The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. For professional or institutional investors only.
Did you know?
- Access to affordable housing may be one of the most cost-effective ways to reduce childhood poverty.1
- Global demand for fresh water is expected to grow by 70% by 2050.2
- Immunization prevents between two and three million deaths every year.3
- One in nine people suffer from hunger, and one in three are malnourished.4
Meeting basic human needs like access to health care, affordable housing, clean water, and sustainable food sources may not seem like a compelling thesis for active investors seeking to outperform market indices. But we have found that disruptive impact issuers working to solve the world’s most pressing problems are often underappreciated market opportunities with attractive long-term return potential.Our investment universe includes companies from 11 impact themes, which fall into three broad categories. Life essentials is described here. In upcoming posts, we’ll briefly discuss the types of investments we seek to identify in our Human empowerment and Environmental themes.
We believe investments in affordable housing can help accrue health and wellness benefits, lead to better educational outcomes, and create economic value for disadvantaged or underserved communities. Within the impact investing universe:
- Many companies combat homelessness by building low-cost manufactured homes, refurbishing dilapidated or abandoned structures, or employing efficient modular construction to create inexpensive living spaces.
- Issuers are offering debt instruments to provide financing for low-cost or multifamily housing; others offer affordable mortgage financing.
Clean water & sanitation
Advancements in infrastructure and technology that improve water quality or delivery are essential and provide a basic service that can potentially impact health benefits and underpin economic development. Water infrastructure may also be a key to communities’ climate-change adaptation efforts.
- Impact companies are providing water and wastewater treatment services to municipalities with the stated goal of supporting economic growth and environmental sustainability.
- Businesses are manufacturing water-safety and flow-control products, and facilitating water testing, treatment, and filtration.
- Bond issuers are financing essential underground water infrastructure improvements.
Providing affordable, effective health care is a challenge in many countries. Reaching vulnerable populations or delivering multifaceted, long-term treatment for complex diseases is especially difficult. We believe private-sector companies, not-for-profit hospitals, and municipalities can offer needed solutions.
- Pioneering health care technology companies are developing precision medical equipment that improves patients’ quality of life.
- Businesses are specializing in women’s heath, providing insurance to underserved populations, or developing treatments for age-related diseases.
- Lab equipment companies are building tools that facilitate genomic research with potentially lasting benefits for society.
- Not-for-profit hospitals are issuing debt to help charity care or advanced research.
Sustainable agriculture & nutrition
With the global population expected to reach 10 billion by 2050,5 the ability to produce more food with less resource-intensive methods may be critical. In our view, enterprises developing solutions for sustainable food production can help reduce food insecurity, improve human health, and mitigate the negative externalities of large-scale agriculture, which has historically been a severe draw on natural resources, as well as a major source of pollution.
- Impact companies are helping to improve the quantity and quality of livestock through vaccines and disease-preventing antiparasitics.
- Enterprises are helping rural farmers increase crop yields with technologically advanced irrigation systems and forms of precision agriculture.
- Companies are developing new sources of plant-based protein, a promising step toward improving human health, ending hunger, and reducing the sector’s carbon footprint.
We invite you to learn more about impact investing and explore our 2019 impact activity and outcomes.
1Multiple studies cited in “A Place to Call Home: The Case for Increased Federal Investments in Affordable Housing,” Campaign for Housing and Community Development Funding (CHCDF). | 2“Nature-Based Solutions for Water: World Water Development Report,” United Nations, 2018. | 3“Leaving no one behind: All children immunized and healthy,” UNICEF, July 2019. | 4“Zero Hunger,” World Food Programme, 2020. | 5“World’s population will continue to grow and will reach nearly 10 billion by 2050,” World Bank, July 2019