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Higher-quality companies
that aim to grow sustainably
should outperform over
the long term due to their
robust cash flows, focus
on improving shareholder
returns and increasing
franchise value
BMO Responsible Global Equity’s
Jamie Jenkins names three stocks
set to benefit from the increased
investment focus on contributing
to a more sustainable global
economy
Keeping
it up
regularly and deliver better risk-
adjusted returns. We believe that
higher-quality companies that aim to
grow sustainably should outperform
over the long term due to their robust
cash flows, focus on improving
shareholder returns and increasing
franchise value. These companies
should also be more resilient in the
face of persistent economic and
geopolitical volatility, due to their
long-term strategic horizons.
T
here is a growing recognition
that looking at the world
through a sustainable lens
can lead to better financial outcomes
for investors. In our experience,
companies that have a proactive
approach to managing environmental,
social and governance issues, in terms
of risks and opportunities, tend to
achieve their strategic targets more
customers reduce water
losses, optimise water-
system assets, address
We live on a planet
scarcity issues and help to
where we have too much prevent and/or quickly re-
water where we do not
spond to sewer and storm
want it and not enough
water overflows. Recent
where it is required. Xy-
acquisitions have focused
lem is a US-based global
on smart technologies that
water technology group
will be central to driving
that provides products
efficiency and reducing
and services to help its
water leakage.
TRUSTNET
HDFC Bank is India’s
second-largest private
bank. Demographics
should continue to drive
Indian GDP growth: more
than 45 per cent of the
population is younger
than 25, a subset that
should enter the banking
system as they become
workers and earners.
HDFC is using its status
as a relative newcomer to
become the most tech-
nology-focused lender in
India and, unlike many of
its competitors, has lit-
tle balance-sheet stress.
An estimated unbanked
population of 200 million
should allow HDFC to ac-
celerate access to finance.
tions necessitate higher
yields. Kubota dominates
Kubota is one of the
Asian rice farming and has
world’s largest agricul-
a strong franchise in small-
tural and small-scale con- scale tractors, mini-con-
struction equipment man- struction equipment and
ufacturers. Based in Japan, recreational vehicles in the
it represents a play on the
US. It recently used weak-
mechanisation of farming
ness in the arable cycle to
in emerging markets where broaden its developed mar-
economic expansion and
ket offering to larger-scale
ballooning urban popula-
tractors and equipment.
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