February was a positive month for global stock markets with the MSCI World Index up +5.8%.  This was led by the US, with resilient economic data and relatively strong earnings reports supporting returns. The Fund delivered strong performance over the month returning +8.1%, outperforming the broader index.

In this month’s commentary, Laura Grenier (Director of Operations) discusses WHEB’s journey to becoming a B Corp (a corporation that is accountable to all stakeholders and not just its shareholders) as well as WHEB’s continuing goal of seeking further improvements.

Top Holdings (alphabetically)

Agilent Technologies Inc

United States

Health Care

Agilent Technologies is a specialist in the development and manufacture of bio-analytics for the life sciences and chemical analysis industries. The companys mission is to advance quality of life. Within healthcare, its analytical instruments are used in the development and testing of healthcare products. Agilent also has a chemical analysis business which makes equipment for monitoring levels of pollutants in the ambient environment and or measuring contaminants in food and the human body.

Autodesk Inc

United States

Information Technology

Autodesk is a global leader in 3D design and engineering software and services. Its products are used by architects, engineers and designers to design, develop and manufacture and operate a vast range of products, buildings and services. Autodesk tools are a critical component in the design and operation of more resource efficient products and buildings. They can deliver significant resource savings, due to their impressive capabilities and critical position in design process. The product brands include Autodesk 360 cloud services, AutoCAD civil 3D and LT, 3Ds Max, Maya, and Revit.

CSL Ltd

Australia

Health Care

CSL develops medical products for serious and life-threatening diseases. Its core business is as a provider of human blood plasma-derived products to treat bleeding disorders, rare and serious infections and autoimmune diseases. CSL also manufactures vaccines and related products, including for flu and cervical cancer, as well as other products that speed up recovery times for patients that have undergone heart surgery, organ transplants and burns. The company provides these solutions across North America, Europe, Asia, Australia as well as other parts of the world.

Danaher Corp

United States

Health Care

Danaher is a diversified business that designs, manufactures and sells laboratory equipment and consumables to clinical and medical laboratories including microscopes, analytical software and imaging and molecular devices. These tools are used in the development of new drugs and for diagnosing critically ill patients. In addition, the company also designs, manufactures and sells equipment to test and treat water (incl. UV water treatment systems). Overall, Danahers products offer improved efficiency and reliability.

Ecolab Inc

United States

Materials

Ecolab sells cleaning products and services to restaurants, hotels, hospitals, food and beverage producers and other businesses. The company has a particular focus on energy and water efficiency. Ecolab has developed a range of products and services that help to reduce, and in some cases even eliminate, the use of water in a wide range of industrial applications. In turn, this helps to lower costs through a reduction of energy and water impacts.

ICON PLC

United States

Health Care

ICON is a clinical research organisation (CRO) which provides outsourced development services on a global basis to the pharmaceutical, biotechnology and medical device industries. The companys mission is to accelerate the development of drugs and devices that save lives and improve the quality of life. ICON specialises in the strategic development, management and analysis of programmes to support all stages of the of the clinical development process.

Linde PLC

United States

Materials

Linde Plc produces and distributes industrial gases. The company operates globally supplying oxygen, hydrogen and other gases to a very wide range of downstream markets including into manufacturing industries, petrochemical and electronics industries. The gases are used in a variety of applications including in making manufacturing processes more efficient and in reducing harmful emissions. The company is establishing a strong presence in the green hydrogen market and also sells oxygen and other gases into the healthcare sector.

Thermo Fisher Scientific Inc

United States

Health Care

Thermo Fisher Scientific is one of the largest suppliers of analytical instrument, equipment, consumables and software for healthcare and environmental research, analysis, discovery and diagnostics. The company offers a very wide range of products and services including the equipment needed to analyse samples as well as the variety of containers and other consumables needed to handle them.

Trane Technologies PLC

United States

Industrials

Trane is a world leader in air conditioning systems and services. The company serves engineers, contractors and business owners across an array of markets including education, healthcare, government and manufacturing. It also provides climate-controlled transport solutions to the food and medical industries. It also has an offering in the heat pump space which brings a 300% efficiency gain compared with the system it would replace.

