Three sustainable stocks that are doing well by doing good

Professional investor Peter Michaelis of the Liontrust Sustainable Investment Team picks three stocks to buy that are helping to create a cleaner, safer and healthier society.

For the past 20 years we have been running our Sustainable Future (SF) funds. They are based on the belief that in a fast-changing world the companies likely to survive and thrive are those helping to create a cleaner, safer and healthier society. 

We combine negative and positive screening with identifying key structural growth trends that will shape the sustainable global economy of the future. We view the world through three megatrends: better resource efficiency (cleaner), improved health (healthier) and greater safety and resilience (safer) – and then identify 21 themes within these. 

Our strategy seeks to generate strong returns while benefiting society by identifying long-term transformative developments such as technological and medical advancements. We focus on well-run companies that capitalise on these changes.

Making money from good work 

We also require excellence in environmental, social and governance (ESG), and our holdings will tend to have processes in place to manage customer relationships, employees and supply chains. We have long believed that outperformance on social issues will deliver more resilient businesses over the long term. We bring all this information into our forecast earnings for companies, only selecting those that can make money from their good work.

The shift to personalised medicine

Illumina  (Nasdaq: ILMN) is a global leader in gene sequencing and a great example of a company exposed to a powerful trend. Held under our enabling-innovation-in healthcare theme, the company’s ability to read and interpret a patient’s DNA is a core first step in the shift towards more personalised medicines and it continues to lower the cost of gene sequencing over time. Their work is a highly positive development for patients.

Learning Technologies Group (Aim: LTG), which fits into our providing-education theme – part of the improved-health megatrend – boasts a collection of e-learning, compliance, training, human resources software and content brands. The company continues to consolidate the e-learning sector with acquisitions designed to cross-sell to new customers and access new technologies and geographies. 

A low-cost investment platform

Avanza Bank Holding (Stockholm: AZA) is an investment platform based in Sweden serving around 1.4 million individuals. By providing a low-cost way for people to manage their savings and investments, it is exposed to our saving-for-the-future theme. The company releases monthly data on new customer numbers, net inflows and trading volumes, and continues to surprise us with its growth and engagement levels of the customer base.

Over our first 20 years of managing the SF funds, our process was successful precisely because it identified companies that have provided something society needs, and this will hold true for the next 20 years and beyond. What 2020 revealed clearly, however, is that the economy and capital markets have to be the servants of society and not the other way around. A sustainable society needs to provide opportunities for everyone and also operate within planetary boundaries in a way that preserves and enhances nature. 

Recommended

Will energy prices go down in 2023?
Personal finance

Will energy prices go down in 2023?

The Energy Price Guarantee will now be extended, but how much will your gas and electricity cost you in 2023?
9 Dec 2022
What is an annuity?
Glossary

What is an annuity?

Annuities are growing in popularity as rates increase. But what is an annuity, and how do you get one?
9 Dec 2022
National Grid gets ready to pay households to cut energy use this weekend
Personal finance

National Grid gets ready to pay households to cut energy use this weekend

The cold weather and unfavourable wind conditions have raised concerns about electricity supplies, prompting the National Grid to consider paying hous…
9 Dec 2022
Asda cuts fuel prices by 5.5p a litre
Personal finance

Asda cuts fuel prices by 5.5p a litre

Asda is now selling the cheapest fuel. We look at if fuel prices are now set to come down further and how to save on costs.
9 Dec 2022

Most Popular

Is it cheaper to leave the heating on low all day?
Personal finance

Is it cheaper to leave the heating on low all day?

The weather is getting colder and energy bills are rising, but is it really cheaper to leave the heating on low all day or should you only turn it on …
1 Dec 2022
Radiator vs electric heater – which is cheaper?
Personal finance

Radiator vs electric heater – which is cheaper?

We compare the costs, pros and cons of radiators and electric heaters and see which one will help keep your energy bill as low as possible.
28 Nov 2022
The pros and cons of smart meters – should you switch?
Personal finance

The pros and cons of smart meters – should you switch?

A smart meter can help you keep tabs on your energy usage, but is it better than a regular meter? We take a look at smart meters vs regular meters.
2 Dec 2022