The city of Jackson is shaping up to be Tennessee’s cryptocurrency hub
the-city-of-jackson-is-shaping-up-to-be-tennessees-cryptocurrency-hub

The city of Jackson is shaping up to be Tennessee’s cryptocurrency hub. In the coming weeks, Mayor Scott Conger will form a blockchain task force to explore how to adapt the novel asset class.

Following Miami’s example, Jackson mayor Scott Conger plans to integrate cryptocurrencies into his city

Conger told that his plan is to encourage the use of cryptocurrency by incorporating it into the city:

“The plans are very simple right now. We want to encourage the use of cryptocurrency. I want to get people with a much greater knowledge of blockchain, than myself, in the room to discuss how we can incorporate cryptocurrency into our city.”

In 2020, Tennessee state representative Dennis Powers introduced a bill that calls for an in-depth study of blockchain technology, focusing on its use cases in banking, payments, lending, and other industries.

Jackson is the eighth largest city in Tennessee, but the rest of the state might be tempted to follow its lead due to exploding cryptocurrency adoption. Last week, the Bobby Hotel, one of the most popular hotels in Nashville, added cryptocurrency payments, a first for the state capital.

Conger says that he is taking pointers from Miami Mayor Francis Suarez, who is determined to refashion the South Florida city as the world’s biggest Bitcoin hub.

In February, city commissioners voted to explore Suarez’s proposal to pay municipal employees in Bitcoin and invest a portion of the treasury into the cryptocurrency. Should they proceed with the audacious plan, Miami would easily become the most crypto-forward city in the U.S.

In a March interview, Suarez also mentioned that he wanted to turn Miami into a Bitcoin mining hub, offsetting China’s dominance in the industry. Meanwhile, crypto exchange FTX recently scored a deal to rename Miami Heat’s AmericanAirlines Arena to FTX Arena.

Spain Seeks Public Comments on Potential Cryptocurrency Regulations

Cryptocurrency regulations across different countries continue to be a hot topic, and Spain is the latest to join in. The nation’s watchdog has asked industry participants, investors, and consumers for their opinion, and they have until April 16th to respond.

Spain’s Regulator Looks for Crypto Legislation

According to a report from La Informacion, The National Securities Market Commission (CNMV), Spain’s watchdog overseeing the securities markets, has initiated the first steps of nationwide crypto regulations.

The process has started by sending emails to representatives of the cryptocurrency industry, investors, and customers. They have less than two weeks to prepare statements with their comments on the proposals and send them back to the agency.

The coverage outlined that the potential regulations could affect almost all areas of the cryptocurrency industry. However, the legislation could exempt some professional activities, assets that are exclusively used as means of payment, and non-fungible tokens (NFTs).

Interestingly, the US also hinted at new rules regarding NFTs recently, but they seemed significantly more strict. The Internal Revenue Service (IRS) may implement taxes on NFT purchases made with profits of digital assets, as CryptoPotatoreported recently.

Apart from the aforementioned potential regulations on crypto assets, Spain has also explored developing a central bank digital currency. The country’s central bank said in late 2020 that releasing a CBDC is among the priorities in the next three years.

Regulations in Other Countries

The exponential growth of the entire crypto space in the past year or so has caught the attention of global regulators. Consequently, numerous countries have started looking into inserting legislative frameworks.

Spain’s northern neighbor, France, called for a new and robust approach towards crypto regulations in February this year. The chairman of the nation’s financial regulatory body (AMF) believes that the current legal structures are insufficient when it comes down to new asset classes such as digital currencies.

Continuing north on the map and Britain’s Finance Minister, John Glen, urged the country to firstly focus on regulating stablecoins rather than the entire market, while the FCA has repeatedly issued warnings.

In some countries, such as South Korea, the implemented regulations have caused troubles for some of the firms operating within their borders. The East Asian nation introduced new AML legislation last month, and several cryptocurrency exchanges announced closing doors for their respective South Korean branches in response.

