Worldwide Sustainability
An unconstrained investment strategy that invests in companies across the world which are positioned to contribute to, and benefit from, sustainable development.
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Our Worldwide Sustainability strategy was launched in November 2012. It is an unconstrained investment strategy, by which we mean it is not restricted to certain countries, and is able to invest in between 40-60 companies all over the world. As with all of our strategies, we are interested in finding only the very best businesses; those with high quality management teams, franchises, and financials, that are well positioned to contribute to, and benefit from, sustainable development.
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: Q4 2022
Worldwide Sustainability strategy update: 1 October - 31 December 2022
2022 was a challenging year for several reasons. Geopolitical and macro-economic uncertainty increased. The war in Ukraine caused an energy crisis and exacerbated a cost of living crisis in Europe. Rising inflation and interest rates triggered fears of a recession in many economies around the world.
During the year we focused on enhancing the resilience and diversification of the strategy. We were pleased to introduce two high-quality consumer staples companies, Jerónimo Martins (Portugal) and Beiersdorf (Germany) into the strategy, along with two financial companies, Markel (United States) and Admiral Group (United Kingdom), one telecommunications company, Elisa (Finland), one healthcare company, Roche (Switzerland) and one industrial company, Watsco (United States).
We disposed of four healthcare companies: Edwards Lifesciences (United States), Philips (Netherlands), Masimo (United States) and Illumina (United States); one information technology company, Ansys (United States); and one consumer company, Ain Holdings (Japan).
In the fourth quarter, we did not initiate any new positions or dispose of any companies. However, we took the opportunity to build up some of our newer positions in Jerónimo Martins, Beiersdorf, Markel, Elisa and Roche. We also added to many of our resilient franchises, including HDFC (India: Financials), Hoya (Japan: Health Care), MonotaRO (Japan: Industrials), Kotak Mahindra Bank (India: Financials) and Fortinet (United States: Information Technology).
We increased positions in a number of companies that became more reasonably valued towards the end of the year, including Adyen (Netherlands: Information Technology), Halma (United Kingdom: Industrials), Chr. Hansen (Denmark: Materials), A. O. Smith (United States: Industrials) and Zebra Technologies (United States: Information Technology).
At the same time, we trimmed higher-valued and somewhat cyclical positions in WEG (Brazil: Industrials), Diploma (United Kingdom: Industrials), Alfen (Netherlands: Industrials), Constellation Software (Canada: Information Technology), Arista Networks (United States: Industrials) and Jack Henry & Associates (United States: Information Technology). We also trimmed Tecan (Switzerland: Health Care), in part due to valuation, but also due to caution about our overall diagnostics exposure.
We look forward to the year ahead with cautious optimism. We are beginning to see some exciting long-term opportunities to invest in many of our favourite companies at more reasonable valuations. However, we remain conscious of the risks that still dominate the economic picture. Our focus in the months ahead will be on portfolio resilience and diversification.
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: Q3 2022
Worldwide 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.
In terms of how we are responding to this challenging investment backdrop, we have initiated two new positions in familiar companies. Roche (Switzerland: Health Care) is a high-quality and well-stewarded pharmaceutical and diagnostic company at attractive valuations and Markel (United States: Financials) is a high-quality insurance company which is also reasonably valued. Both should provide fundamental support in the portfolio via strong financials and robust franchises.
We have also added to other resilient franchises such as the well-run Finnish telco Elisa (Finland: Communication Services), retailer Jerónimo Martins (Portugal: Consumer Staples), home and personal care supplier Beiersdorf (Germany: Consumer Staples) and a strong Asian consumer company, Unicharm (Japan: Consumer Staples), among others.
At the same time, we have trimmed higher-valued and somewhat cyclical positions in Nemetschek (Germany: Information Technology), Veeva Systems (United States: Health Care), Tomra (Norway: Industrials), Synopsys (United States: Information Technology), MonotaRO (Japan: Industrials), Nordson (United States: Industrials) and Alfen (Netherlands: Industrials), among others.
We have not divested any holdings this quarter and we believe the aforementioned changes leave the portfolio in a more robust position.
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 Sustainability strategy update: 1 April - 30 June 2022
Stock markets during 2022 have reminded us that the value of equities can rise and fall sharply, hence the importance of investing in the asset class for the long term rather than the short term.
We continue to deploy the same investment philosophy and process as we navigate these markets, and continue to build resilience in the portfolio. The chart below perhaps best illustrates what we have been trying to navigate. It shows the performance of the global investment benchmark (MSCI AC World Index), broken down by sector, for the year to the end of June. It highlights that without investing in energy or utilities (most of which are fossil fuel-based) it has been incredibly difficult to generate decent returns from equities.
Little has changed for us from Q1 to Q2. Most of our companies continue to perform well but the price investors are willing to pay for them has fallen. We have taken some profits from some of our companies that appear to be defying gravity, and removed some where we have quality concerns. We sold Ain Holdings (Japan) after nine years in the strategy. We have long admired the company for its defensive attributes, but we believe it will come under pressure as drug rebates in Japan continue to fall. We exited Philips (Netherlands) – a clear mistake – having joined the journey two years ago. The company’s efforts to build a world-class patient treatment and monitoring business have been plagued by product recalls and supply chain difficulties.
We sold Ansys (United States) on growing concerns about management incentives; Illumina (United States) due to concerns about the likely negative impact of a legally contested acquisition as well as a patent litigation case; and Masimo (United States) following a confusing acquisition that takes the company into an unrelated industry and threatens to weaken the franchise quality.
