The growth stocks at the forefront of a better future

The companies delivering strong long-term growth are those that continuously innovate, adapt, and reinvent themselves. They string a sequence of great business ideas together to create wave after wave of strong growth.

In addition, amid today’s complex and interconnected global economy, robust growth and positive change are interconnected forces – and the companies that prioritise sustainable practices and enduring value creation are not just helping to create a pathway to a better future for the world; they are gaining a competitive advantage.

Despite this, sustainable investing has recently navigated a period of intense debate and reflection. As global challenges like climate change continue to demand innovative solutions, differing expectations and new realities – such as war in Ukraine – have raised many questions among both critics and advocates. However, this scrutiny is also driving an essential shift: the inconsistencies that have challenged sustainable investing are now paving the way toward greater clarity in debates and a stronger focus on meaningful outcomes, including generating profits and returns.

In short, companies are continuing to do good things but with less fanfare now – the greenwash is getting washed out. We continue to target compelling opportunities aligned to three pillars – good health and wellbeing, inclusive growth, and environmental sustainability.

Investing in companies advancing innovative treatments for diseases and medical conditions, as well as improving access to essential medicines and healthcare services, is a good way to tap into powerful and potentially accelerating sources of long-term growth. We focus on innovative high-growth companies that can address unmet needs and thereby enjoy sustainable growth while benefiting ever-larger numbers of patients.

A good example is global biopharma company UCB. Its products provide valuable solutions that improve the lives of people living with neurological and autoimmune conditions. In 2024, UCB’s medicines helped more than 3.1 million patients globally, and the company continues to focus on expanding geographic access – achieving 82% coverage in 2024, up from 68% in 2023. UCB’s key new drug, Bimzelx, is driving positive revenue and earnings growth and momentum for the company.

Focusing on inclusive growth can help extend and elevate the growth runways for companies that can innovate and implement these strategies, benefiting their customers and workers. Here, MercadoLibre is a disruptive force in the LatAm e-commerce and online payments industry.

The largest online commerce and payments ecosystem in the region, MercadoLibre’s business model focuses on bringing its technology platform to underserved populations and SMEs, with its marketplace and fintech platforms boosting the development of digital, commercial, and financial inclusion. The company is the main source of income for more than 1,800,000 families in LatAm, as of 2024, while over 45 million loans were granted to entrepreneurs and SMEs in 2023, empowering them to grow their business. MercadoLibre’s exceptional competitive positioning and management team has delivered outsized top-line growth and margin expansion.

One of the key components of our transition to a low-carbon economy is sustainable consumption. Companies that move toward more responsible consumption and production can leverage emerging market opportunities and evolving regulations. In addition, implementing resource-efficient practices lowers operational costs and risks while enhancing brand value. An example is French luxury goods giant Hermès, which promotes sustainable consumption by creating durable products designed for repair and recycling.

Hermès’ products are designed to last generations, with options for repair and renovation, and the company conducted more than 200,000 product repairs in 2024 as part of its commitment to durability. It has meticulously reviewed over 90 raw material supply chains to ensure ethical and sustainable practices, with 100% of Hermès’ gold and silver sourced from recycled sources, and 70% of leather suppliers LWG-certified. We believe Hermès should continue to deliver significant and consistent above-average top-line growth for longer, driven by the defensiveness and visibility of its business model and the powerful and durable equity of the Hermès brand.

So, while the political winds may change, causing companies to go quiet on sustainability, we continue to seek out compelling growth companies quietly building strong businesses contributing to a better future.