Coinbase Reports Record-Breaking Q1 With $1.8 Billion in Revenue Ahead of IPO

A week prior to its direct listing on NASDAQ, Coinbase has posted preliminary Q1 data indicating a massive increase in its userbase and revenue. The trading volume has increased by nearly 300%, the revenue is about $1.8 billion, and more than 11% of all crypto assets are stored on the platform.

Coinbase’s Record-Breaking Q1

The largest US-based cryptocurrency exchange published its Q1 results yesterday, showing a substantial growth in every area compared to previous quarters.

Starting with the monthly transacting users (MTUs) – the increase is roughly 117% since the last three months of 2020. At the time, the number of the company’s user base was about 2.8 million, and it has expanded to 6.1 million in Q1 2021.

Naturally, this has also impacted the revenue, which has reached $1.8 billion. For comparison, this means a near 10x surge from the Q1 last year when it was around $190 million.

According to the preliminary estimations for this year’s first quarter, the net profit should be between $730 million and $800 million.

The company attributed a large part of its quarterly increase to the ongoing bull cycle in the cryptocurrency market. As bitcoin and numerous altcoins have exploded multi-fold in value since October 2020, it has garnered the attention of retail investors.

11.3% of Crypto Assets Held on Coinbase

Perhaps what’s even more notable for the entire cryptocurrency industry is the billions of dollars worth of digital assets held on the exchange. The report highlighted that as of March 31st, there were $223 billion stored on Coinbase.

With the entire market capitalization worth just shy of $2 billion at the time, this means that 11.3% of all cryptocurrency assets had a home on the US-based trading venue.

The firm’s estimations showed that roughly half – $122 billion – were “assets on the platform from institutions.” Coinbase is among the most preferred venues for accredited and institutional investors to receive exposure to bitcoin and other crypto assets. Consequently, the company projects a significant advancement on that front by the end of the year.

“We expect meaningful growth in 2021 driven by transaction and custody revenue given the increased institutional interest in the crypto asset class.” – reads the statement.

Coinbase’s record-breaking quarterly results come just a week before the company concludes its direct listing. As CryptoPotatoreported before, the giant exchange plans to go public on NASDAQ on April 14th.

Tech has dominated the economy – but the real world is about to strike back

Even money itself has gone digital. Only about 3% of money globally is now in physical form. Bitcoin is now (measured by market cap, at least), the 13th largest currency in the world. It didn’t exist 15 years ago.

The key to this rapid growth is scalability. A digital product can be endlessly and instantly copied. I can design a fantastic app once, upload it to the app store once, and it can be downloaded a million or a billion times. If Google can get some new groovy feature in its search engine, then once implemented it’s almost infinitely scalable.

But let’s say I design a fantastic washing machine. It takes much longer to get this washing machine to the world – the fabrication and distribution are all tricky, but perhaps most difficult is the burden of regulation in the physical economy, particularly as it attempts to cross the national borders.

By contrast, the economy of the internet is (almost) borderless. The digital space, or certainly the areas where the innovation is, is largely unregulated – how do you regulate something that hasn’t been invented? So digital escapes the ties of regulation that curb the growth of the tangible.

Then, because of the extraordinary speed of growth in digital, there is the potential for investors to make far quicker returns on their investment. And so the digital economy attracts the most capital, the most talent and so on.

With this in mind, let us turn our attention to metals.

The physical world is treacherous and time-consuming

You don’t get much more tangible than metal. Mining is in many ways the most analogue industry there is; it is the very opposite of the dynamic digital world. A geologist is studying rock formations that took thousands of years to take shape, and will take decades to mine.

5 Ways DeFi Can Revolutionize the Healthcare Industry
5 Ways DeFi Can Revolutionize the Healthcare Industry 101
Source: iStock/Savushkin

Pradeep Goel, CEO of Solve.Care, a blockchain-powered platform for healthcare benefits administration and payments.

______

Against the backdrop of the COVID-19 pandemic, the recent growth of the decentralized finance (DeFi) market could change the game for the healthcare industry. Let’s explore several examples.

