Corporate culture and competitive advantage – the impact of culture and people on sustainable long-term alpha generation

Business leaders have long been vocal about the importance of people in their organisations – a subject attracting progressively more interest from the investment community, but with little analytical rigor.

In this session we consider people, and their interaction in a corporate culture, as part of a corporate competitive advantage and a component of sustainable long-term alpha generation.

Discussing our academic collaboration with Alex Edmans, Professor of Finance at London Business School, we lay out our framework for culture assessment within a long-term investment strategy, backed by empirical evidence. We approach the topic from both a top down and bottom up perspective, resulting in a framework for analysing culture as well as questions that can be asked to management in order to provide unique cultural insights.

Two portfolio managers at the forefront of sustainable investing will provide insights into their approaches, the opportunities and the challenges they face as they seek to deliver not only environmental and societal impact, but financial impact through the portfolios they manage.

The Ninety One Global Environment Fund seeks to capture the structural decarbonisation growth story by investing in companies that are driving the transition to a low-carbon world. Through rigorous carbon avoided analysis, the fund focuses only on the leaders – those companies truly at the forefront of sustainable decarbonisation.

The Ninety One UK Sustainable Equity Fund invests in companies making a positive contribution to the future of society and the environment. With a commitment to using investment as a force for positive change at its core, this quality portfolio is underpinned by a three pillar approach to sustainability to identify those companies actively making the most societal/environmental – and financial – impact.

Explaining the key drivers behind the rapid rise of Clean Energy and the investment opportunities this creates:

• Public awareness and desire to change
• Governments including the EU, China, Japan, UK and the US under President Biden are taking decisive action on both the climate emergency and air pollution
• Complete transformation of energy landscape. Wind and solar are now the cheapest sources of electricity generation, even without subsidy
• Complete transformation of transport industry: e-mobility and autonomous driving
• New manufacturing methods, with more software and A.I.

Since the launch of the first socially responsible funds and the coining of the word “Impact” investing in 2005, sustainable finance has undergone a massive transformation, driven by investors’ access to more ESG disclosure by companies and data sources, the emergence of regulations, and financial innovation to deliver investment solutions aligned with the Paris Climate Agreement and the UN Sustainable Development Goals.

Jens Peers will highlight a few of the market developments, including investors’ challenges to align with the Paris Agreement goals, new regulatory environment, and Mirova’s key initiatives over the last few months. We will cover biodiversity as a core research topic, the impact of regulations on markets and investors’ portfolios, as well as the imperative of targeting dual performance objectives and implementing performance-based corporate engagement policies in light of the increasing number of Net-Zero commitments.