The Space Race and Sustainability

VIDEO: Aegon Sustainable Global Equity fund manager Malcolm McPartlin talks ESG and opportunities in the space race 

Holly Black 17 August, 2021 | 10:51AM
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Holly Black: Welcome to Morningstar. I'm Holly Black. With me is Malcolm McPartlin, he is manager of the Aegon Sustainable Global Equity Fund.

Hello. 

Malcolm McPartlin: Hi. 

Black: So, Malcolm, do you want to tell us what the fund does? 

McPartlin: Yeah, sure. So our mission is to invest in sustainable growth companies that are making a positive impact on the world, either the environment or society. Fundamentally, we believe that sustainability is a source of alpha. We think the sustainable theme is huge. There's a societal shift underway, once in a generation, once in a century shift in terms of how we manage our economies, manage society. That shifts being driven by consumers demanding change, governments forcing change, and corporates adapting to change. And we believe there's going to be material winners and material losers in the shift. Our mission is to invest in those winners. And that's really the sort of crux what we're doing. And the portfolio is a high concentration, portfolio investing in companies that have a strong sustainable impact and strong growth characteristics. And that's what we're doing in a nutshell.

Black: So you talked about the shift there, and there is sort of an increasing focus, it seems on sustainability. Does that mean it's easier to find good companies to invest in then perhaps it was a few years ago? 

McPartlin: I think there's certainly more companies that meet our criteria. But we have quite a distinct criteria when we are looking for companies. When we look at sustainable companies, we're looking for three dimensions, we're looking at their products, their practices, and we're looking for improvement. And that's a big part of the process. So we're looking for companies that have products that are really making a material difference to sustainability, companies that are enabling sustainable change, or companies that are benefiting from sustainable change. A lot of market participants focus more on the company's practices. So for example, their own environmental footprint, and their own governance. We think the most powerful impact a company can have on the world is through what they actually do, what they sell. And I think the opportunity set there is a bit narrower, but there's certainly many more companies coming along that fit the criteria.

Black: Now, one theme you've been looking at recently, which you might not automatically associate with sustainability is the space race. Why have you found yourself drawn to this?

McPartlin: Well, I wrote a little blog about space in the context of some of the space tourism and there's a bit of a sustainable backlash, I guess, rightly so. You know, it seemed a bit like (egotism). But there's some really interesting things going on in space. So, and some of these developments are going to have a real paradigm shift in terms of some sustainability impact in the world. And for context. So the new space race, space tech has been driven by a material fall in the cost of putting payload into space, putting satellites into orbit, it's fallen by about 100 times over the last 10 years. And that's been driven by SpaceX, innovative use of reusable rockets, and miniaturization of technology. And what we're going to see is, I guess, there's kind of three key drivers, there's increased connectivity, increased observability, and increased data usage. And some of these early stage capabilities will have a material impact on sustainable issues.

So for example, about 3 billion to 4 billion people in the world don't have internet access. Most of these people are in the developing world, it's just not feasible to get traditional broadband or satellite coverage. New space tech can enable these people to be connected, enable to improve education, improve commerce, improve trade, and ultimately improve prosperity in some of these developing economies. We can use a lot of the data generated from space observability to really improve things like renewable energy generation, figuring out the exact places we should be building solar farms, wind generation, enable power utilities being able to optimise their mix. We can improve agricultural harvests with some of the data, we can improve disaster management, identify wildfires early. So all of this stuff is sort of early stage evolving, but really interesting space, excuse a pun.

Black: Malcolm we'll end on that bombshell. Thank you for time. From Morningstar I'm Holly Black.

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Holly Black  is Senior Editor, Morningstar.co.uk