In this interview, Head of Global Sustainable Equities and Portfolio Manager of the Global Sustainable Equity Fund, Hamish Chamberlayne discusses how economic stimulus and the digital transformation of the economy – both of which were accelerated by the COVID-19 pandemic – are helping advance sustainability goals around the world.

Prior to the COVID-19 pandemic, we were seeing small steps toward sustainability in the U.S. and globally. Has the pandemic hampered progress?

Rather than impair progress, we believe the COVID-19 pandemic has accelerated areas that we consider to be enablers of sustainability. In the midst of the pandemic, digitalization allowed us to navigate many of the travel restrictions by enabling working from home, buying groceries online and attending medical appointments virtually. By nature, digitalization results in a lesser physical impact on the planet and we see a close alignment between digitalization, electrification and decarbonization. It is also key to advancing social goals around knowledge sharing and economic empowerment and development.

The COVID-19 pandemic has prompted many governments to initiate unpreceded amounts of spending to stimulate the economy and curtail economic stress. It also appears to have inspired governments to build back greener and more resilient economies. In the U.S., President Biden recently announced the massive $2 trillion-plus American Jobs Plan. The plan addresses many aspects of the U.S. economy, but accelerating the migration to a greener, cleaner, healthier U.S. economy and society is clearly at the heart of it. In the bill there are material provisions to clean up the country’s drinking water supply, electrify a portion of the school bus fleet, retrofit buildings to higher environmental standards, further reduce the use of coal and gas generation within the energy mix, provide tax incentives for electric vehicles, and invest in the country’s electric and renewable energy infrastructure. These steps signal clear intention to tackle climate change head on.

Green energy is a major focus in Biden’s recovery plan. What does this mean for the development of renewables in the U.S.?

Surprisingly, there has been a scarcity of compelling renewables investments up until recently. The Global Sustainable Equity Fund currently holds three renewables companies, two of which are based in North America. We anticipate that Biden’s plan will propel the investment into renewables further, and that new and exciting green technologies will emerge.

Alongside government support, there are a number of other attributes that we consider when investing in renewables. Does the company have the capacity to develop in the future? Does it have a platform that can produce both offshore and onshore wind and solar? Does it have the management expertise to navigate different government agencies and local politicians? These questions are crucial to finding companies that we believe will succeed over time.

As renewable energy develops, the need for effective energy storage solutions increases. Battery and hydrogen cell technology are at the forefront of innovation and will be crucial to the implementation of electrification and, ultimately, decarbonization across all industries. This technology is at the early stages of development and we are excited about the future for the fuel cell industry.

How do you see the digital transformation of the economy impacting sustainability and how do you identify companies that stand to benefit from this trend?

Technology is the largest weighting in the portfolio, primarily because we believe it is so closely linked to decarbonization and electrification. Advances in technology are impacting all industries and blurring the lines between sector classifications. When one thinks of technology companies, the obvious tech giants such as Amazon and Apple might come to mind. In reality, technology companies span a much broader remit. There are many companies listed as “technology” that are exposed to industrial drivers that shape the world we live in.

Autodesk is one of the leaders in software design for architecture, engineering, construction and manufacturing. Its software solutions empower customers to optimize the environmental and social impacts of their designs. While this company is listed as a technology firm, its products are used to develop resilient and environmentally sustainable infrastructure. Another such company is IPG Photonics, a global manufacturer of high-performance fiber lasers, which are 20 times more energy efficient than traditional industrial lasers. Although classified as “tech,” these lasers are used in transforming industrial manufacturing processes, medical technology and consumer entertainment.

What role do you see the Global Sustainable Equity Fund playing in an investor’s overall portfolio?

Our investment framework seeks to invest in companies that have a positive impact on the environment and society, while at the same time helping us stay on the right side of disruption. We believe this approach will provide clients with a persistent return source, deliver future compound growth and help mitigate downside risk.

Learn more about Janus Henderson Global Sustainable Equity Fund by visiting
janushenderson.com/GSE