Liontrust Sustainable Investment Annual Review 2021 - International - Report - Page 17
2016: Risk vs opportunities
After many years of analysis, we
concluded retailers have been unable to
show sufficient improvements in the supply
chain and the image of ‘Fast Fashion’
has become irrevocably damaged as a
result. The theme exposed more risks than
opportunities for the large retailers and we
sold out of names including H&M and,
ultimately, Inditex in 2018.
2018: Safety
This is not to say we no longer find
opportunities within this theme but we now
focus on companies that assess supply
chains on behalf of retailers.
The Testing, Inspection and Certification (TIC)
industry is vital for sustainable development,
ensuring the safety of our products both
for the users and the people making them.
With more complex supply chains, product
innovation, stringent regulations and everincreasing consumer demands around
sustainability, this sector enjoys a long-term
structural growth rate that should continue to
rise ahead of global GDP.
2011
2012 2013
2014
2012: Footprint
We began monitoring the carbon footprint
of our strategies, allowing us to better
understand where portfolio emissions were
coming from.
2016: Gas and coal
We further strengthened our approach.
The investment team and our Advisory
Committee agreed that natural gas should
no longer be considered a primary
transition fuel so, in addition to coal and oil
screens, we decided to exclude
companies exploring for or
producing natural gas
from our strategies.
We identified Intertek as a positively
exposed company benefiting from structural
growth in increasing safety standards,
outsourcing, regulations and sustainability,
adding it to strategies in 2018. It also has the
sustainability profile, business fundamentals
and valuation that we need to invest
with confidence.
2019: Circular economy
We continue to look for clothing businesses
focused on closing the loop and moving
towards a circular economy, buying
innovative Italian textile manufacturer Aquafil.
Plastic pollution has quickly become a
mainstream issue and urgent action is
needed from consumers, companies and
governments. One solution to this problem is
to recover and re-use the plastic waste that
litters our oceans. ‘Regenerated’ plastics are
made from recycled plastic waste, avoiding
the creation of new virgin material from oilbased petrochemicals and helping to ‘close
the loop’ in the plastic lifecycle.
Aquafil’s main product is nylon, which has a
number of valuable characteristics including
toughness and durability, as well as being
2015
2016
2017
lightweight, quick-drying, shrink and fire
resistant. As a crude oil derivative, however,
nylon clearly has a number of sustainability
challenges. Recognising this around 20
years ago, Aquafil decided to tackle this
issue by trying to improve the sustainability
of nylon production.
After years of trial and error and investment,
CEO Giulio Bonazzi’s vision was realised as
Aquafil successfully developed a commercially
viable process to recycle used nylon. Aquafil
branded this innovative recycled product
Econyl, with the tagline: No waste. No
new resources. Just endless possibilities.
We believe this will enable Aquafil to
capture more of the end product margin,
and its central role in Vogue’s recent
sustainable issue shows how it is winning
over the fashion world.
We continue to believe unsafe and
degrading working practices make no
business, common or investment sense
and will continue to play our role in
bringing them to an end. We do this to
generate investment returns for our clients
but it is also clearly the right thing to do.
2018 2019
This timeline is designed to show how
the Liontrust Sustainable Investment
team has been at the forefront of
recognising when times are changing.
Being early to adapt means we
avoid risks and capture investment
opportunities along the way.
Currently, our strategies continue to
be positioned progressively because
we believe the shift to decarbonise will
be bigger and happen more quickly
than the market anticipates. The Paris
Agreement in 2016 was a major
step forward but we expect further
tightening of global regulations as well
as shifts in consumer behaviour – and
our efforts as part of the One and a
Half Degree Transition Challenge are
testament to this.
Liontrust Sustainable Investment: Annual Review 2019 - 17
