Baillie Gifford, a UK-based independent investment management firm, manages on behalf of its clients the largest investment in Novozymes outside of the Novo Group. In 2017, it launched the Positive Change Fund, which aims to contribute to a more sustainable world for future generations while making attractive long-term returns for investors.
We spoke with Lee Qian, Investment Manager of Baillie Gifford's Positive Change Fund, about the importance of sustainable business to the investment community.
Why have you chosen to invest in Novozymes?
We believe that Novozymes has good long-term growth opportunities ahead, because it provides products that are useful for society. Its business is built on bringing innovative products to market and strong customer engagement. From selling enzymesProteins that act as catalysts, helping to convert one substance into another. to laundry detergent manufacturers that enable low-temperature wash and energy savings to partnering with Monsanto to scale the reach of its microbialRelating to or caused by microorganisms. solutions which can improve agricultural yields, Novozymes takes a proactive approach to solving global sustainability challenges.
What was the motivation behind creating the Positive Change Fund?
The Positive Change Fund aims to contribute toward a sustainable and inclusive future. We believe that businesses and innovations have tremendous potential to improve our society and planet. We further believe that purpose complements profits over the long term. Companies that are solving social and environmental challenges are likely to benefit from growing demand for their products and services, more loyal customers and more motivated employees. By allocating capital toward those companies, our clients can contribute toward a better future at the same time as receiving attractive returns on their investments.
How do you analyze positive change?
We consider three factors when analyzing positive change. The first factor is intent: we look for companies that have a strong vision and clear leadership commitment to solve global sustainability challenges. Secondly, we look at product impact, which assesses how a given company’s products solve social or environmental challenges. And finally, we look at business practices, specifically how a company treats its wider stakeholder base, beyond its shareholders.
What does this mean for Novozymes?
Sustainable investing is moving away from the traditional notion of filtering out firms that are perceived to cause harm. The idea for the Positive Change Fund came from a simple question – if we want to invest for the best of society, how can we do that? We believe funds like these are the future of investing. Companies such as Novozymes, which enable their customers to operate more efficiently and reduce their carbon footprint, are well placed to take advantage of this trend.