A walk down Water Street – highlights from our recent US research trip
America is one of the most innovative countries in the world. It is also the wealthiest, contributing nearly 30% of the world’s spending on research and development1. It is no surprise, then, that American companies feature prominently in our impact investment universe.
In September, I took the opportunity to visit Chicago and Washington D.C. to meet with some of these American sustainability leaders. I met with 14 companies in all – some we own, many we don’t. It was a great opportunity to catch up with businesses we’ve known for years on their home turf, while scouting for new opportunities.
A particular highlight was my visit to Xylem’s global headquarters, in Washington D.C. Xylem is America’s champion for improving global access to clean water. Their solutions help customers use water more efficiently, detect leaks, and prevent polluted water from entering communities. We’ve been investors since 2014 and remain hugely supportive of their work.
Located on Water Street, overlooking the Potomac River, Xylem’s ‘Reservoir Center for Water Solutions’ is something quite special. Xylem shares their HQ with 33 leading organisations in the water industry. The collaborative workspace is home to non-profits such as Water for People and EarthEcho, as well as policy organisations like the US Water Alliance and the Aspen Institute. Its purpose is to bring together the greatest minds from across the water sector, to speed up progress in finding solutions to the world’s water challenges.
During my visit, I had the opportunity to pick the brain of Austin Alexander, Xylem’s VP for Sustainability and Social Impact. We had a wide-ranging conversation covering Xylem’s water-saving technologies, their own plans to reach Net Zero emissions, and the diversity of Xylem’s leadership team. I was also able to discuss business fundamentals with Mike Travers, of the investor relations team. I came away feeling assured that Xylem is a clear impact and sustainability leader which deserves its space in our portfolio.
During my time in the States, I also joined Jefferies’ IT Hardware and Semiconductor summit in Chicago. This is a space that is often overlooked by sustainability investors – which is partly why we think it’s fertile ground for new ideas. This summit gave me the opportunity to meet with loads of companies operating in this sector, to uncover hidden gems and emerging trends.
I was particularly intrigued by my meetings with two companies operating in the lidar space. Lidar sensors are emerging as a ‘new frontier’ for the electric vehicle industry. They are used to detect and respond to objects around the car, to enhance the safety of passengers and other road users. One company I met with thinks their sensors can reduce the rate of road traffic accidents by up to 60% compared to today’s average2.
These sensors are technically challenging to design and manufacture, and they are also expensive. This is why we don’t see them much on cars today, and why we won’t be investing immediately. But this complexity also creates an opportunity for the company, or companies, that can rise to the challenge. We will be watching this space with interest over the next few years.
The opportunity to meet company management teams in-person is often extremely valuable. While video calls are certainly very productive, they can’t replicate the immersive experience of a sector conference or company visit.
And let’s be honest, it’s also great to be back out in the world after years of talking mainly to a computer screen and my (dear) colleagues. There are only so many stories you can hear about Ben’s cats 😉.
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1 https://ncses.nsf.gov/pubs/nsb20221/u-s-and-global-research-and-development#:~:text=R20has%20declined.-,Global26D,global26D%20(Figure%2012).
2 This lidar company’s website provides a great demo – keep scrolling! https://www.innovusion.com/
