Liontrust 20 Years of Sustainable Investing 03.2021 - Flipbook - Page 9
Few would argue the car defined the 20th century in many parts
of the world, but as we move through the third decade of the 21st,
we are at a tipping point in terms of humanity’s relationship with the
automobile. Once seen by teenagers as the ultimate passport to
freedom, many now have serious issues with the emissions profile of
the car industry and congestion in cities has also put a dent in the
‘fun and convenient’ image of driving.
Highlighting how the team’s thinking on autos has changed over
the years, they removed Improving the fuel efficiency of cars during
a review of their themes in 2018. This has long been a key tenet
of sustainable investing but they are now keen not to distinguish
cars from other forms of transportation, especially with the advent of
autonomous vehicle fleets. As a result, the team moved the theme into
Making transport more efficient. They also changed the Improving
auto safety theme to Improving transport safety in 2020 as they do
not assume cars will remain dominant, particularly with safe, efficient
mass transport key to reducing emissions.
2001: Right back in 2001, the team started the portfolios with a
refusal to invest in companies exposed to petrol or diesel engines,
believing the economics of a sector that basically emits poison
into the air we all breathe were no longer viable. We finally saw
regulation shift in this direction in 2009, with the EU introducing a
130g/km C02 target for new passenger cars, dropping to 95g/
km by 2021.
2009: Beyond emissions, the autos industry has also had to face the
problem that cars are fundamentally dangerous: while deaths caused
by road accidents in the UK have been falling since the 1960s,
thousands of people still die every year. This has required more
and more safety measures and the team identified an opportunity
in French company Michelin, a world leader in the development of
energy-efficient and safer tyres, in 2009. Again, this was ahead of
the curve and, in 2012, the EU Commission moved to require tyre
manufacturers to comply with labelling regulation to unify and clarify
security requirements and efficiency.
2012: Better tyres was one of a raft of measures to improve safety
but the initial focus remained very much on the people within the car
– and yet data on accidents showed half of those dying were either
pedestrians or cyclists. The team saw this as a problem that needed
solving and identified stocks innovating in areas such as smart sensors
and features for automated driving, including autonomous emergency
braking (AEB). Once more, regulations changed to embrace these
changes with Europe’s New Car Assessment Programme (NCAP)
including autonomous emergency braking as part of the requirements
for its highest rankings from 2016.
Today: The team is again seeking ways to get ahead of the regulatory
and societal curves in this space, with driverless cars no longer the
stuff of science fiction. Emissions controls have been an issue for
decades but the team believes something more fundamental is at
work: the problem is not should we buy a diesel, petrol, hybrid or
full electric but rather whether to own a car at all. This is driving
the notion of ‘peak car’ and analysts are missing what the public is
increasingly realising – driving is no longer always fun or convenient.
The transport sector is shifting focus from traditional internal combustion
engine and powertrain cars to auto safety, multi-modal transport and
trains. For our own welfare and the planet’s, we need to get away
from the model of single ownership cars in clogged streets and that
continues to create opportunities for companies in electric transport.
EU introduces a
target for new passenger cars,
dropping to 95g/km by 2021.
Liontrust: 20 Years of Sustainable Investing - 9