Nordea’s Global Social Empowerment Strategy
ESG considerations continue to gain traction globally – with investors, politicians, regulators and companies increasingly acknowledging the urgent need for change. In recent years, we’ve seen a bright spotlight on the environmental aspects of ESG investment. Now, in part due to Coronavirus, that light is shining on the social dimensions of ESG, which include things like a company’s treatment of its employees and the workers involved in its sup-ply chain. The ‘S’ factor is not just about limiting harm, but is also about adding social benefits—like job opportunities or access to healthcare. After witnessing the power of capital allocation in relation to environmental considerations, we believe innovative solutions will be just as potent on the social side. Below, we outline five stocks leading the way in advancing the social agenda.
LEG
LEG is a pure play on the German affordable residential market, where there is a shortage of affordable housing and demand is far higher than supply. LEG, which has a 10% share of the German affordable housing market, offers rents at a 30% discount to the average, with lower rent inflation. While the company is generating relatively low returns, it is a very stable business and offers an attractive risk/reward.
Safaricom
The largest telecommunications provider in Kenya, Safaricom is one of the most profitable companies in the East and Central Africa region. Smartphones serve as the basic medium to connect to the internet for Kenyans, as just 12% of people have access to fixed broadband. In addition, less than 40% of the population have a bank account, but Safaricom’s mobile payment platform Mpesa significantly expands financial inclusion by enabling transactions via this system.
Ping An Good Doctor
Launched in 2015, Ping An Good Doctor is already China’s largest online healthcare provider, with 300 million registered users – approximately 21.5% of China’s population. Patients benefit from 24/7 online medical services, a health e-commerce mall, as well as consumer healthcare services. These solutions are backed by an in-house medical team, facilitated by cutting edge AI-technology. More than half a billion people live in rural areas in China, where there are fewer medical facilities and resources available. Good Doctor helps to alleviate some of the pressure on the system, while boosting healthcare access to hard-to-reach parts of the country.
Xero
This tech company from New Zealand offers an online accounting software to help small businesses manage their books thereby saving time and costs, and improving productivity . With SMEs, the use of technology solutions to improve business processes is low compared to large enterprises. SMEs are a vital element of the global economy, with the UN estimating about 50% of jobs are provided by these businesses.
Bank Rakyat
The second-largest bank in Indonesia, Bank Rakyat is one of the most successful microfinance institutions in the world. Many people in Indonesia do not have access to a bank account, so Bank Rakyat’s small loans are crucial in enabling families to establish and expand their own small businesses. Bank Rakyat can provide loans at reasonable rates, as its non-performing loan ratio is actually very small compared to traditional bank lending. This is positive for the company and investors, as well as society at large
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