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We invest in companies that we consider to be the very best sustainability companies in Europe. These businesses have strong and competitive franchises, exceptional people and distinctive cultures, and resilient financials. Individually and collectively they are solving difficult problems, meeting critical needs, and helping bring about a more sustainable future.
By focusing on the highest quality and best sustainability companies in Europe, we believe we can offer an exciting portfolio that stands out from the crowd.
Why invest in European companies?
World-leading sustainability companies
- Europe has a large listed universe, including world-leading health care, clean energy, manufacturing and IT companies
- Many of these companies have large and growing end-markets, including in many emerging economies, and a strong presence globally and locally
Exceptional people and cultures
- Many companies are run by outstanding management teams and are often controlled by long-term stewards – foundations, families and entrepreneurs
- Europe has a high concentration of companies with strong cultures, great franchises, and healthy balance sheets and financial characteristics
Sustainability tailwinds
- Social norms, policies and regulations are often favourable for companies advancing sustainable technologies and solutions
- European companies are known and respected for setting high standards
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: Q2 2023
European (ex UK) Sustainability strategy update: 1 April - 30 June 2023
In order to gauge a company’s performance prospects, we must try to grasp the context in which it operates. Seen through the abstract lens of news, the world usually seems profoundly chaotic, hostile, erratic and unfathomable. The world may be all these things, but all these things are not the singular context in which companies operate. We need a different, better frame of reference.
The more uncertain the political economy context and market conditions get, the harder and closer we look at what we can best make sense of: companies, and how well they deal with the particular contextual challenges they face and foresee. Companies are of course impacted by developments in the political economy and financial markets, but company leaders deal with the manifestations of these things in amongst the practical realities of employees, customers, supply chains, production facilities, distribution channels, and regulatory environments.
Performance over the quarter was mixed. Encouraging results and positive trading outlooks boosted the share prices of Jerónimo Martins (Portugal: Consumer Staples), the leading supermarket operator in Poland; Atlas Copco (Sweden: Industrials), a maker of compressors, vacuums, and industrial assembly technologies; and Teqnion (Sweden: Industrials), a serial acquirer of a wide range of specialised industrial and technology businesses, which was bought at the start of the year.
Companies that dragged most on performance included Carl Zeiss Meditec (Germany: Health Care) – a maker of ophthalmic devices and microsurgery visualisation technologies – which fell after the company confirmed slower growth in China due to covid infection waves and lockdowns earlier in the year; Sartorius (Germany: Health Care) – a provider of laboratory and drug development technologies – which issued a profit warning due to falling sales as biopharma customers run off inventories built up during the pandemic; and ALK-Abelló (Denmark: Health Care) – the global leader in allergen immunotherapy treatments – which fell when first quarter data showed softer European tablet sales growth.
One new company was brought into the portfolio. EPAM Systems (US: Information Technology) is a founder-controlled, Eastern European IT services company that is helping accelerate digital transformation and productivity gains for its clients. EPAM is known in its field as the developers’ developer. The exceptional platform engineering and software development skills of its workforce, most of whom are based in Eastern Europe, and a full consult-design-engineer-operate model, have enabled it to establish long-term relationships with leading companies in over 35 countries worldwide.
We continued building the position in Teqnion (Sweden: Industrials), among the main performance contributors mentioned above. We also added to several holdings as they became more attractively valued, including Alfen (Netherlands: Industrials), a provider of electric vehicle charging stations as well as smart grid and energy storage solutions; Assa Abloy (Sweden: Industrials), a global leader in locks, doors and intelligent security systems; and Roche (Switzerland: Health Care), a developer of biologic drugs for cancer and rare diseases as well as in-vitro diagnostics. Valuation concerns were the main reason for trimming positions in Vitec Software (Sweden: Information Technology), a serial acquirer of leading niche software businesses; Elisa (Finland: Communication Services), the market leader in telecommunications and digital services in Finland; and Inficon (Switzerland: Information Technology), a maker of niche gas detection equipment and sensors.
