Despite the heated debate over the merits of environment, social and governance (ESG) principles in investment, the transition to a sustainable future is proving to be a big opportunity for companies across many industries.
From cutting emissions and waste to developing innovative clean tech and financial solutions, there’s upside in supporting companies that are actively improving their impact. For investors, this is not just about risk mitigation but also about unlocking new avenues for growth, profitability and enhanced shareholder returns.
Companies undergoing this transition may also experience valuation rerating, making them attractive investment opportunities.
This is precisely the approach our Positive Change strategy takes. As a global equity strategy, Positive Change is designed to capitalise on quality businesses that are driving or benefiting from the transformation to a more sustainable economy.
Over the past three years, we have built a balanced and diversified portfolio of companies that can create value from improving their impact, working closely with their management teams to encourage sustainable practices.
Our active engagement encourages these companies to create tangible value for investors as they progress on their transition.
Increasing margins
Take one of our investments Carlisle. The US-based roofing and insulation provider products increase thermal performance and energy efficiency, which helps cut energy bills. The company estimates its products have the potential to save customers USD20 billion over the lifetime of those products.https://www.carlisle.com/investors/news/press-release-details/2024/Carlisle-Companies-Publishes-2023-Corporate-Sustainability-Report/default.aspx
We have been engaging with Carlisle to reduce waste, working with it to find ways to better recycle, reuse and remanufacture, which we believe can directly benefit both the environment and the company’s bottom line – after all, each ton of waste avoided is money saved.
The company has committed to diverting 2 million tons of waste from landfill by 2030, doubling its initial goal. In the most recent reported period, the company generated more than 16 million tons of waste.https://esgdatacenter.carlisle.com/esg-data-center/default.aspx
What is more, it recently rolled out premium insulation products such as its Polyiso Eco made with 5% bio-circular materials, which command higher pricing as customers value its contribution to achieving green building certifications.
Crucially, the use of recyclable materials lowers reliance on fossil fuels, which helps cut cost and protect margins from volatile oil prices. This is a clear example of how improving circularity is creating tangible value for Carlisle and its investors.
GHG intensity per energy throughout (CO2e)
Source: Williams
Another example of how targeted corporate engagement activities can bring about positive results is Williams, the US gas pipeline company that’s critical to the modernisation of energy supply.
Methane leaks are a major hidden cost of the company’s operations – or what economists refer to as externalities.
By reducing methane leaks, Williams not only lessens environmental harm but also retains more of the gas available for sale.
It is already making good progress in its long-term journey to cut greenhouse gas emissions intensity by 30% by 2028; it has already cut methane leakage by 10% in the past year.
Positive impact and growing revenues
Improving impact can also open up new avenues of revenue.
Take HCA Healthcare, which has been one of our top three holdings since inception. As the largest hospital owner and operator in the US, it stands out for its clear strategic alignment with social pillars of the UN Sustainable Development Goals.
When HCA grows its business by investing in new hospitals, facilities and equipment, it increases the number of patients it serves and improves their health outcomes. HCA increased the number of patients served by 6 million in 2024, its revenues grew nearly 9% and net income by almost 10%. Its capital allocation decisions are designed to both enhance its impact and drive returns.
Some of our other holdings demonstrate the same approach. US-listed energy company Baker Hughes is transitioning from traditional oil and gas operations to innovative clean technologies such as carbon capture and hydrogen. It targets USD6-7 billion in new orders for 2030 and higher margins in these new clean technology markets.
We’re seeing a positive outcome in our engagement with US-based financial services firm Intercontinental Exchange encouraging doubling its share of revenues from sustainable energy products.
ICE reported record trading in its environmental markets in the first half of 2025 while it added over USD1 trillion of notional value traded last year, making the fourth consecutive year this threshold has been surpassed.https://ir.theice.com/home/default.aspx
Its novel emissions trading solutions should deliver a positive environmental impact as well as higher revenues for the business.
Reducing ESG risk and enhancing valuations
Reducing governance risks through an active approach can also improve valuations.
Take GFL, a waste management and recycling company in North
America. It’s a younger, faster growing player in the sector facing many of the same opportunities that propelled Republic Services, Waste Management and Waste Connections to strong performance over the last decade.
Yet GFL shares traded at a significant discount to its peers. In our view, this gap stemmed from governance risk as the company transitioned away from its historical private equity mindset.
Our ongoing engagement with the company is focused on further strengthening its governance structures. We expect our partnership and dialogue with GFL to help reduce ESG risks over time and benefit shareholders.
Investing in companies wherever they are in their transformation, should drive attractive financial performance.
Investing beyond green leaders
Sustainable investing isn’t only about directing capital to companies that are already green or excel in social and governance performance.
We believe investing in companies wherever they are in their transformation and actively engaging with them to accelerate it should bring about meaningful and positive improvement in corporate behaviour and drive attractive financial performance.