1. Medical devices

With regards to medical device financing and leasing, currently, no one is offering a global solution — no government agencies, banks, or insurers. As healthcare systems around the world struggle to cope with the challenges inflicted and exacerbated as a result of COVID-19, it is clear there is a real need to change the process around medical equipment leasing and financing.

Telehealth and virtual care are quickly becoming the most attractive way of accessing healthcare, both as a direct result of the COVID-19 pandemic and the changing landscape of healthcare. Patient devices include apparatus such as blood pressure monitors, glucose meters, oximeters, weight scales, and even thermometers. The distribution of 4G medical devices for remote patient monitoring provides patients with chronic illnesses with the equipment they need to take control of their health. This facilitates the coming together of the administrators, practitioners, and patients in an efficient and trust-minimized manner. By financing the leasing of medical devices through decentralized solutions we can provide better patient outcomes, and promote transparency.

Professional devices such as x-ray machines, computed tomography scans, magnetic resonance imaging and even specialist medical furniture are also needed. This is evident through the sustained growth of community clinics, remote diagnostic labs, and fully automated walk in diagnostic centers — all of which need to be financed. Identifying a device financing solution that is globally and easily accessible to both physicians and patients alike can be achieved through the utilization of DeFi.

2. Increased variety of SMEs

Accessibility to financing acts as a significant barrier to entry for many of the smaller players in the market. Similarly to many other industries, professional equipment financing is available in abundance for larger equipment manufacturers, often due to economies of scale, however the same opportunities are not afforded to small and medium enterprises (SMEs). This results in less and less SMEs participating in the market, reducing variety for customers and overall, debilitating the competition in the industry. Smaller manufacturers could offer revised financing options to their customers through decentralized finance, further lowering the end cost for customers and increasing the availability of access to affordable healthcare equipment to customers and indeed to healthcare facilities.

3. An enhanced healthcare community

While DeFi presents a huge market opportunity for healthcare solutions, to date there has been little talk of the integration of the two, despite the massive potential for the healthcare industry. At the moment, community service providers are in great need of increased cash flow financing. They have a need to serve the population first, then they bill the government, and await payment which can take up to 180 days. This way they end up paying an extortionate price if finance is available at all. With traditional finance continuously failing to cater to the needs of stakeholders within the healthcare industry, by using decentralized finance to democratize healthcare, it will provide better patient outcomes, and promote transparency within the industry. There are more ways for users to participate and they have more autonomy around projects. Users can participate by staking tokens and vote in community voting.

4. Insurance

The health insurance sector is a cause for contention in many parts of the world, and contributes greatly to inequality of access to care. Decentralized autonomous organizations (DAOs) utilizing DeFi for healthcare have the potential to democratize healthcare by putting the power into the hands of the community.

Basing health insurance practices on a DeFi model creates a new realm of possibilities within the healthcare industry that will benefit all stakeholders, from patients, to doctors, to governments and care organizations. For example, doctors could create an asset pool to fund a malpractice insurance model specifically for their needs, or similarly, patients themselves could create a global insurance pool, cutting out the middlemen. In many cases, it is these middlemen that result in high costs and delayed waiting times for treatment. So, by basing health insurance on a DeFi model, we can make the healthcare people need more affordable, accessible and equal.

Applying DeFi throughout the healthcare industry will ultimately benefit patients, doctors, and care organizations. There is a lack of funding in the area of consumer and faculty medicine devices, medical research, and medical malpractice insurance, which collectively pose great challenges to the healthcare industry and result in poor patient care.

DAOs utilizing DeFi for healthcare have the potential to democratize healthcare by putting the power into the hands of the community to select and finance deserving projects that create value for communities and generate sustainable returns in a highly transparent manner. They aim to deliver innovative financial solutions for deserving healthcare projects, while simultaneously improving the access and efficacy of healthcare at a time when it is needed more than ever.

