Vontobel Multi Asset Boutique
“Finish your plate!” is a line still often heard around dinner tables. In the past few decades, even the most obedient among us have found this order increasingly hard to follow for the sheer size of our generous helpings. But could it be that suddenly, there may not be enough food to go around? And if this should be the case, is there something – anything – we as asset managers can do? Yes, there is, but in our case, it’s not by way of financing grain shipments, for example. Ours is an investor’s view, which nevertheless should also have an overall positive real-world impact – but in a roundabout way.
If we haven’t yet realized an inconvenient post-pandemic truth, this year has made it abundantly clear that relying on a single provider comes with huge risks for the global economy. This holds true for manufactured goods from China, gas deliveries from Russia, and grain shipments from Ukraine.
We in the West feel the pinch mainly through rising prices, and we’re still getting off the hook relatively lightly. In some parts of the world, there is an immediate threat of starvation. At the same time, the global population continues to grow and could surpass the 10-billion mark in 2100, despite falling fertility rates, according to the United Nations.1
So how do we go about trying to address global food shortages whilst – truth be told – also hoping to see our efforts produce some return? We as active investors aim to identify publicly traded companies with promising products and services in areas such as crop yield increase, food waste reuse, and biodiversity protection. As with any other investments, we start with an analysis of a company’s corporate strategy, product pipeline, revenue drivers, and management execution, to determine whether taking a stake in the company could make sense. One precondition is that the investment, i.e. the company’s activities, should be in line with one or more of the Sustainable Development Goals set down by the United Nations. Moreover, as so-called impact investors, we also assess whether the company’s products or services make a measurable contribution to the environmental or social improvements we have in mind. Defining and collecting this data can be a real challenge. Relying on investment managers with externally audited processes is key here.
You could call this approach “putting our money where our mouth is”. To the critical beholder, our contribution to a more sustainable world by engaging in traditional equities and bonds may seem limited, but capital markets are like democracies – every vote counts, whether it’s at the ballot box or a company’s annual general meeting.
1. World Population Prospects 2022, United Nations, Department of Economic and Social Affairs, Population Division, 2022.