Our investment philosophy focuses on purpose-led Future Quality businesses, which can attain and sustain the best returns on capital in the market. It is our view that businesses with solutions to environmental and social problems, which provide value across all their stakeholder groups, will position themselves to be among the high-return companies of the future.
Society cannot solve the problems that it faces without the private sector making a significant contribution. As a result, we believe the market will increasingly allocate capital to companies that solve these problems while also behaving in a way that provides suitable value to all their stakeholder groups.
Profits to companies are as red blood cells are to humans. We need red blood cells to survive and thrive but our purpose in life is far more than just their production. The same is true in business. Profits are essential for companies, but the purpose of a business is about far more than simply the generation of profit. The best businesses understand this as they consistently provide value to all their stakeholders.
Investors need to integrate a consistent methodology to monitor corporate behaviour and governance while engaging with firms to effect change. However, to be a long-term investor, one needs to focus on companies that can not only act responsibly but are also actively working to address the social and economic problems we face — problems that have never been greater. For this to be done sustainably, we believe it also needs to be done profitably. We believe companies that can do this will be the winning businesses of the future. Companies that are purpose-led, creating value for all of their stakeholders, are more likely to attain and sustain high returns and become Future Quality investments.
Our search for Future Quality focuses on researching and investing in some of the most profitable companies. Given the scale of the challenges faced across the world today, we are finding an ever-increasing number of companies that can form part of the solution rather than be part of the problem, which is critical for both future financial returns and the wellbeing of future generations.
ESG data provides a limited and often imperfect snapshot of how companies are dealing with and thinking about ESG issues. A focused portfolio of purpose-led Future Quality companies, with solutions to the critical environmental and social difficulties we face today, should be the defining characteristic of a truly sustainable approach.