We seek out exceptional leaders of companies with adaptable franchises and solid balance sheets – companies that can thrive in good times as well as bad. We strive to hold companies which, in combination, can help make the portfolio resilient across a range of fast-fluctuating market environments. The goal of consistently good performance in all circumstances can never be attained, but we aim for consistency in as many different market environments as possible, which we believe is the best way to deliver good overall performance 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 0.5%. 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: Q1 2023
European (ex UK) Sustainability strategy update: 1 January - 31 March 2023
The geopolitical and macro environment has been lurching from one crisis to the next.
This time last year, it seemed covid might be coming under control and supply chain bottlenecks were easing. Then war broke out in Europe, energy and food prices rose sharply, and different supply chain issues emerged. We entered a new era of rising interest rates and inflation, which ushered in considerable market turbulence. This quarter’s ‘macro shock’ has come from banking failures (and bailouts - again) in both the US and Europe.
Against this backdrop, the strategy’s performance over the quarter was satisfactory – helped, in part, by limited exposure to banking stocks. We have long been unconvinced about the prospects for most traditional developed market banks, and the strategy only has modest positions in smaller, country or regionally-focused banks with strong financial quality. These include Ringkjøbing Landbobank, a niche Danish bank, Handelsbanken, a conservative Swedish bank, Bankinter, a high-quality Spanish bank, and Komerční banka, the third-largest bank in the Czech Republic. Positions in these banks have been relatively small since the inception of the strategy, and we substantially trimmed our holding in Ringkjøbing Landbobank earlier this year due to valuation concerns.
Performance over the quarter was boosted by strong results from Infineon Technologies (Germany: Information Technology), a producer of semiconductors for the auto, industrial and power management sectors; Deutsche Post DHL Group (Germany: Industrials), the world’s largest logistics provider; and INFICON (Switzerland: Information Technology), a maker of gas analysis and leak detection devices.
Companies which dragged on performance included Roche (Switzerland: Health Care), a maker of biologic drugs for cancer and rare diseases which struggled with a couple of failed drug trials; and DiaSorin (Italy: Health Care), a maker of immuno and molecular diagnostics equipment which was weaker due to a greater-than-expected pullback in covid-related sales; and Alfen (Netherlands: Industrials) a maker of electric vehicle charging stations and smart grid technologies which expects slowing growth in EV charging sales in 2023.
We added one new company to the portfolio, Teqnion (Sweden: Industrials), which is a serial acquirer of electronics design and manufacturing businesses. We tend to like serial acquirer companies because they offer exposure to a broad range of specialised businesses and they provide attractive risk/return characteristics due to their diversified revenue streams.
We sold out of two companies, Beijer Ref (Sweden: Industrials) and NIBE Industrier (Sweden: Industrials), both due to valuation reasons. Beijer Ref distributes HVAC and refrigeration technologies, and NIBE Industrier sells heat pumps and other sustainable solutions. Both have been beneficiaries of positive sentiment around green incentives from the EU and US, and valuations became increasingly uncomfortable.
During the quarter we added to a number of holdings that became more reasonably valued. These included Nexans (France: Industrials), a maker of cables used in the generation and transmission of renewable energy, and DiaSorin and Alfen, as mentioned above. We also trimmed Tecan (Switzerland: Health Care), a maker of laboratory automation devices; Beiersdorf (Germany: Consumer staples), a maker of personal-care products and adhesives, and Ringkjøbing Landbobank (Denmark: Financials), all for valuation reasons.
As ever, we remain focused on the long term, and on ensuring the portfolio is as resilient as possible. We believe the best way to accomplish this aim is by running a diversified portfolio of high-quality companies with strong and conservative financials, exceptional stewardship, and sustainability tailwinds.
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 0.5%. 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: Q4 2022
European (ex UK) Sustainability strategy update: 1 October - 31 December 2022
We entered 2022 with a portfolio of high-quality, leading sustainability companies, with strong management teams, resilient cash flows and safe balance sheets.