5. Drug discovery and research funding

DeFi provides a great opportunity when it comes to supporting drug discovery and research funding. Many diseases fall by the wayside when it comes to available prescriptions and research. In many cases, some diseases are so rare that researching possible treatments is seen as unprofitable and companies can’t justify the cost. These diseases, termed orphan diseases, can benefit from community and global funding through the same DAOs utilizing DeFi for healthcare mentioned previously. These DAOs can give families and loved ones of those afflicted by these orphan diseases an opportunity to be involved in the financing of research and more importantly make their own project proposals. Furthermore, not just research, but financing for much needed distribution of prescription medicines and vaccines can benefit from the same DAOs.

____

Learn more:

Yield Farming-boosted DeFi Set For New Fields With Old Challenges in 2021

Watch Decentralized Insurance As Another Emerging DeFi Trend

Crypto Can Disrupt Legacy Finance And Add Another Layer On It – Panel

DeFi ‘Genie Is Out’ and Is Set For Growth in 2021

Crypto Exchange Operator Affiliate to Launch Blockchain Genome Platform

South Korean Doctor Says Blockchain ‘Must Be Used’ to Fight Crisis

Chinese Internet-based, Blockchain-powered Hospital Set to Open in 2021

A bitter aftertaste? The failed Deliveroo IPO could prevent growth shares from listing in London

The UK’s IPO market had a very buoyant second half of the year in 2020 as investor sentiment recovered from historic lows, with 13 companies floating onto the AIM market compared to ten IPOs that launched over the same time frame in 2019.

The AIM All-Share index also significantly outperformed the FTSE 100 over 2020, returning 21.8% compared to its flailing blue-chip counterpart’s loss of 11.6%.

Deliveroo IPO falls nearly a third as investors succumb to ‘anxiety’

The picture seems more muted this year, however, with the FTSE 100 outperforming the AIM All Share by 1.3 percentage points with a total return of 5%, according to data from FE fundinfo.

Deliveroo has been the latest IPO to hit the headlines, with the highly anticipated flotation snubbed by asset management giants including Aviva, Aberdeen Standard and M&G in the run-up due to concerns regarding its workers’ rights and its dual-class share structure.

Upon floating onto the AIM last Wednesday (31 March), the company saw more than £2bn wiped off of its £7.6bn valuation after its share price tumbled by more than 26% during its first day of trading.

Ketan Patel, who manages EdenTree’s Responsible and Sustainable UK fund, said he chose not to invest in a business model “which has little to commend for ESG investors, where the relationship between capital and labour is so asymmetrical”.

“The rise of the ‘S’ in ESG during the pandemic has highlighted social inequity and injustice within society,” he reasoned.

“The Deliveroo business model is best characterised as a race to the bottom with employees in the main treated as disposable assets which is the very antithesis of a sustainable business model.”

Sophie Lord, executive director of strategy at Landor & Fitch, added that the backlash to Deliveroo’s IPO is a reminder that ESG investing is “more than green commitments and pledges to reach net zero”.

“The ‘S’ of ESG – societal commitment, people, inclusivity, diversity – is just as important and brands that fall foul of this are putting their own sustainability at risk,” she added.

While the company’s IPO was hotly anticipated – in part – due to the mass uptick in demand for takeaway deliveries during the pandemic, numerous studies and surveys have shown that demand for ESG-compliant portfolios has also increased significantly.

Research from Calastone published earlier this month found that 84% of all equity fund inflows globally were into ESG-specific products.

But Lee Wild, head of equity strategy at interactive investor, added that preparations for the float have “not been ideal” aside from any social or governance issues, and that there were “several clear warning signs that all was not well”.

“Firstly, the company does not make a profit, even though the pandemic provided the biggest tailwind it could hope for,” he said.

“That benefit will fade as lockdowns end and diners return to pubs and restaurants over the summer. Remember, too, that Deliveroo had to be bailed out by Amazon last year, and it continues to operate in a highly competitive market.”

Is the problem with IPOs?

In addition to several company-specific headwinds Deliveroo has faced in the run-up to its IPO, risks regarding investing into freshly-launched companies have been well documented. Research from Dimensional Fund Advisors, which studied 6,000 US IPOs from 1991 to 2018, found that on average they underperformed the broader US market by more than 2% per year.

