Safety - a critical factor supporting social progress

  • 17 November 2022 (5 min read)

Key points: 

  • Safety is one of the key fundamental human needs for basic wellbeing
  • Global instability and health crises exacerbate effects of existing inequalities
  • Responsible investors can allocate capital to pioneering companies seeking to close the gap

During a sustained turbulent and unpredictable period for markets, it’s tempting to focus one’s attention solely on headline-grabbing critical global crises and how they can be addressed. However, it’s equally as important to consider the humanitarian aspect, and the similarly critical effect that resource and wealth inequality has on all parts of our global community. Many of us are fortunate to take certain elements of our safety for granted; this is not the case for millions of people worldwide with limited or no access to safe, basic living and wellbeing requirements.1 The effects of the COVID-19 pandemic have also been seen to wreak an additional significant long-term detrimental effect on mental health and anxiety.2  Continued geopolitical volatility and financial uncertainty is only likely to widen the already significant divide, as millions more cross the line into poverty amidst the backdrop of a severe cost of living crisis.3

The American Psychologist Abraham Maslow established a hierarchy of basic physiological and psychological needs which need to be obtained by all people and which drive their motivation. Personal safety and security - including health, financial, and avoidance of injury – are considered to be the second most fundamental and critical requirement after basic sustenance. Indeed, the United Nations Sustainable Development Goals (SDGs), a recognised global framework for positive action, include SDG 3 which recognises the importance of good health and well-being to the international population, as well as SDG 16 which promotes peace, justice and strong institutions.4

How then can we, as asset allocators, do our part to help actualise this for the people around the world who need it most, and make the basic human right to safety and security more accessible to all? Read on to discover a selection of companies which, together, form a complementary investible sub-theme of safety as a key pillar driving effective social progress.

More than one billion workers are exposed to hazardous environments per year, often with severely detrimental, yet preventable, effects on their health.5  MSA Safety is a developer and manufacturer of sophisticated safety equipment which uses a combination of electronics, mechanical systems and advanced materials to protect workers in hazardous situations. Daily, 25-35 million workers use an MSA product; the company is a market leader across product lines, including breathing and protective apparatus for firefighters, as well as industrial and construction workers’ head protection. It also has a pipeline of more advanced products which will utilise cloud technology. Worker safety is mission critical, and its main business aligns soundly with UN SDG 8 - promoting ‘decent’ work for all.

Also seeking to protect the physical safety of people is Gentex, a company specialising in safety features for the automotive industry including innovations such as automatic- and non-automatic-dimming rear view mirrors, dimmable glass, and fire protection products to help reduce accidents, which cause approximately 1.3 million preventable deaths each year.6  Auto-dimming mirror products help to eliminate dangerous glare and increase the visibility of drivers, and Gentex is the world’s leading provider of these as well as operating additional business strands for the aviation and fire protection industries.

Feeling safe and secure at home is a fundamental requirement for physical and mental wellbeing, and one which we can all relate to. Alarm.com is an American company which develops new ways to achieve this via cloud-based solutions for ‘smart’ residential and commercial properties. The ability to remotely monitor hazards such as gas, water or fire related incidents is further complemented by the ability to control energy saving modes in empty properties without manual intervention.

The development of new technologies, while generally positive, can also create new channels for risk. That’s why cybersecurity firms such as GB Group are vital to ensure that not only homes but all aspects of life which contribute to wellbeing but are vulnerable to cyber-attack such as financial, identity, travel, and location services are protected. The British company provides digital data risk management tools to around 200,000 organisations globally, due in part to the strength of its consistent database built with global partners which gives GB Group the power and capabilities needed to verify 4.4 billion people across the world. It also commands strong revenue from the financial services sector, which must comply with stringent regulatory controls around data security.

Preventing infection is crucial to developing the health of communities, especially those with limited access to quality or affordable healthcare.  Eurofins Scientific is an international, analytical testing group with over 900 companies operating across 50 countries. It contributes materially to SDG 3 through its comprehensive food, water, environmental and product quality testing capabilities which help promote safety and wellbeing across the globe.

Another aspect of clinical safety is promoted by SKAN, which supports SDG 3 by providing isolators and ‘cleanroom’ devices which allow the sterile development of advanced, injectable drugs and biopharmaceutical products. These include existing and developing high-value cancer drugs, cell and gene therapy, hormones and vaccines; the increased efficacy of these depend upon delivery methods which bypass human body defences, thus requiring aseptic and stringently controlled equipment to be safe and successful. These developing drugs and therapies such as biologics, which differ from traditional drugs in their manufacture within living systems and often utilise DNA technology, offer the potential to prevent and treat a wider range of diseases.7

Godrej Consumer Products is a manufacturer which helps to provide another line of defence in the pursuit of global wellbeing through its large range of personal and household care products. Crucially, one of its most important business lines are insecticides and nets which help to control mosquitos and prevent infection from vector-borne diseases such as malaria, dengue fever, chikungunya, yellow fever and Zika. The prevalence of these diseases in tropical and sub-tropical areas causes a disproportional effect on some of the poorest populations globally - 627,000 people died of malaria in 2020 alone.8 Godrej is helping to combat this by providing mosquito repellents and household insecticides to some of the worst-afflicted regions, with India and Indonesia collectively accounting for 75% of sales in those products. The company also develops and carries out vector-borne disease prevention programmes to help further address these preventable tragedies.

Preventing the spread of disease and pestilence is a battle also being fought by pest control and hygiene company Rentokil Initial. The World Health Organisation (WHO) accounts vector-borne diseases for more than 17% of all infectious diseases globally and has noted how many of these are preventable through protective measures.9 Rentokil Initial is a global leader in pest control and hygiene services, and achieves 85% of its revenues through both main businesses. These are set to become even more indispensable due to the effects of urban sprawl, increasing numbers of people living in close proximity, and climate change. The company also continues to demonstrate a strong commitment to provide access to quality hygiene solutions to new markets.

Ensuring the wellbeing and safety of a global population with diverse needs and inequal resource division is a multi-faceted, nuanced, sensitive and complex issue that we, as investors, have a responsibility to solve. The above companies are by no means an exhaustive list of the opportunities available to us to achieve this but can help to illustrate why investing in social progress - and specifically the safety of our global community, regardless of location or wealth – has the potential to be a powerful force for good and a key investment in the future of our planet.

Companies shown are for illustrative purposes only as of 16/11/2022. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalised recommendation to buy or sell securities.

Risks

No assurance can be given that our equity strategies will be successful. Investors can lose some or all of their capital invested. Our strategies are subject to risks including, but not limited to: equity; emerging markets; global investments; investments in small and micro capitalisation universe; investments in specific sectors or asset classes specific risks, liquidity risk, credit risk, counterparty risk, legal risk, valuation risk, operational risk and risks related to the underlying assets.

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