Worldwide Leaders Sustainability

Worldwide Leaders Sustainability

The Worldwide Leaders Sustainability strategy launched in November 2013 and transitioned to become a dedicated sustainability strategy in October 2016. 

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. 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

Quarterly updates

Strategy update: Q4 2023

Worldwide Leaders Sustainability strategy update: 1 October - 31 December 2023

The strategy experienced a year of strong returns over 2023. We do not fully understand short-term market moves and so won’t speculate on the causes of short-term performance.  The market continued to rise, despite a turbulent environment as it absorbed higher inflation and interest rates, worries about recession and increasing geopolitical tensions.

Our focus, as always, is to look for high-quality management teams, running businesses that drive human development forward. Buying companies with strong balance sheets that can weather any coming storm, that have structural tailwinds driving their growth and reasonable valuations is the best way to invest our clients’ savings, and we have found many interesting investment opportunities.

We added five new companies to the strategy during the quarter. Lincoln Electric (United States: Industrials) is the world’s leading maker of welding equipment and is a high-quality franchise that is well positioned to benefit from the tailwinds of increasing automation, safety and transition to greener infrastructure. Linde (United States: Materials) is the world’s leading industrial gases company and a high-quality franchise with strong sustainability tailwinds that should drive growth for years to come. Samsung Electronics (South Korea: Information Technology) operates in consumer electronics, information technology and communications worldwide. We took the opportunity of attractive valuations to invest in a company that is well positioned to contribute technology solutions to most global development challenges. EPAM Systems (United States: Information Technology) is a digital platform engineering and software development services company. We have been interested in the company for a while and took advantage of attractive valuations to initiate a position. Midea (China: Consumer Discretionary) is a home appliances manufacturer with strong cash flows and an exciting direction of travel into innovative technologies.

We funded these new positions by divesting three stocks completely.  We have been monitoring Philips (Netherlands: Health Care) since a safety recall of ventilators in 2021 and this quarter lost conviction that management could sufficiently improve the quality of the culture and franchise.  We also sold our position in Constellation Software (Canada: Information Technology) which has been an excellent investment over the past few years but had become very expensive.  While we retain conviction in its management and business model, its valuation left no room for error and we feel there are better opportunities elsewhere.  Finally, we sold Nestlé (Switzerland: Consumer Staples) as it is struggling to grow the business at the same time as it is increasing its levels of debt.  In addition, we trimmed positions in CSL (Australia: Health Care) and Tata Consulting Services (India: Information Technology) as they had become fully valued.

During the year we visited India and met with many of the companies in the strategy, including Mahindra & Mahindra (India: Consumer Discretionary) and HDFC Bank (India: Financials). Our conviction in our Indian holdings continues to remain high in the context of the quality of these institutions and the growth opportunities they are presented with.

Our portfolio is well diversified, not only across sectors and geographies, but also across growth drivers such as improving energy efficiency, the rise of living standards in India and building clean infrastructure in the United States. As we look at a portfolio of high-quality, great sustainability companies with resilient cash flows and strong competitive positions bought at reasonable valuations, we are excited about the future.

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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Stewart Investors Quarterly Client Update Q4 2023

1 October - 31 December 2023

Investment philosophy

  • We are stewards: Our role is to allocate society’s capital to productive uses, in accordance with our Hippocratic Oath
  • We are long term: Our time horizon is measured in years, not weeks, and we value companies accordingly
  • We invest only in companies contributing to a more sustainable future: We engage constructively as owners to help companies on their sustainability journeys
  • We invest only in high-quality companies: We seek out companies with exceptional cultures, strong franchises and resilient financials
  • We believe capital preservation is important for capital growth: We define risk as the possibility of the permanent loss of client capital

Investment objective

To generate attractive long-term, risk-adjusted returns by investing in the shares of high-quality companies that are particularly well positioned to contribute to, and benefit from sustainable development.

Important information

Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell the same. All securities mentioned herein may or may not form part of the holdings of Stewart Investors’ portfolios at a certain point in time, and the holdings may change over time. 

Important information

The information contained within this material has been obtained from sources that First Sentier Investors (“FSI”) believes to be reliable and accurate at the time of issue but no representation or warranty, expressed or implied, is made as to the fairness, accuracy, completeness or correctness of the information. To the extent permitted by law, neither FSI, nor any of its associates, nor any director, officer or employee accepts any liability whatsoever for any loss arising directly or indirectly from any use of this. This material is intended solely for distribution to professional/institutional investors as may be defined in the relevant jurisdiction and is not intended for distribution to the public. The information herein is for information purposes only; it does not constitute investment advice and/or recommendation, and should not be used as the basis of any investment decision. Some of the funds mentioned herein are not authorised for offer/sale to the public in certain jurisdiction.

The value of investments and the income from them may go down as well as up and you may not get back your original investment. Past performance is not necessarily a guide to future performance. Please refer to the offering documents for details, including the risk factors.

Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell the same. All securities mentioned herein may or may not form part of the holdings of Stewart Investors’ portfolios at a certain point in time, and the holdings may change over time.

Some of the information in this document has been compiled using data from a representative strategy accounts. This information relates to existing Stewart Investors strategies and has been provided to illustrate Stewart Investors’ expertise in the strategies This material is provided for information purposes only and does not constitute a recommendation, a solicitation, an offer, an advice or an invitation to purchase or sell any fund and should in no case be interpreted as such. The distribution or purchase of shares in any funds, or entering into an investment agreement with First Sentier Investors or Stewart Investors may be restricted in certain jurisdictions.

This material and the information contained herein may not be reproduced in whole or in part without the prior consent of FSI. This material shall only be used and/or received in accordance with the applicable laws in the relevant jurisdiction.

In Hong Kong, this material is issued by First Sentier Investors (Hong Kong) Limited and has not been reviewed by the Securities & Futures Commission in Hong Kong. In Singapore, this material is issued by First Sentier Investors (Singapore) whose company registration number is 196900420D. This advertisement or material has not been reviewed by the Monetary Authority of Singapore. First Sentier Investors and Stewart Investors are business names of First Sentier Investors (Hong Kong) Limited. First Sentier Investors (registration number 53236800B) and Stewart Investors (registration number 53310114W) are business divisions of First Sentier Investors (Singapore).

First Sentier Investors (Hong Kong) Limited and First Sentier Investors (Singapore) are part of the investment management business of First Sentier Investors, which is ultimately owned by Mitsubishi UFJ Financial Group, Inc. (“MUFG”), a global financial group. First Sentier Investors includes a number of entities in different jurisdictions.

MUFG and its subsidiaries are not responsible for any statement or information contained in this material. Neither MUFG nor any of its subsidiaries guarantee the performance of any investment or entity referred to in this material or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk, including loss of income and capital invested.

© First Sentier Investors 

Strategy update: Q3 2023

Worldwide Leaders Sustainability strategy update: 1 July - 30 September 2023

During the quarter we did not add any new stocks to the portfolio but did rebalance the portfolio when presented with an opportunity to buy more of a quality company at a lower price.

Key increases over the quarter included Fortinet (US: Information Technology), Graco (US: Industrials) and Watsco (US: Industrials). We funded these additions through trimming Mahindra & Mahindra (India: Consumer Discretionary). While it remains one of the highest conviction positions in the portfolio, the increase in share price during the quarter required us to rebalance the position.

We divested of one stock during the quarter, selling out of Cognex (US: Information Technology) due to decreasing conviction on the strength of its franchise compared to its valuation.

We believe the best way to protect and grow our clients' capital over the long term is to invest in high-quality franchises, run by competent and honest stewards that have strong financials enabling them to contribute to and benefit from strong 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: Q2 2023

Worldwide Leaders Sustainability strategy update: 1 April - 30 June 2023

During the quarter, we added to Atlas Copco (Sweden: Industrials), Infineon Technologies (Germany: Information Technology), Deutsche Post DHL Group (now DHL) (Germany: Industrials), bioMérieux (France: Healthcare), Fortinet (US: Information Technology), Texas Instruments (US: Information Technology) and Edwards Lifesciences (US: Health Care) as valuations became more reasonable. 

These are high-quality companies well positioned to evolve and grow in the coming decades. We funded this through divestments in Coloplast (Denmark: Health Care), Synopsys (US: Information Technology) and Jack Henry & Associates (US: Financials) where valuations were becoming expensive.

We recently visited India and met with many of the companies held in the strategy. Mahindra & Mahindra (India: Consumer Discretionary) remains cheaply valued despite a solid track record of compounding book value at high rates over the last few decades. There is a much sharper focus on capital allocation, growth and returns under the current management. This alongside a desire to lead on sustainability outcomes makes it one of the highest conviction ideas in the strategy. Elsewhere, HDFC (India: Financials) is preparing to merge with its subsidiary bank. The consolidated institution should become stronger than the sum of its parts with an expanded set of growth opportunities. HDFC is the cheapest it has been for many decades. Our conviction in our Indian holdings continues to remain high in the context of the quality of these institutions and the growth opportunities they are presented with.

The strategy experienced strong absolute returns over the year. We do not fully understand market movements in the short term so it is best we refrain from speculating on the reasons for short term portfolio performance. On the macro front, we continue to worry about the flood of cheap money over the last few decades which would require unwinding at some stage. We also observe that until recently, inflation has remained low for a long time, inequality in society is the highest it has ever been, government and corporate balance sheets are stretched and the world has experienced benign geopolitics for many decades. These are some of the risks we think about and we certainly cannot predict if, and when, they come to bear. We would equally not be surprised should these conditions continue for many decades to come. Continuing to invest in well managed companies with structural tailwinds, strong and improving market positioning, safe balance sheets and reasonable valuations is the best way to manage society’s savings in the face of constantly evolving or unchanged macroeconomic conditions.