Joshua Mahony, senior market analyst at IG, said Deliveroo’s arrival on the stockmarket has done “far more to highlight the innate risks of investing in fresh listings” than to deliver value to their 70,000 new shareholders.

Ship shape and ready to float? IPO market picks up but headwinds remain for small launches

“This listing comes at exactly the wrong time for shareholders, with rising Treasury yields bringing pressure on growth/tech stocks, and valuations based on a period of massive upheaval for the restaurant business,” he said.

“No doubt, the company has the ability to grow into its valuation over time, but the expectation that we will see poor momentum for pumped up growth stocks does not exactly fill investors with complete confidence.”

Gervais Williams, head of equities at Premier Miton, said Deliveroo’s setback is likely to deter larger growth-orientated stocks from listing in London, but that small-cap IPOs could well continue to thrive.

“I expect many more to come, and brokers tell me they have a long list of potential IPOs in the next three quarters,” he explained.

“In a way, I do not think that the UK will greatly lose out as a result, as one of the key features of the UK stockmarket universe is that it is different from the US.

“If inflationary pressures were to build, and were growth stocks to have an extended period of underperformance, then many investors would start to reallocate capital away from the US into other exchanges that were less correlated. The UK very much meets this criteria.”

Industry Voice: Can palm oil ever be considered sustainable?

It is hard to overstate the importance of forests, both environmentally and otherwise.

Covering over 30% of the world’s land mass[1], forests supply food, medicine, building materials and fuel for more than a billion people. Worldwide, they provide more than 86m green jobs and support the livelihoods of many more. In terms of biodiversity, forests are home to an estimated 80% of the world’s plant and animal life[2].

Forests are clearly a resource but, as history proves, they have also been used as large, undeveloped swaths of land that can be cleared and converted for other purposes. Global deforestation continues to endanger local communities, contribute to global warming and result in the loss of biodiversity.

So, if palm oil causes deforestation, why can’t we just stop using it?

At the heart of palm oil’s success is its versatility. Palm oil is used in 70% of cosmetic products and found in around half of all supermarket products. It is a key ingredient in staple foods such as bread and margarine, as well as chocolate, ice cream, instant noodles, and biscuits. It can also be used in the production of biodiesel and biofuel for cars and power plants.

There are many reasons why palm oil is so popular. Firstly, palm trees produce 4-10 times more oil than other crops per unit of cultivated land and consume less water in the process[3]. This makes palm oil the most environmentally friendly vegetable oil in the world.

Second, palm oil’s high yield makes it the cheapest vegetable oil on the market. The fact that palm oil is an ingredient in so many affordable foods is key here, particularly given our ever-increasing global population size and appetite.

Third, thanks to its natural preservative qualities, palm oil extends the shelf life of food products, thus reducing waste.[4]

With this in mind, environmental activists such as the World Wildlife Fund (WWF) argue that consumers should not boycott products containing palm oil.[5] Avoiding it could, in fact, have far worse environmental and societal consequences.

The winds of change: advocating to increase palm oil yields, sustainably

The Investor Working Group on Sustainable Palm Oil, which is coordinated by the United Nations Principles for Responsible Investment (UN PRI), is backed by over 60 global investment organisations, representing approximately $7.9tn in assets under management. What’s more, we – at the international business of Federated Hermes – have joined forces with other stakeholders to raise concerns and lobby government authorities in Brazil and Indonesia.

Good intentions aside, with the global palm oil market expected to enjoy a compound annual growth rate (CAGR) of 5.6% over the 7-year period from 2018-2025[6], sustainable palm oil production remains a challenge. How can the industry achieve a greater volume of production ─ by increasing palm trees’ yields ─ and avoid further deforestation?

The certification jungle: reforming standards and encouraging widespread adoption

At the same time, it is important to ensure that existing and additional production is delivered in a sustainable way. Buyers and investors currently use certification to ensure the sustainability of their purchases but navigating this can be tricky, with no uniform set of standards in use. Then, there is the issue of credibility. In obtaining certification, it is not unheard of for producers to cut corners and pay bribes.

