Impact investing with an eye to sustainability, inclusion and growth.

April 2022

Key points

What does the next decade have in store for impact investing? Kate Fox and Lee Qian, joint managers of Keystone Positive Change Investment Trust, tell Iona Bain about four big areas that could solve some of the world’s toughest challenges.

Yuima Nakazato’s Haute Couture Spring/Summer 2020 collection used Spiber’s Brewed Protein biodegradable material © Getty Images Entertainment

Please remember that the value of an investment can fall and you may not get back the amount invested. This article originally featured in Baillie Gifford’s Spring 2022 issue of Trust magazine.

Having spent the last few centuries plundering the planet and living with huge income disparities, can humankind start to take bigger strides in the race to repair the damage?

According to Kate Fox and Lee Qian, the spotlight now falls on innovative companies. As they see it, Keystone Positive Change’s job is to seek out and support the firms best placed to help move us to a more prosperous and inclusive society and a more sustainable planet.

These are the pioneering firms that, aligned with investors, governments and enlightened consumers, can help tackle the big, complex and often interlinked global challenges. Among them are climate change, biodiversity loss and rising income inequality. Because of these companies’ potential to contribute to transformational outcomes, the investment managers “have a responsibility”, Fox believes, to channel investors’ capital their way. This responsibility also provides an opportunity: “Companies that are developing products that meet social and environmental needs are likely to prosper.”

Keystone Positive Change has trained its telescope on several exciting areas of opportunity. These include digital education, sustainable materials, financial inclusion and sustainable agriculture.


Sustainable materials

Growing populations mean greater demand for materials made from resources that are increasingly scarce, environmentally damaging, or both.

“Take textiles, for example,” says Fox. “Fashion is becoming faster and cheaper. We are consuming more clothes and using them less frequently, and, as 60 per cent of textiles are made using petrochemicals, the system has a huge environmental impact. We need to move away from this system of ‘extract, use and dispose of’ to one where we make things from more sustainable materials, keep them for longer and dispose of them more responsibly.”

Synthetic biology is a field of science that involves designing organisms for useful purposes by engineering them to have desirable characteristics and abilities. Japan’s Spiber, one of the Trust’s private company investments, uses synthetic biology to create entirely new, better textiles. Its custom-made fibres are made from proteins that are manufactured on an industrial scale and are biodegradable.

We can make ‘better’ materials and move towards a more circular economy – a system in which materials are retained for longer. Brussels-based Umicore is contributing towards this goal. “It has three parts to its business and all have interesting positive impacts on society,” Qian explains. “They are metal recycling, which reduces our need to extract raw materials; automotive catalysts, which improve exhaust emissions and reduce pollution; and battery cathodes, which reduce the cost of batteries for electric vehicles, making them more affordable and accessible.”


Digital education

In 1997, Kofi Annan, the then secretary-general of the United Nations, said: “Knowledge is power. Information is liberating. Education is the premise of progress, in every society, in every family.” Recent Keystone Positive Change purchases reflect the importance of this theme.

Coursera is an online platform that provides a range of educational material, from short courses to online degrees. It appeals to different stakeholders within the education system: learners, academic partners and corporations. By providing online content, Qian explains, “Coursera is helping to improve access to learning through lower costs and greater convenience and helping to provide relevant qualifications in an ever-evolving job market”.

Similarly, Duolingo provides online educational content, but its focus is on helping people study languages. English is considered a passport to success in many countries and is widely acknowledged as the lingua franca of the cultural, business and academic worlds. As such, a good grasp of English often leads to higher salaries and greater educational, economic and cultural opportunities. Qian believes that Duolingo “is run by a thoughtful and mission-focused founder who can strike the right balance between delivering for learners and increasing revenue”.

We can make ‘better’ materials and move towards a more circular economy

Sustainable agriculture

Just as we need to change our fashion habits, we also need to address how we eat, Fox believes. “It’s about raising awareness. The agricultural sector is responsible for 20 per cent of emissions and 70 per cent of global water consumption and is the leading contributor to biodiversity loss. How can we address that?”

Since 2009, Beyond Meat has been developing healthy, plant-based meat alternatives that mimic the taste and sensory experience of animal meat but have a far lower environmental impact. “Having enjoyed some of their burgers over the summer, I can say they’ve made good progress,” Fox says. “They have partnered with big food chains such as McDonald’s and Starbucks, so there are signs that a brand advantage is emerging there as well.”

Agricultural equipment is another way we can improve farming productivity while reducing its negative environmental impact. This is crucial for a more sustainable food system in the future. In this area Illinois-based Deere uses technology to reduce pesticide and fertiliser use. Fox explains: “It’s helping the system to improve through precision agriculture tools. John Deere machines are equipped with cameras and sensors and use machine learning to spot what’s crop and what’s weed. It means they can reduce herbicide and pesticide use by up to 80 per cent. It’s helping farmers improve yields while reducing consumption of these harmful products.”


Financial inclusion

Helping the financially excluded is important because at least half the population of many emerging markets lacks access to financial services.

Indonesia’s Bank Rakyat provides microfinance – small loans, low-deposit savings accounts, low-premium insurance – to the otherwise unbanked, helping to enable financial inclusion and inclusive growth. Its advantage? “A very extensive network of rural agents and bank branches. Indonesia is a vast country with thousands of islands and other banks can’t build up an infrastructure to compete,” says Qian.

Similarly, Nu Holdings, a digital bank in Latin America, is helping to promote financial inclusion by providing cheaper and more accessible services, including bank accounts, credit cards and personal loans. There are about 134 million unbanked adults across Brazil, Mexico and Colombia, with the rest of the population receiving a substandard but expensive banking service. Nu can play an important role in fostering innovation and competition, Qian says: “Although Nu is not the only fintech player in Latin America, by virtue of the company’s scale and success, its impact has been far greater.”


This article first appeared in the Spring 2022 issue of Trust, Baillie Gifford’s bi-annual investment trust magazine. To register for a free copy, delivered to your door or to your inbox please visit


The Trust invests in companies that make a positive impact on society and/or the environment. This means the Trust won’t invest in certain sectors and companies, limiting the investments available to the Trust. Therefore, the Trust’s returns may be different to those of a fund or trust which has no such restrictions.

Investments with exposure to overseas securities can be affected by changing stock market conditions and currency exchange rates. The Trust’s risk could be increased by its investment in private companies. These assets may be more difficult to sell, so changes in their prices may be greater.

The views expressed in this article should not be considered as advice or a recommendation to buy, sell or hold a particular investment. The article contains information and opinion on investments that does not constitute independent investment research, and is therefore not subject to the protections afforded to independent research.

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