We have also added some new names to provide resilience. We bought pharmaceutical and laboratory equipment supplier Sartorius (Germany), and HVAC distribution business Watsco (United States). After two years on the sidelines, we invested once more in consumer company Beiersdorf (Germany) and telecommunications company Elisa (Finland). We also initiated, and are still building positions in, a leading UK-listed auto and household insurance company, as well as a Portuguese-listed retailer that earns most of its revenues and profits in Poland, and which we consider one of the highest-quality, most responsible operators of good-value supermarkets anywhere in the world. All the aforementioned transactions resulted in higher portfolio cash levels at the end of the quarter.
The war in Ukraine, high inflation, low real-wage growth, rising interest rates, and declining growth and corporate-earnings expectations have produced a widespread sell-off. In this environment, the market has yet to show much concern for corporate debt and rising debt-servicing requirements. We continue to invest in companies we believe are high quality and have defensive attributes, not least illustrated by high-quality financials and solid balance sheets.
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: Q1 2022
Worldwide Sustainability strategy update: 1 January - 31 March 2022
The previous quarter-end summary referenced an estimated 100,000 Russian troops mobilising on the Ukrainian border. Sadly, as we now know, Russia invaded in February. This is a human tragedy, adding to the disruption and uncertainty for global supply chains and the economy.
The first ten weeks of the year witnessed a sharp decline in global stock markets and an even sharper decline by the strategy, with most damage done in January. Outside of January, the strategy clawed back some returns.
While the strategy historically withstood market drawdowns relatively well, past drawdowns have been in the face of economic concern, slow-down, and even shutdown in the case of COVID-19. Rather than economic slowdown, January witnessed a sharp rotation as investors followed inflation and moved quickly into the next phase of economic growth. Capital shifted to early-stage inflation beneficiaries, such as fossil fuels, resources and commodities, and developed world banks; while exiting quality healthcare, technology and small and mid-cap companies. Many of these beneficiaries fail the sustainability or quality hurdles, or both, that make up the core of our investment process.
We believe the most attractive long-term opportunity for our clients lies in the many high-quality companies we already own that experienced significant valuation de-rating, with no discernible underlying change to fundamental company health, and in some cases an improvement. We increased our ownership of technology companies Adyen (Netherlands), Nemetschek (Germany), Halma (UK), Spectris (UK), Zebra Technologies (United States); healthcare companies Tecan (Switzerland), DiaSorin (Italy), bioMérieux (France); and industrial companies MonotaRO (Japan) and Nordson (United States).
In some cases, the bounce back was as sharp and surprising. This saw us reduce our ownership of Alfen (Netherlands), Jack Henry (United States) and again MonotaRO. Due to valuations, we also reduced position sizes in technology companies Ansys (United States), Arista Networks (United States), Constellation Software (Canada) and Fortinet (United States).
Outside this active period of topping and tailing, we bought one company and sold one company. We bought Veeva Systems, the first US company to become a listed Public Benefit Corporation (not to be confused with a B Corp), ensuring that Veeva will work for customers, employees and shareholders. Management believe this shift from shareholder primacy is consistent with customers making 20 – 30 year commitments to Veeva. We sold Edwards Lifesciences (United States), reflecting high valuations and the potential for ongoing surgical interruptions going forward rather than fundamental quality concerns, in the context of a wealth of quality healthcare companies from which to choose.
We take comfort in the long-term quality and investment fundamentals of the portfolio of companies owned for clients. There are many macroeconomic factors driving uncertainty for the year ahead; inflation, interest rates, and both capacity and demand in the economy. We believe it is extremely difficult to know what will play out, but by concentrating on companies with consistent cash flow generation, strong balance sheets, strong sustainability positioning and reliable stewards, we should be well positioned for whatever eventuates.
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: Q4 2022
Worldwide Sustainability proxy voting: 1 October - 31 December 2022
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter there were 56 resolutions from nine 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 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
Worldwide Sustainability proxy voting: 1 July - 30 September 2022
Proxy voting by country of origin
Proxy voting by proposal category
During the quarter there were 79 resolutions from six companies to vote on. On behalf of clients, we voted against one resolution.
We voted against the election of the chairman of the audit committee at Vitasoy as the committee met less than four times during the last fiscal year. (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: Q2 2022
Worldwide Sustainability proxy voting: 1 April - 30 June 2022
During the quarter, there were 477 resolutions from 32 companies to vote on. On behalf of clients, we voted against 28 and abstained on four 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 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 the appointment of the auditor at Arista Networks, Cognex, Constellation Software, Fortinet and Masimo, as per our comments on auditor rotation above. (five resolutions)
We voted against Atlas Copco’s remuneration report as no progress appears to have been made to address shareholder concerns, the CEO's total remuneration exceeds that of peers and there is no disclosure on short-term incentive plan (STIP) targets. (one resolution)
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 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 with 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 voted against Zebra Technologies’ execution remuneration, as we believe the CEO's total remuneration is high compared to the median employee, and exceeds that of peers. We voted against the appointment of the auditor, as per our comments on auditor rotation above. (two resolutions)
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 Illumina and Texas Instruments which would enable shareholders with a combined 10% share ownership the right to call a special shareholder meeting. (two resolutions)
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.
Proxy voting: Q1 2022
Worldwide Sustainability proxy voting: 1 January - 31 March 2022
During the quarter there were 63 resolutions from six companies to vote on. On behalf of clients, we voted against three resolutions.
We voted against the appointment of the auditor at Infineon Technologies, as they have been in place for over 20 years and the company has given no information on intended rotation. (one resolution)
We voted against the approval of Nordson’s executive compensation (as we did last year). Our preference is for remuneration schemes that are reasonable and simple. We also voted against the appointment of the auditor, who has been in place for over 60 years. 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)
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 December 2022.
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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