Despite this, we would argue that certification is the way forward, provided the underlying standards are strengthened and the process for obtaining certification is made corruption-free.

To this end, we have been working with the UN PRI to strengthen certification standards and pushing to improve the process by which certification is granted and remove the risk of malpractice. Here, modern technology ─ from satellite monitoring to geolocation tracking and blockchain ─ could be used to enforce certification standards. Investigations on the ground might also complement a company’s self-disclosure on ESG matters, as could third-party verification checks.

Sustainable palm oil: a commitment beyond the financial

Palm oil can be grown sustainably. To realise this goal, we will need to engage extensively with companies involved in the palm oil supply chain, but our outlook remains positive. With rates of deforestation declining globally, significant progress being made by leading companies, and mounting pressure from investors and other stakeholders alike, it would seem an end to deforestation may come sooner rather than later.

To access more in-depth analysis, research and commentary on sustainability direct from our investment teams, visit the new Federated Hermes sustainability hub

Disclaimer:

The value of investments and income from them may go down as well as up, and you may not get back the original amount invested. Past performance is not a reliable indicator of future results.

For professional investors only. This is a marketing communication. The views and opinions contained herein are those of Elena Tedesco, CFA, Co-Portfolio Manager – ESG strategies, Global Emerging Markets, and may not necessarily represent views expressed or reflected in other communications, strategies or products. The information herein is believed to be reliable, but Federated Hermes does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This material is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. This document has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. This document is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Figures, unless otherwise indicated, are sourced from Federated Hermes. This document is not investment research and is available to any investment firm wishing to receive it. The distribution of the information contained in this document in certain jurisdictions may be restricted and, accordingly, persons into whose possession this document comes are required to make themselves aware of and to observe such restrictions.

Issued and approved by Hermes Investment Management Limited (“HIML”) which is authorised and regulated by the Financial Conduct Authority. Registered address: Sixth Floor, 150 Cheapside, London EC2V 6ET. HIML is a registered investment adviser with the United States Securities and Exchange Commission (“SEC”).


[1] According to the UN Food and Agriculture Organization (FAO) report, State of the World’s Forests 2020 (July 2020), forests cover 31% of the global land area.

[2] Ibid

[3] See the Roundtable on Sustainable Palm Oil Certification (RSPO), About sustainable palm oil, for more detail.

[4]While some researchers are experimenting with alternatives such as algae-based oil, or microbes that convert food waste and industrial by-products into synthetic palm oil, growing these technologies on a scale that could compete with palm oil is difficult.

[6] As per Global Palm Oil Industry (September 2020).

Advertisement

Industry Voice: Re-thinking technology – connect and protect

COVID-19 lockdowns have accelerated pre-existing technological and digital trends reshaping our world. How can investors remain on the right side of these trends and invest in sustainable market leaders that will connect and protect us going forward?

Disclaimers:

The value of investments and any income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested. Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any stocks or products that may be mentioned.

© 2021 BMO Global Asset Management. Financial promotions are issued for marketing and information purposes; in the United Kingdom by BMO Asset Management Limited, which is authorised and regulated by the Financial Conduct Authority.

Industry Voices: Why Supply Chain Sustainability Is Important

How a company manages and monitors its supply chain forms a critical part of our analysis of any potential investment. Companies that fail to take this seriously are very likely to run into reputational, financial and legal issues that directly impacts the long-term sustainability of their business model. On the flip side, effective supply chain management can be a valuable way of securing a competitive advantage, enhancing reputation and brand, and improving operational performance.

Although some may naturally associate this issue with companies operating in emerging markets – where employment laws and practices are less advanced – it has relevance across a wide range of geographies and industries. It is a particularly critical issue for textile and apparel manufacturers and retailers – see the controversy over working conditions at UK fast fashion company Boohoo as a recent example. Due to the operational complexity and global reach of the sector’s multi-tiered supply chains, it carries a number of environmental and social risks from the sourcing of raw materials through to the manufacturing of the finished product.