Xylem Inc/NY

United States

Industrials

Xylem manufactures a wide range of products and provides services to the water industry. The companys water infrastructure business provides a range of pumps, filtration and testing and treatment equipment to water utilities. The company also supplies commercial, residential markets with water and wastewater systems, and provides measurement and control solutions. Xylems strategy is characterised by the application of intelligent technology to improve water efficiency, in products such as smart meters and intelligent monitoring equipment.

Market Review

February was a positive month for global stock markets with the MSCI World Index up +5.8%.  This was led by the US, with resilient economic data and relatively strong earnings reports supporting returns. In addition, both the US and the eurozone composite Purchasing Managers’ Index (PMI), which measures business confidence, rose over the month. Sector-wise, Consumer Discretionary, Technology, and Industrials were the best performing sectors while Utilities was weak, being the only sector to post a negative return.

Fund Review     

The Fund delivered strong performance over the month returning +8.1%, outperforming the broader index.

Resource Efficiency was the largest positive contributor to performance at a thematic level, with several holdings performing well including Trane, Trimble, Schneider Electric and Daifuku. Daifuku,  a global material handling systems manufacturer, reported results which showed a sharp increase in profitability, reassuring the market about its ability to meet full-year guidance.

The Environmental Services theme also performed well.  The largest positive contributor in the theme was Advanced Drainage Systems (ADS), a leading provider of stormwater management systems in the US. ADS reported strong quarterly results driven by demand in the infrastructure and residential industries and gave a positive outlook for 2024.

Further positive contributions came from the Health and Water Management themes. Within Health, the top performer was Icon, a clinical research organisation. The company delivered strong results and confirmed its guidance, as well as making more positive comments regarding its market environment than in January implying upside to guidance.

Outlook

Following the fall in inflation, sentiment in global equities is more positive with markets expecting that the central bank tightening phase is nearing its end.  This environment should be more supportive for the generally smaller and more growth-orientated impact stocks we invest in.  Our faith in the sustainability-led growth drivers and competitive advantages of the companies themselves is as strong as ever.

What does it mean to be a B-Corp?

Laura Grenier (Director of Operations)

I had only recently joined WHEB in 2015 when George Latham (Managing Partner) asked me if I knew what it meant to be a B Corp. I didn’t! But soon afterwards I embarked on the journey to certification, and in 2016 WHEB joined the cohort of founding B Corps in the UK.

Roll the clock forward to 2024 and there are now more than 1,500 B Corps in the UK, and over 6,000 worldwide in more than 80 countries spanning 150 industries. We are now in the company of many well-known brands and there are even  B Corp aisles in the UK supermarket chain Waitrose, where you can add positive impact to your weekly shop!

So, what does it mean to be a B Corp?

Primarily, a B Corp has to legally commit (by changing its constitutional documents), to be accountable to all stakeholders, not just its shareholders. Just as important as the legal framework, is the assessment. This is an intensive process that ensures that key stakeholders are taken into account in decision-making and that processes and performance is verified to meet high standards of social and environmental performance, transparency, and accountability. Focusing on ‘five pillars’ this requires consideration of the impact of the firm’s activities vis-à-vis Governance, Workers, Customers, Environment, and Community. During the certification process, we realised that this approach to doing business was very much aligned with WHEB’s own mission “To advance sustainability and create prosperity through positive impact investments”.

The process of certification itself offered us the opportunity to consider how well we serve the interests of these stakeholders. As we were completing the initial assessment, we quickly realised where we had a gap or didn’t score so well, and could ask ourselves whether this was an opportunity to do things better? The answer was very often: ‘Yes’!

Approaching the certification with this mindset has enabled us to embrace the challenge and actively seek improvements in the way our business interacts with all of our stakeholders. Our score increased accordingly; in 2016 we registered a score of 106.6, in 2018 we achieved 125.4 and our current impact score is 139. The B Lab assessment is, in our view, a really useful framework for continuous improvement.

Being part of the B Corp community has many other benefits including valuable opportunities to knowledge share and network with like-minded businesses and their teams with a common aligned goal to address society’s most critical challenges, from different sectors, businesses, and countries. We also try to ensure our own procurement is focused on other B Corps wherever possible.

As we set off on another recertification cycle, we are excited to continue on this journey with the B Corp community. We look forward to making further improvements to our score and being at the vanguard of the movement to transform the global economy to benefit all people, communities, and the planet.