After the hottest summer on record, sustainable investments are gradually making headway, addressing climate change as one of today’s most pressing issues.
EDM Global Equity Impact, classified as an Article 8 plus fund, considers environmental, social, and sustainability factors in its investment processes.
We select companies that are spearheading the transition toward a low-carbon economy. We invest in companies that promote mitigating and adapting to climate change, among other issues, while meeting our profitability criteria.
Climate change is exacerbating both water scarcity and the risk of floods and droughts, as rising temperatures alter precipitation patterns and the entire water cycle.
One of the fund’s main holdings, Veolia Environnement, is a purpose-driven company that leads the environmental services sector and is a global standard-bearer in the optimised management of water, waste, and energy resources, which has a positive impact on all of its stakeholders.
Veolia currently operates more than 8,500 water and wastewater plants worldwide. It offers services dedicated specifically to the operation and maintenance of water plants, as well as wastewater treatment and solutions for industrial effluents.
The company develops innovative solutions for the purification of water and its entire cycle, which involves the treatment of surface or subterranean water to obtain quality drinking water, thus promoting its reuse as an eco-friendly solution and a strategy to conserve and use water more efficiently, while preserving public health and water resources.
Assuming that the demand for water will exceed available resources by 40% in 2030, it is crucial to focus on the efficient management of this increasingly scarce and essential natural resource.
Veolia is determined to become a benchmark in the global ecological transformation. The share has performed well this year, accumulating a return of +13%, and trading at very attractive multiples: 12.5x 2024 P/E and 7.5% FCF yield. It is also well poised to continue obtaining strong revenue growth, regardless of the macroeconomic context.
Another company worth highlighting for its 50+ years of positive social impact is ICF International, a global provider of technology and advisory services, listed on the tech-heavy Nasdaq.
ICF combines expertise and cutting-edge technology to help clients resolve complex challenges. Given its focus on combatting climate change and developing various social projects, 85% of its revenue stems from areas that have a positive impact on society, including energy efficiency, public health and social programmes, IT modernisation, and natural disaster management.
It also plays a pivotal role in infrastructure and climate, which we believe is not reflected in its share price.
The share has appreciated +22% this year and trades at 17x 2024 P/E, consistent with its historical average.
EDM Global Equity Impact integrates sustainability criteria into its selection of quality companies, those with the strongest fundamentals that are well positioned to grow and generate value for shareholders.
In our view, current valuations offer an excellent opportunity to invest in a fund like EDM Global Equity Impact, which is comprised exclusively of companies that are industry leaders, with competitive advantages, healthy balance sheets, strong cash flows, and successful management teams, all of which meet our strict sustainability criteria.
The portfolio trades at a very attractive 21x 2024 P/E, with an estimated annual earnings growth of +13.7% for the next five years. We are confident that the application of our ESG criteria will add value to the fund’s profitability and satisfy the expectations of a long-term sustainable investment.
Mariona Selva,
Fund Manager & Head of ESG
