Past performance does not predict future returns. You may get back less than you originally invested. Reference to specific securities is not intended as a recommendation to purchase or sell any investment.
Our Sustainable Future strategies have for 24 years sought to deliver strong financial returns by investing in companies that also drive positive environmental and social change. In a world of ecological strain, shifting demographics, digital threats, and global interconnectedness, the role of investment must go beyond capital allocation – it can become a force for transformation. This article summarises six interconnected themes from our Sustainable Investment team, each demonstrating how sustainable investment helps to solve the challenges we face while enhancing long-term shareholder value.
1. Leaving our planet in a good state for future generations
The environmental pressures we face are urgent and unprecedented. According to the Stockholm Resilience Centre, six out of nine critical planetary boundaries – including those relating to climate change, biosphere integrity, and nitrogen/phosphorus flows – have already been breached. This places us beyond the safe operating space that has historically enabled human civilisation to thrive.
While this picture may seem bleak, it also offers a clear call to action – and a roadmap for hope. The recovery of the ozone layer, following the global ban of CFCs under the Montreal Protocol, proves what is possible when science, policy, and business align.
Sustainable investment finds and invests early in those companies that are providing the solutions. Companies like Trane Technologies and TopBuild are improving building energy efficiency through smart heating, ventilation, and air conditioning systems and insulation. Trex uses recycled plastic and waste wood in decking products, turning waste into long-life materials. Others, like Waters Corporation and Oxford Instruments, help detect and monitor pollutants such as PFAS and microplastics – ensuring cleaner, safer ecosystems.
By investing in companies that lead on climate, circularity, and clean water, we are not only supporting environmental restoration but backing those best placed for long-term success in a resource-constrained world.
To read the full article, please click here.
2. Improving health and quality of life
An ageing global population is placing increasing strain on healthcare systems, while lifestyle-related illnesses continue to rise. We believe sustainable investment plays an important role in finding and backing the innovators in healthcare which are undertaking research & development that leads to genuine breakthrough treatments, early diagnosis, as well as making it easier to live a healthy lifestyle.
We focus on three critical areas. First, early diagnosis and screening, where companies like Roche and Agilent are enabling more accurate and cost-effective detection of disease. Early intervention often means more successful treatment and lower costs over time. Second, we invest in medical innovation, particularly in the shift from small-molecule to biologics-based treatments, which are more effective but require complex delivery systems. West Pharma supports this transformation with cutting-edge drug delivery technologies. Companies like Edwards Lifesciences, which offers heart valve replacements via keyhole surgery, and Intuitive Surgical, the leader in robotic-assisted surgery, exemplify how innovation improves patient outcomes while reducing the healthcare burden.
Third, we target companies promoting healthier lifestyles. Gym Group, for example, has removed one of the biggest barriers to exercise – cost – by providing affordable access to gyms and classes. We also back telemedicine and drug compliance technologies that make healthcare more accessible and efficient.
Sustainable investors can also help shape the behaviour of healthcare companies. Twenty years ago, we joined the “Access to Medicines” initiative, which encouraged pharmaceutical companies to offer affordable drugs in low-income countries. This shift has opened up profitable new markets while improving global health equity.
To read the full article, please click here.
3. Driving higher standards in global supply chains
Today’s globalised supply chains have delivered enormous economic benefits – but they’ve also introduced serious risks. These range from poor labour practices and environmental degradation to supply disruptions caused by geopolitical shocks and natural disasters. Responsible oversight is essential, and sustainable investors are uniquely positioned to demand higher standards.
Our role is to challenge companies to demonstrate robust sourcing policies, clear auditing mechanisms, and commitment to remediation when problems arise. Our engagements include challenging Puma over concerns about Xinjiang-sourced cotton. In response, the company initiated independent lab testing to ensure traceability and avoid human rights abuses.
We’ve also worked with Smurfit Westrock, where legacy issues in Colombia involving indigenous land rights were raised. With fellow investors and external experts, we supported dialogue and welcomed the move to independent mediation. In another case, we pushed Trex to verify the sustainability of its wood fibre inputs, which resulted in confirmation that 98% came from certified sources, including reclaimed orchard wood. DFS, the UK’s largest sofa retailer, has made strong progress on wood and leather sourcing, now targeting 100% certified wood by 2025.
These examples show how sustainable investors, working with NGOs and consumer groups, can raise standards in complex global supply chains. By promoting transparency and accountability, they help address environmental and social risks while backing companies that lead on sustainability – often the ones best positioned for long-term success.
To read the full article, please click here.
4. Improving resilience to natural events
As climate change makes extreme weather events more frequent and severe, the resilience of our infrastructure becomes a matter of national and economic security. Droughts, floods, wildfires and rising sea levels are now disrupting everything from agriculture to urban infrastructure, and investments are urgently needed to mitigate these risks.
