Since the invention of the modern investment structure in the early 17th century, investment decisions have rested solely on the risk-return spectrum.
But now, faced with realities like climate change, environmental degradation and social injustice, “impact” has entered the fold as a fundamental investment dimension. And on a global scale, investment is the machine that turns the wheels and cogs of industry, and ultimately has the power to drive positive change.
The principle upon which this change rests, is that profit is only the beginning. Today’s investors expect more than just financial returns – they want to see the impact their choices make on the generations of tomorrow.
As we look to “impact” as one of the cornerstones of investment, we see large manufacturers taking a different approach to every step of their production chain, considering factors such as environmental sustainability, carbon footprint and socio-economic value. In turn, we see distributors looking into how they can mitigate the environmental effects of large-scale production. Such is the case with Bunzl, a company that fondly refers to itself as, “the largest company you’ve never heard of.”
Bunzl, a British multinational distribution and outsourcing company, delivers essential supplies for sectors from groceries and retail, to hospitals and building sites. Its core product line includes disposable items like cups, food containers and bags. In one way or another, it is a company that touches every consumer, whether through the distribution of a plastic shopping bag or the personal protective clothing that has been in high demand since the onset of the COVID-19 pandemic. Bunzl has invested heavily in technology and has grown its dividend every year for almost thirty years. But profit is only part of the story.
“Financially, it’s agnostic between product types, and often makes better margins on green products. We’re pleased to see Bunzl innovating on products and piloting ‘closed loop’ systems, where packaging and other products don’t end their lives at the point of sale. For example, it’s developed a carbon neutral bag for life using 97% recycled plastic. It’ll take time, but we’re seeing progress,” explains Katherine Davidson, Portfolio Manager: Global & International Equities.
The plain truth is this: Bunzl is close to one of the world’s biggest problems – the pollution caused by single-use plastic that ends up in our oceans, landscapes and food chains. Bunzl itself does produce plastic. But the key difference is that “it sits in the middle of the supply chain, between the manufacturer and the businesses that are using its products, so it’s in a good position to influence both sides.”
Bunzl works with its customers – such as supermarkets and restaurants – to inform and educate them about their environmental footprint and enable a switch to sustainable products. It also encourages manufacturers to move away from single-use products, and works with both sides to identify and develop solutions that work for their customers.
Demonstrating the impact that the investment sector can have on larger society and how assessing this impact can help deliver risk-adjusted returns for clients, Katherine explains: “We are working with the company to set new targets, and we’ll hold it to account through our engagement, our voting and our capital allocation. Because that’s what our clients expect us to be doing with their money.”