Following a year of unprecedented change, we undertook our annual review of themes in the context of a new ‘normal’ to ensure they remain fit for purpose, consistent with new science, data and thinking.
One theme our team reaffirmed was connecting people. We’ve had exposure to this theme over many years, but this year, there was little doubt of the importance of staying connected – reaffirmed by the pandemic and reinforced our conviction.
Connecting people relates both to the technological revolution and the planetary crisis. Technological progress can spur innovation and allow new business models, new ways of doing things, which have the potential to improve the efficiency of the overall economy – vital if we are to move to a more sustainable economy.
Remote working was a trend that was already taking place, because it reduces the need for business travel and allows more flexible working, and the pandemic accelerated this trend. Similarly there are many ways of forming human connections, as the use of Zoom calls over lockdown has shown.
Companies whose products and services enable safe, affordable access to communications can help narrow the digital divide, improve quality of life and maximise environmental efficiencies.
The challenge comes in identifying investible companies. Some may well fit the theme, for instance, fixed or mobile network operators largely score well in terms of managing ESG issues well, however when we assess business fundamentals and valuation, we find fewer that fit our criteria. Currently, we find infrastructure asset owners and innovative communications technology companies as better ways to play this theme.
One company in the funds is Helios Towers, a telecom infrastructure company that enables mobile operators to efficiently roll out and run their networks to provide wireless voice and data services in sub-Saharan Africa, where mobile penetration is still low. Here, demand for telecom services is increasing as younger populations increasingly demand mobile internet access to connect to digital services. Because Helios is an independent tower company, mobile operators benefit from sharing the company’s towers, consolidating power requirements and maintenance journeys.
It’s also a theme where engagement to encourage better impact metrics is taking effect; one company in our portfolio can now demonstrate through academic research that it’s products and services reduce 37 megatons of CO2 per year, comparable to the amount of carbon that 3.5bn trees can bind in one year.