However, this was not enough to protect against a challenging investment environment, marred by geopolitical uncertainty, an energy crisis, rapidly rising inflation, and a devastating war.
Many investors exited quality healthcare, technology and small and mid-cap companies and rotated into companies in the traditional energy, resources and banking sectors. This was painful for the strategy and performance in 2022 was disappointing. With the clairvoyance of hindsight, the portfolio should have been more diversified, with less exposure to companies on expensive valuation multiples.
Our main preoccupation throughout the year was on improving portfolio diversification and defensiveness. To this end, we:
- Initiated and built positions in two new financial services companies (Handelsbanken: Sweden and Komerční Banka: Czech Republic); two industrial companies (Nexans: France and Assa Abloy: Sweden); a consumer company (Beiersdorf: Germany); a communication services company (Elisa: Finland); and a utility company (Energiedienst: Switzerland).
- Sold out of two industrial companies (Kardex: Switzerland and Vestas: Denmark); a technology company (ASML: Netherlands); a healthcare company (Philips: Netherlands); a consumer discretionary company (Mister Spex: Germany); and a utility company (Ørsted: Denmark).
- Reduced exposure on a precautionary basis to other higher-rated companies that we thought were susceptible to a correction, including Infineon Technologies (Germany: Information Technology), Nemetschek (Germany: Information Technology), Tomra (Norway: Industrials), Adyen (Netherlands: Information Technology), Rational (Germany: Industrials) and SFS (Switzerland: Industrials).
- Took profits in certain companies following good runs of performance and valuations becoming stretched, including NIBE Industrier (Sweden: Industrials), Vitec Software (Sweden: Information Technology), Alfen (Netherlands: Industrials), Beijer Ref (Sweden: Industrials), and Jerónimo Martins (Portugal: Consumer Staples).
In quarter four, we took advantage of attractive valuation opportunities to increase exposure to several holdings, including Inficon (Switzerland: Information Technology), Indutrade (Sweden: Industrials), Sartorius (Germany: Health Care), Roche (Switzerland: Health Care), Alcon (Switzerland: Health Care), Carl Zeiss Meditec (Germany: Health Care), and Novozymes (Denmark: Materials). We trimmed some of our diagnostics exposure by reducing positions in Tecan (Switzerland: Health Care) and bioMérieux (France: Health Care), and some of our more expensive industrial exposure via Nibe, Tomra and Beijer Ref.
As a result of these changes, we believe the portfolio is more robust. The overall (sector-level) exposure to technology and industrial companies is lower than 12-18 months ago, healthcare exposure roughly similar, and exposure to financial and consumer companies slightly higher.
We are becoming steadily more excited about the opportunities that lie ahead. We are fortunate to have slightly elevated cash levels and look forward to increasing positions in some of the highest-quality, best sustainability companies in Europe, at more reasonable valuations.
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 0.5%. 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
European (ex UK) Sustainability strategy update: 1 July - 30 September 2022
It has been painful seeing the share prices of most portfolio constituents decline this year.
We hold a good variety of high-quality, great sustainability companies, with strong cash flow capabilities, ample liquidity, and safe balance sheets. If the portfolio were a collection of boats, we believe the view below the surface of the roiling sea would be of sturdy hulls and safe anchors and lines.
The economies of most European countries seem to be heading into a recession. Geopolitical tensions are mounting. Decades of short-sighted energy policies are catching up with most European nations. The cost of most things is rising. Interest rates are rising. Debt burdens are rising. Financial liquidity squeezes look increasingly likely. Pressures are mounting on company earnings. There are no miracles in the central bank box of magic tricks.
Though the quarter began with a classic bear-market rally, it was no surprise that share prices retraced in September. Our main preoccupation was the same as the previous quarter: trying to improve portfolio diversification and defensiveness. We replaced two companies, reduced exposure to twelve, and added to eight holdings. As a result of these changes the portfolio cash position ended lower than last quarter, but still elevated; this may well continue to be the case in the months ahead.
