This is a sponsored article from Janus Henderson Investors.
We know well from the last 20 years that Technology is a disruptive force. Investors naturally associate technology with the FAANG stocks but Technology is so much more— it is essentially the science of solving problems and its potential for innovation will be crucial for our world to meet the challenges it faces.
Investing in technology has long been about understanding the changing behaviour of digital natives or that next generation who are also increasingly focused on sustainability. Solving problems aligned with the needs of future generations creates significant and broad investment opportunities within an emerging sustainable technology universe and provides investors with an avenue to drive positive change in both environmental and social issues.
When it comes to sustainability, solutions to adapt and mitigate climate change will have to be wide ranging focusing not just on areas such as sustainable transport and electrification but on migrating to low carbon infrastructure for our technology needs and creating smart cities with hardware and software that will allow us to optimise our existing human and natural resources, facilitate the circular economy and minimise waste. Investing Sustainably goes beyond the impact on the planet but also to how we impact people and the changing fabric of our society. Many of United Nation’s Sustainable Development Goals are socially directed, and the EU is already looking at extending the existing taxonomy to cover social issues as well as environmental. Technology has a huge role to play in these social goals as well, for example through the democratisation of healthcare, financial services and education which can improve accessibility and lower cost for all and help to reduce inequalities, poverty and improve outcomes.
The investment team behind the Janus Henderson Horizon Sustainable Future Technologies Fund (The Fund) believes that sustainable development requires innovative solutions with positive environmental and social benefits that also have the potential for attractive, long-term returns.
Bridging the divide?
COVID-19 revealed the extent of the digital divide that exists between those in both ends of the socio-economic spectrum, as government isolation measures forced dependence on computers and internet connectivity to access a myriad of basic services. Unsurprisingly, those in the lower income bracket bore the brunt of the inaccessibility more than others. A Brookings Institute survey found that students in Indian private schools and those from households with high socioeconomic status (SES) had more access to digital devices and were more engaged in regular educational activities than their peers in government schools and from low-SES households. Similar conditions exist in other sectors such as healthcare and financial services.
The Sustainable Future Technologies team believes that technological innovations are being incubated that can help bridge the divide. In the area of internet access, for instance, the team has identified a company whose innovations is poised to result in broadband access to underserved areas in the US. Similarly, in education, the team is looking at a provider of infrastructure and services to enable on-line education, from post-graduate University courses, through undergraduate degree courses into vocational training, short courses and boot-camps. These are a few examples of technology’s role as enablers in providing opportunities for upward social mobility.
The Horizon Sustainable Future Technologies Fund
Technology is the science of solving problems, and the team behind the Horizon Sustainable Future Technologies Fund views technology as a positive force for both innovation and disruption. As investors, their knowledge and experience enable them to navigate the technology hype cycle to identify persistent growth opportunities that provide solutions to the global challenges that humanity faces.
To identify suitable opportunities, the team utilises a 5-level approach consisting of positive screening of sustainable technology themes providing solutions to key global environmental and social challenges; negative screening to avoid investing in companies with goods or services that contribute to environmental or societal harm; bottom up fundamental research focusing on companies impact on people, planet and profits; valuation discipline to find underappreciated earnings growth potential and proactive engagement with companies. The team does this with the support of a dedicated, experienced sustainability analyst. As an additional resource, the team may also tap into the knowledge of Janus Henderson’s Governance and Responsible Investment Team to help guide investment decisions.
As well as investing in technology that address social challenges, the Sustainable Future Technologies Fund also seeks to uncover promising companies that can help mitigate climate change. Notably, in alignment with the Paris Agreement, at least 20% of the Fund is committed to be net carbon zero by 2030.
Technology investors typically own a lot of the FAANG and mega cap innovators. As a positive impact, sustainability-focused technology strategy, the Fund sets itself apart by giving technology and sustainable investors an alternative way to invest in positive and social outcomes as well as participate in attractive long-term returns.
Tech for a sustainable future
The acceleration of sustainability trends in 2020 brought on by the COVID-19 pandemic has seen interest in environmental, social and governance themes grow significantly. It’s also marked a significant shift in long-term investor attitudes. Today, Asia Pacific is embarking on its journey in sustainability, and with increasing political and regulatory scrutiny on the subject, one thing has become clear — that in the most positive sense of the expression — this is a journey from which there is no return. What’s equally certain is that technology will be there to help pave the way.
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This is a sponsored article from Janus Henderson Investors.