We explore why a holding in our Australian Equities Trust and Growth Portfolio, ResMed, is a top pick for sustainable development.
29 September 2021.
The United Nations Sustainable Development Goals (UN SDGs) were adopted by the United Nations in 2015 as a universal action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. The goals identified the significant role that the private sector has to play in their achievement. By assessing how aligned a company is to achieving specific goals, our investment team tailors our portfolio according to U Ethical’s investment philosophy. Using the goals as a guideline for ethical investing helps maintain our vision of doing well while doing good.
Looking back over FY21, our investment team has identified a holding in our Australian Equities Trust and Growth Portfolio, ResMed, as a top pick for sustainable development.
Operating within the healthcare equipment and supplies industry, ResMed primarily provides cloud-connectable medical devices for the treatment of sleep apnea, chronic obstructive pulmonary disease and other respiratory conditions.
Its development of medical devices that help to treat and manage respiratory disorders, which account for approximately 26% of total revenues, ResMed shows alignment with UN-SDG 3 (Good health & wellbeing); ensure healthy lives and promote well-being for all at all ages.
Since the onset of COVID-19, the company has made positive impact globally, responding to the pandemic by shifting production towards ventilators and respirators.
CEO Mick Farrell commented on this response and how the company pivoted to help meet increasing demand for these ventilators and respirators amid the crisis:
“As a global leader in respiratory medicine, ResMed stands with the world in the face of the latest coronavirus disease COVID-19 and is ready to help mitigate its effects, helping people breathe while their immune system fights this virus. More than 7,500 ResMedians are working in over 140 countries for this purpose. We are working with governments, health authorities, hospitals, physicians, and patients worldwide to assess their needs, and to deliver the ventilation therapy that is essential to treat the respiratory complications of COVID-19. Our primary focus is to maximise the availability of ResMed ventilators and other respiratory support devices for the patients that need them most.¹”
The company is also a leader in digital health with cloud-connected devices enabling increased remote monitoring, which should improve treatment access and outcomes.
MSCI ESG Research has rated ResMed “AA” given its exceptionally low levels of controversies. These ESG Ratings are designed to measure a company’s resilience to long-term, industry material environmental, social and governance (ESG) risks. This helps identify industry leaders and laggards according to their exposure to ESG risks and how well they manage those risks relative to peers.
The company’s improving ESG profile can be attributed to product safety and quality management and human capital development, which both distinguish ResMed from its peers.
ResMed maintains industry best practice through certification to the widely-accepted International Organisation for Standardization (ISO) standards³ and implementation of stringent supplier quality checks. This indicates the company’s continuous focus on strengthening the quality management system of its products, demonstrated in only two product recalls in three years (as of Nov 2020).
The company also has a strong track record with workforce standards and talent management, especially considering it has experienced a 31% increase in employees between FY2018 and FY2020. Despite rapid growth of the team, employee management and engagement initiatives remain a strong point, showcasing the company’s efforts to maintain talent in the face of growing turbulence for the sector.
ResMed has also performed strongly for investors, with the company traded up ~30% over the June 2021 quarter.
The United Nations has identified COVID-19 as spreading human suffering, destabilizing the global economy and upending the lives of billions of people around the globe⁴. ResMed epitomizes the type of companies our investment team looks for when constructing our portfolio. We’re proud to invest in a company that is working hard to support those suffering from the virus and look forward to seeing further sustainable development from ResMed in the near to long-term.