Impact investing: doing well by doing good

Two professional investors tell us where they’d put their money. Rupert Welchman and Victoria Leggett of Union Bancaire Privée choose three beneficiaries of the trend towards sustainable growth.

Rupert WelchmanConsumers, businesses and governments are setting greater store by the sustainability of our precious planet. The UN’s Sustainable Development Victoria LeggettGoals affect all aspects of our daily lives, adding serious momentum to the strategy of impact investing, where the aim is to have a measurable beneficial impact as well as make money.

Impact investing is now gaining real traction among listed firms. There are many exciting stocks providing exposure to different themes within the positive impact space. We shall focus on the areas of supply chains, consumer choice and fast fashion.

Keeping consumers safe

Intertek (LSE: ITRK) is one of the world’s leading testing and certification companies. This sector is responsible for approving the safety of everything we, as consumers, come into contact with during our daily lives.

Intertek offers a service called Total Quality Assurance, which allows a firm to identify and monitor all the elements within its value chain, from early-stage product design through to the final sale. Consumers are ditching brands that get shamed for falling short of acceptable standards, so companies are becoming more conscious of the importance of the kind of positive impact made by Intertek.

Fast fashion

The fashion industry has often been characterised by its short attention span, constantly reinterpreting what is hot and what is not. The rise of social media, where trends come and go very quickly, has cemented this characteristic. Consumers have come to expect faster and faster fashion, and nimble retailers have taken advantage, shortening their time to market and changing their clothing ranges more rapidly.

Making clothes last longer and cutting down on the destruction of unsold goods are two of the most obvious ways that sustainability could be improved in this context. Aquafil (Milan: ECNL) has been highly vocal in the promotion of its infinitely renewable Econyl solution – a nylon thread made from recycled carpets and the ghost fishing nets that plague our oceans. With the likes of Stella McCartney and Adidas backing Aquafil, the outlook for growth is auspicious.

World’s top cork producer

Consumer choice will be increasingly influenced by the theme of sustainable living. One area where consumers can make a difference is by choosing sustainable materials over synthetic ones. Often the choice will be simple – buying wood-based products from well-managed sources, for instance. Corticeira Amorim (Lisbon: COR) is the world’s leading producer of cork products.

Cork is usually associated with bottle stoppers but it can also be used as an alternative material for products ranging from insulation blocks to surfboards. Cork has a negative carbon footprint thanks to the many harvests a single tree can produce in its 200-year life. Negative carbon-emitting products will become increasingly high profile in the fight to limit global temperature rises. Corticeira Amorim is well positioned to invest in this challenge.