We sold the last of our holdings in Vestas (Denmark: Industrials) and Ørsted (Denmark: Utilities). Both investments were mistakes. Both are well-run, but difficult, order-book businesses. Both ought to have a bright future, yet are highly sensitive to regulatory dynamics and fluctuating input costs. The longer we held them, the longer our list of unknown-unknowns became. Other investment ideas seem more likely to deliver a satisfactory return over the coming decade.
Handelsbanken (Sweden: Financials) was brought into the portfolio. It is a full-service bank with a decentralised, customer-focused operating model. It has survived four major banking crises in its 150-year history. During the severe Swedish banking crisis in the early-1990s, it was the only bank not to be either bailed out or nationalised. During the 2008 Global Financial Crisis, it was a net lender to peer banks and to the Swedish (Central) Riksbank.
Handelsbanken has emerged stronger and leaner from a difficult period of restructuring and reorganisation over the last five-odd years. We believe it will continue to improve under the leadership of CEO Carina Åkerström.
We trimmed positions in Tomra (Norway: Industrials), Tecan (Switzerland: Health Care), bioMérieux (France: Health Care), NIBE Industrier (Sweden: Industrials) and Jerónimo Martins (Portugal: Consumer Staples), among others, during the spell of relative share price buoyancy in the early part of the quarter. We built positions in the companies we recently introduced into the portfolio – Beiersdorf (Germany: Consumer Staples), Elisa (Finland: Communication Services), Energiedienst (Switzerland: Utilities) and Komerční Banka (Czech Republic: Financials) – and also added to ALK-Abelló (Denmark: Health Care).
We are long-term investors. We understand patience pays off in a number of different ways. We are also trained to invest into crises. As valuations become more attractive, we become more excited about adding to our favourite companies. We will do our best to balance enthusiasm and patience as we take opportunities ahead of us.
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 0.5%. 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: Q2 2023
European (ex UK) Sustainability proxy voting : 1 April - 30 June 2023
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter there were 408 resolutions from 23 companies to vote on. On behalf of clients, we voted against ten resolutions.
We voted against Alcon’s remuneration report as well as the Board and Executive remuneration, as we believe it is excessive and the company has signalled that they want to keep ratcheting. (three resolutions)
We voted against Assa Abloy’s remuneration report and long-term incentive plan as we believe the CEO’s remuneration is excessive and do not think earnings per share is an appropriate metric for a serial acquirer and instead it should make reference to returns on capital. (two resolutions)
We voted against the appointment of the auditor at Beiersdorf, bioMérieux, Elisa, LEM Holdings and SFS Group 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. (five 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: Q1 2023
European (ex UK) Sustainability proxy voting : 1 January - 31 March 2023
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter, there were 259 resolutions from 12 companies to vote on. On behalf of clients, we voted against six resolutions.
We voted against the appointment of the auditor at Indutrade, Infineon Technologies, Novozymes and Ringkjobing Landbobank 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. (four resolutions)
We voted against two shareholder proposals requesting Handelsbanken change their IT management software, as well as allocate funds and participate in the formation of an integration institute with operations in the Öresund region. We believe management are best placed to decide the day-to-day operations of the business. (two 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: Q4 2022
European (ex UK) Sustainability proxy voting : 1 October - 31 December 2022
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter there were 37 resolutions from five companies to vote on. On behalf of clients, we voted against two resolutions.
We voted against the appointment of the auditor at Chr. Hansen and Coloplast, 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)
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
During the quarter there were no annual general meetings.
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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 investee companies* 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 as at 30 June 2023. *Assets that the strategies may hold which an active decision has not been made, and sustainability assessment does not apply, include cash, cash equivalents, short-term holdings for the purpose of efficient portfolio management and holdings received as a result of mandatory corporate actions. Holdings of such assets will not appear on Portfolio Explorer.
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
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