We target companies building resilience into physical systems. Advanced Drainage Systems and Genuit PLC are modernising stormwater management by replacing traditional concrete pipes with recycled plastic piping, helping prevent flash floods and encouraging natural water absorption. Similarly, National Grid and South Eastern Power Networks are overhauling energy infrastructure to withstand increasing climate volatility.
Water infrastructure is also under strain. By investing in bonds issued by water utilities like Severn Trent, we support critical upgrades without extracting shareholder dividends, ensuring that funds are reinvested for public benefit. Veralto and other testing companies offer vital technology to monitor invisible pollutants such as nitrates, phosphates, and PFAS – known as “forever chemicals.”
Resilience also applies to how we design our built environment. Companies like Clarion Housing Group are improving air quality, climate control, and affordable housing standards, particularly in urban areas most vulnerable to extreme heat and flooding.
To read the full article, please click here.
5. Strengthening corporate governance
Good governance might not grab headlines, but we believe it is one of the most reliable predictors of long-term investment performance. When governance fails, the consequences can be catastrophic – think of the collapses of Enron and Wirecard. Strong governance, on the other hand, fosters ethical behaviour, improves risk management, and aligns management incentives with shareholder value.
We integrate governance analysis into our proprietary Sustainability Matrix, scoring firms on how they manage material environmental, social, and governance (ESG) risks. Our analysis of 319 companies over a decade revealed that those with the best governance scores returned 31% above their benchmarks, while those with poor scores underperformed by as much as 72%.
Our active ownership strategy includes voting on all eligible investee companies. In 2024, we voted against management or abstained in 68% of cases, challenging issues such as excessive executive pay, entrenched board members, and lack of board diversity.
By pushing for higher standards, we aim to improve both company performance and investor outcomes.
To read the full article, please click here.
6. Keeping ourselves safe in a digital world
In today’s hyper-connected world, cyberattacks pose one of the greatest threats to businesses, governments, and individuals. From ransomware to data theft, digital breaches are now routine – and costly. The average cost of a breach in 2024 was estimated by IBM to be $4.9 million, with some incidents, like that at M&S, leading to estimated losses of £300 million.
Sustainable investment in cybersecurity addresses two fronts. First, we support firms offering advanced protection tools. Palo Alto Networks has evolved from a firewall company into a comprehensive cloud security platform, while Visa uses cutting-edge fraud prevention to safeguard $15 trillion in annual transactions at a fraud rate of just 0.07%. Softcat provides cybersecurity solutions to UK small businesses, many of which lack internal IT departments.
Second, we engage directly with all companies in our portfolios to ensure robust governance around cybersecurity. This includes board-level oversight, dedicated cybersecurity teams, employee training, and timely disclosure of breaches. We also worked with groups such as the PRI to push for more transparency – an effort now reflected in the SEC’s new rule mandating that material breaches be disclosed within four days.
To read the full article, please click here.
Conclusion
Sustainable investment is about solving problems while generating long-term value. From rebuilding our planet’s ecological stability to transforming global health, fixing broken supply chains, and securing the digital economy, these interconnected themes demonstrate why a sustainability lens is vital for responsible capital allocation.
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KEY RISKS
Past performance does not predict future returns. You may get back less than you originally invested.
We recommend this fund is held long term (minimum period of 5 years). We recommend that you hold this fund as part of a diversified portfolio of investments.
The Funds managed by the Sustainable Investment team:
- Are expected to conform to our social and environmental criteria.
- May hold overseas investments that may carry a higher currency risk. They are valued by reference to their local currency which may move up or down when compared to the currency of a Fund.
- May invest in smaller companies and may invest a small proportion (less than 10%) of the Fund in unlisted securities. There may be liquidity constraints in these securities from time to time, i.e. in certain circumstances, the fund may not be able to sell a position for full value or at all in the short term. This may affect performance and could cause the fund to defer or suspend redemptions of its shares. May invest in companies listed on the Alternative Investment Market (AIM) which is primarily for emerging or smaller companies. The rules are less demanding than those of the official List of the London Stock Exchange and therefore companies listed on AIM may carry a greater risk than a company with a full listing.
- May encounter liquidity constraints from time to time. The spread between the price you buy and sell shares will reflect the less liquid nature of the underlying holdings.
- May invest in companies predominantly in a single country which maybe subject to greater political, social and economic risks which could result in greater volatility than investments in more broadly diversified funds.
- Outside of normal conditions, may hold higher levels of cash which may be deposited with several credit counterparties (e.g. international banks). A credit risk arises should one or more of these counterparties be unable to return the deposited cash.
The risks detailed above are reflective of the full range of Funds managed by the Sustainable Investment team and not all of the risks listed are applicable to each individual Fund. For the risks associated with an individual Fund, please refer to its Key Investor Information Document (KIID)/PRIIP KID.
The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.
DISCLAIMER
This material is issued by Liontrust Investment Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518552) to undertake regulated investment business.
It should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets.
This information and analysis is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content, no representation or warranty is given, whether express or implied, by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.
This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID) and/or PRIIP/KID, which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.com or direct from Liontrust. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.