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: 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 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

Proxy voting: Q4 2023

Worldwide Leaders Sustainability proxy voting: 1 October - 31 December 2023

Proxy voting by country of origin

Proxy voting by proposal category

During the quarter there were 52 resolutions from six companies to vote on. On behalf of clients, we voted against one resolution.

We voted against the appointment of the auditor at Copart 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 follows best practice. (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 2023

Worldwide Leaders Sustainability proxy voting: 1 July - 30 September 2023

Proxy voting by country of origin

Proxy voting by proposal category

During the quarter there were 51 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 2023

Worldwide Leaders Sustainability proxy voting: 1 April - 30 June 2023

Proxy voting by country of origin

Proxy voting by proposal category

During the quarter there were 385 resolutions from 27 companies to vote on. On behalf of clients, we voted against 35 and abstained on one resolution.

We voted against the appointment of the auditor at Arista Networks, Beiersdorf, bioMérieux, Cognex, Constellation Software, Edwards Lifesciences, Expeditors, Fastenal, Fortinet, Graco, Markel, Old Dominion Freight Line, Roper Technologies, Synopsys, Texas Instruments and Watsco 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. (18 resolutions)

We voted against Edwards Lifesciences’ request to remove personal liability from certain senior officers. We believe such an amendment is unnecessary and do not think the company’s reasoning holds merit. (one resolution)

We voted against Fortinet’s request to remove personal liability from certain senior officers. We believe such an amendment is unnecessary and do not think the company’s reasoning holds merit. (one resolution)

We voted against a number of proposals relating to Philips. We voted against the allocation of dividends as we believe the company needs to pay back debts before paying out dividends. We voted against the company’s remuneration report as we believe the remuneration structure needs a complete overhaul which is not being addressed in the proposal despite there being an opportunity to do so. We voted against the election of the CFO and Chair of the Audit Committee given the precarious position of the company’s finances and in our view little has been done to improve the quality of the financials. We voted against the request to suppress pre-emptive rights of shareholders as the use of readjusted metrics to overlook accountability for acquisitions and other restructuring decisions is not something management and the Board have earned in our view. We also voted against the request to repurchase shares as we believe the company should use cash flows to reduce leverage. (six resolutions) 

We voted against Roper Technologies’ request to remove personal liability from certain senior officers. We believe such an amendment is unnecessary and do not think the company’s reasoning holds merit. (one resolution) 

We voted against Synopsys’ executive remuneration and amendments to their Employee Equity Incentive plan as we believe it is subject to adjustments to facilitate payments to management. (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 also disagree with the vast majority of remuneration being discretionary and believe it is in shareholder interests for management to be measured against a few key metrics that hold them to account over the long term. (one resolution) 

We voted against WEG’s request to recast votes for the amended supervisory council slate, as we preferred to vote in favour of the female candidate nominated by minority shareholders and who has been on the fiscal council for two years. We abstained from voting on the election of the supervisory council as we preferred to support the minority candidate. (one resolution against, one resolution abstained)

We voted against two shareholder proposals relating to Expeditors. The first proposal requested the company seek shareholder approval for severance payments valued at 2.99 times the sum of salary and short-term bonus. The company has a very different remuneration culture to its peers. Managers are not paid bonuses if the company generates operating losses until all the losses are recouped. We believe the Board has also provided sufficient explanation that under no circumstances will executives be paid severance of that magnitude. The other proposal requested the company conduct further quantitative analysis and publish a report assessing its diversity, equity and inclusion (DEI) efforts. We believe the company’s approach to diversity is reasonable and that the Board has provided enough evidence of a responsible and progressive attitude to DEI matters. (two resolutions)

We voted against a shareholder proposal relating to Nestlé which would have enabled an independent proxy to vote on additional or amended proposals from shareholders at the company’s annual general meeting. We consider ourselves active shareholders and voting an important responsibility in our investment management duties. (one resolution)

We voted against a shareholder proposal relating to Synopsys which would enable shareholders with a combined 10% share ownership the right to call a special shareholder meeting. (one resolution)

We supported a shareholder proposal relating to Edwards Lifesciences which requested that the company separate the roles of the Chair and CEO. (one resolution)  

We supported shareholder proposals relating to Texas Instruments which requested the company report on its process for customer due diligence, by outlining sanctions and export control compliance, risks associated with Russia’s invasion of Ukraine, more information on the know-your-customer due diligence process, and an assessment of legal, regulatory and reputational risks to the company. We also supported a request for the company to adopt a 10% threshold for calling special meetings as currently the Board’s threshold is a shareholding of 25% which appears high. (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: 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.

Portfolio Explorer

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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 31 December 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: © 2014–2024 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.