Wellington’s head of sustainability Louise Kooy-Henckel tells us how their research team seeks out innovation and technology coming together to drive impact
- Director of Sustainability, Wellington Management, 2016-present
- Managing Director, JP Morgan Asset Management, 1997-2016
- State Street, 1994-7
- BSC Financial Economics, University of London 1998-2001
Louise Kooy-Henckel’s interest in sustainable investing came about when at an earlier stage in her career she was involved with a socially responsible investment fund which was mainly applying exclusions for a faith-based investment group.
“I quickly learned that exclusions were not the ideal way to align capital and people. I realised importance of focusing on a positive outcome, and of scaling investment,” she tells Impact Investor.
Her role at Wellington Management is a broad one, with two main areas of focus. Kooy-Henckel has what she describes as “a vertical and deep involvement in the direction of Wellington’s global impact portfolios”. She also has broad responsibilities across the firm’s platform for sustainability. “I work with clients to help them implement their sustainability programmes and engagement strategies.”
Impact and sustainability
Wellington has been involved in impact investing since 2015, with strategies in public equity, public fixed income and private equity. “We spent the first three years educating the market, but I’m so pleased today that that really is not necessary to the same extent.”
The firm now has some $5bn under management in impact-related strategies and Kooy-Henckel says that they are increasingly seeing European pension funds getting interested, led by fund selectors in the Nordics and the Netherlands.
Wellington has an impact steering group of around 15 professionals, including Kooy-Henckel, who come together to discuss and debate issues that are of concern in their impact portfolios.
The firm’s approach is very much research-driven. Impact investments are grouped around a framework of 11 investment themes including food scarcity, health outcomes, education, and financial inclusion. There is considerable similarity between these areas of focus and the UN Sustainable Development Goals (SDGs), however Kooy-Henckel assures us that “Wellington’s framework came first”.
Kooy-Henckel is also involved with Wellington’s stewardship and engagement teams: “We are an asset manager with a constructivist approach helping companies to think through matters, and positively influence what they are doing.”
The team spends considerable time engaging with institutional clients including pension funds, family offices and fund selectors with a particular orientation to Europe. “A client will often approach me and ask, ‘where do I start?’ or ‘which do I put more emphasis on – environment or social impact?’ So, I discuss client objectives and how best to implement them.”
Health and education
Kooy-Henckel highlights key successes in two of Wellington’s investment themes – health and education, areas where their investments are “characterised by innovation and technology coming together”.
“In health, we were an early investor in telemedicine technology and also in speech recognition which helps doctors with their diagnosis.”
Wellington supported an emerging telehealth solutions provider delivering on-demand healthcare 24/7 via mobile devices, through phone and video calls. “Back then, this was a novelty and highly innovative. We had no idea…how the pandemic would make this a much more common practice.”
She says this investment allowed more than 30% of primary face-to-face doctor visits to be effectively replaced by telemedicine, cutting healthcare costs substantially while also broadening access, particularly in remote and rural areas where people had no or little access to healthcare.
“We were an early investor in another health tech company which was an innovative leader in speech recognition and dictation software used to automate a wide range of manual processes in healthcare,” she adds.
This improved efficiencies for doctors, health care workers and hospitals by automating data management and processes, easing the burden of administrative tasks and facilitating patient communication, thus allowing doctors to see more patients and have more meaningful interaction with them during visits.
For example, using its conversational AI solutions, clinicians could free up two hours per shift worked (less time spent on administration) and there was more than a 30% increase in the capture of extreme severity of illness.
This speech recognition solution came into even greater effect during the early stages of the pandemic, “working in established or makeshift hospital, the dictation software enabled healthcare professionals’ mobility as well as safety at a time when touch and close contact with colleagues and patients had to be limited”.
In education, Kooy-Henckel says that Wellington invested in remote learning long before COVID and therefore was a beneficiary when that trend took hold.
One early investment in the education theme provides access to quality post-secondary education to students in developing countries, who otherwise might be unable to receive such an education.
Kooy-Henckel says: “This education company is very well positioned for the future. It benefits from favourable demographics and a clear sectoral value proposition and was already making significant progress into distance learning prior to the pandemic, alongside its campuses, helping with both access to education and its affordability. During the pandemic, they coped well with the increased demand for their distance learning capabilities which allowed for a seamless transition.”
Kooy-Henckel says the biggest challenge in the sustainability space is “the myriad frameworks that exist on impact measurement. There is no standardisation and as an industry we need to move towards this”.
However, she believes this will be a problem “because each impact investor tends to have a preference for their own framework which often is understandable as they fulfil quite specific needs related to their investments. It will be very difficult to walk to find one size that fits all”.
In the case of Wellington, they use a combination of frameworks including the Impact Management Project’s five dimensions of impact, the GIIN’s IRIS+, and an impact logic chain model.
There are also similar challenges with impact reporting and in this regard client expectations are increasing. Kooy-Henckel says: “As clients had become very sophisticated the bar has gone up considerably in measuring impact outcomes.”
She highlights the importance of the firm’s focus on research. “All things begin with research at Wellington – you cannot overestimate how much time and effort we invest into researching our strategies.”
“Any new strategies we launch, or refinements of existing strategies, will come about as a result of that research. At the moment we have considerable interest in biodiversity. Any additional strategies or funds will be where the research leads us to believe there are investment opportunities,” she concludes.