Against this backdrop, we have been formally engaging with a number of companies across the globe on this important issue since 2018, with a focus on two key areas:

  1. Human rights: wage concerns; labour exploitation and unsafe working conditions.
  2. Responsible sourcing: encouraging green sourcing manufacturing through eco-materials and use of recycled clothes.

Our main objective is to increase the overall transparency relating to how companies manage their supply chains. This could be through board-level responsibility, enhanced disclosure and auditing, as well working with their peers and suppliers to improve practices and establish best practice.

Putting theory into practice

Engagement takes time and effort, but the progress made can be long lasting and ultimately benefit both stakeholders and shareholders. We’ve been encouraged by some of the progress we’ve made with several investee companies on this issue, ranging from sportswear and equipment to jewellery and fashion accessories.

For example, we commenced an engagement with a global baggage company back in 2018 when it had provided no disclosure on responsible sourcing or human rights within its supply chain. As a result of our engagement, we were pleased to see the company move to increase disclosure in its 2019 Sustainability Report published in 2020 and update its supplier rating system. This means that each of its tier one suppliers are now given a rating based on their business practices and workers rights, which looks at things like forced labour, child labour and other worker protections.

It is important to recognise that this is an evolving process and we are encouraging the company to focus on monitoring key environmental issues among its supplier operations. This includes things like responsible sourcing of raw materials and water and waste management. We will be following up through our regular meetings with company management to check progress and ensure our engagement activity drives positive change and leads to more sustainable practices and – in turn – investment outcomes.

Working together

In addition to individual company engagements, we are also working closely with other asset managers, policymakers and relevant bodies to drive positive change on these critical issues.

In 2020, Fidelity became a founding member of Investors Against Slavery and Trafficking Asia-Pacific (IAST APAC). This is a coalition of investors including First Sentier Investors, Aware Super, AustralianSuper, Ausbil and Schroders, among others, with collective assets under management of more than US$4tn5. IAST APAC has two work streams:

Investor statement – we sent an investor statement to the ASX100 setting out the group’s expectations of reporting companies under the Australian Modern Slavery Act. We are seeking to influence the way these companies report by setting clear expectations to go beyond the legal requirements and address labour exploitation as a leading indicator of modern day slavery.

Collaborative engagement – we are also embarking on a multi-year initiative to address complex and systematic human rights issues in the value chain through collaborative engagement with companies at risk across Asia Pacific. This will complement and strengthen our existing one-to-one engagement activity on this issue mentioned above.

Elsewhere – and closer to home – we also recently joined the “Find it, Fix it, Prevent it” initiative led by CCLA. The International Labour Organisation estimates there are 25 million people labouring as modern slaves in the private economy. The objective of this collaborative engagement is to help companies develop and implement better processes for finding, fixing, and preventing modern slavery in their supply chains.

Our first area of focus is the UK hospitality sector and as part of this initiative, we are leading the engagement with a restaurant chain regarding their suppliers’ oversight in relation to modern slavery. We have seen some early signs of progress after the company acknowledged the limitations of its existing due diligence process for suppliers. It is encouraging to hear that it is dedicating more resources to this area and we have agreed with the company to follow-up over the coming months.

Looking ahead, we must continue to hold companies to account on supply chain management – alongside other environmental, social and governance issues – as we continue to push our investee companies to act appropriately in order to protect and enhance long-term value.

Important information

This content is for investment professionals only and should not be relied upon by private investors.

Past performance is not a reliable indicator of future returns. Investors should note that the views expressed may no longer be current and may have already been acted upon. A focus on securities of companies which maintain strong environmental, social and governance (ESG) credentials may result in a return that at times compares unfavourably to the broader market. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security’s ESG credentials can change over time. Changes in currency exchange rates may affect the value of investments in overseas markets. Reference in this document to specific securities should not be interpreted as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Investments should be made on the basis of the current prospectus, which is available along with the Key Investor Information Document and current and semi-annual reports, free of charge on request, by calling 0800 368 1732. Issued by Financial Administration Services Limited and FIL Pensions Management, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. UKM0331/32771/SSO/NA