 10% share ownership the right to call a special shareholder meeting. (three resolutions)
We supported a shareholder proposal relating to Expeditors which requested the company report semi-annually on its political contributions and expenditures. (one resolution)
We voted against a shareholder proposal relating to Ansys where shareholders were seeking to declassify the board. We believe a classified board offers some protection against hostile takeovers. (one resolution)
We voted against a shareholder proposal relating to Synopsys which would have enabled shareholders to take action with written consent on important issues that arise between annual meetings. We consider ourselves active shareholders and voting an important responsibility in our investment management duties. (one resolution)
Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.
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For illustrative purposes only. Reference to the names of example company names mentioned in this communication is merely for explaining the investment strategy and should not be construed as investment advice or investment recommendation of those companies. Companies mentioned herein may or may not form part of the holdings of Stewart Investors. Holdings are subject to change.
Certain statements, estimates, and projections in this document may be forward-looking statements. These forward-looking statements are based upon Stewart Investors’ current assumptions and beliefs, in light of currently available information, but involve known and unknown risks and uncertainties. Actual actions or results may differ materially from those discussed. Readers are cautioned not to place undue reliance on these forward-looking statements. There is no certainty that current conditions will last, and Stewart Investors undertakes no obligation to correct, revise or update information herein, whether as a result of new information, future events or otherwise.
Source: Stewart Investors investment team and company data. Securities mentioned are all holdings which have/have had a portfolio weight over 0.5% from representative Asia Pacific Sustainability Strategy, Asia Pacific & Japan Sustainability Strategy, Asia Pacific Leaders Sustainability Strategy, European Sustainability Strategy, European (ex UK) Sustainability Strategy, Global Emerging Markets Leaders Sustainability Strategy, Global Emerging Markets Sustainability Strategy, Indian Subcontinent Sustainability Strategy, Worldwide Sustainability Strategy and Worldwide Leaders Sustainability Strategy accounts up to 31 March 2023.
The Stewart Investors supports the Sustainable Development Goals (SDGs). The full list of SDGs can be found on the United Nations website.
Source for Climate Solutions and impact figures: © 2014–2023 Project Drawdown (drawdown.org). Source for Human Development Pillars: Stewart Investors investment team.
Source for climate solutions and human development analysis and mapping: Stewart Investors investment team. Contributions are defined by the team as demonstrable contributions to any solution, either direct (directly attributable to products, services or practices provided by that company), or enabling (supported or made possible by products or technologies provided by that company).
Investment terms
View our list of investment terms to help you understand the terminology within this document.
