Industry Transition Brings Portfolio Balancing Difficulties
In a recent virtual event hosted by WM Nexus, George Latham, the managing partner at WHEB Asset Management, highlighted the firm's commitment to impact investing, focusing on sustainability and positive environmental outcomes.
WHEB specialises in thematic investing, with a focus on areas such as clean energy, efficient energy use, sustainable transport, resource efficiency, water management, and waste management. The firm's strategy is designed to accelerate the transition to a low- or zero-carbon economy by providing funding and support to innovative companies committed to environmental solutions.
To make informed decisions, WHEB uses five questions adapted from impact investing research to assess potential investments. These questions evaluate the vulnerability of clients, impact criticality, centrality of product or service, size of positive impact, and uniqueness of the company's contribution. The firm scores ESG factors on a 0-10 scale to give a quality score, and combines ESG analysis with conventional analysis to understand stock performance and sustainable growth.
The firm's rigorous approach ensures that at least 50% of a company's revenues come from products and services delivering positive impact. This stringent criterion helps to filter the universe of 28,000 stocks available on the main global markets down to around 700 and 800 stocks whose products make a positive impact.
WHEB's investments directly address seven of the UN sustainable development goals, with some cross-over to others. The firm's average holding period is five to seven years, boosting engagement and enabling long-term value creation.
Latham emphasised that the transition to a zero-carbon economy may increasingly elevate to a strategic level, concerned with identifying which parts of the economy will thrive after the transition. He suggested that investors may view this transition as an overarching asset allocation decision.
Moreover, Latham proposed that philanthropic organisations can now deploy their full financial firepower to make an impact, rather than just using traditional investment strategies to generate income. This shift towards impact investing aligns with WHEB's mission to advance sustainability and create prosperity through positive impact investments.
WHEB's commitment to transparency is evident in their publication of the minutes from every holding in the portfolio, as well as their use of maps, reports, and a calculator on their website to calculate the impact achieved by an investment. The firm's independent advisory committee challenges the investment team on every holding, further ensuring that the firm adheres to its mission and rigorous standards for transparency and positive impact.
WHEB's integration into Foresight Group’s operations further supports product diversification and enhances expertise in sustainable investment, reinforcing their position in the market for ethical, climate-aligned investing. With their strategic focus on impact investing and commitment to sustainability, WHEB Asset Management continues to lead the way in ethical and climate-aligned investing.
Investing with WHEB Asset Management extends to areas such as environmental science, with a focus on climate change, as a part of their thematic strategy that includes clean energy, efficient energy use, and sustainable solutions. As a matter of fact, their investments directly address seven of the UN sustainable development goals.
