The Amazons of the future? Three sustainable disruptors for investors to consider

A number of companies are emerging with the potential to disrupt and dominate their respective markets, whilst also directly addressing key sustainability challenges Kames Capital’s Bonthron says.
Whilst there have long been many great companies offering solutions to the worlds sustainability challenges, rarely have these been truly disruptive to the point that they have changed the way a market operates in the same way as businesses like Amazon or Facebook. Nascent technologies, poor business models or management, regulatory complexity or cyclical headwinds have often got in the way.
However, according to Craig Bonthron, co-manager of the Kames Capital Global Sustainable Equity fund, the situation has changed in recent years, with more viable businesses coming to the fore.
“We have been passionate sustainable investors for many years but admit that we have historically struggled to find disruptive growth companies that can capture real value from sustainability,” Bonthron says.
“However, we have recently noticed more and more sustainable companies emerging as viable disruptive winners by explicitly offering scalable solutions to some of our biggest sustainability challenges. Innovative companies that have identified a problem, developed a solution and can capture value as they disrupt the unsustainable status quo.”
With an underlying focus on growth companies, Bonthron and the team at Kames look for three sources of alpha when it comes to investing in sustainable disruptors; Unappreciated sustainability of returns, an unappreciated addressable market, and an unappreciated rate of adoption.
Bonthron and co-manager Neil Goddin believe we are now in an era where an increasing number of disruptive businesses displaying the above characteristics are sustainable in nature, giving bottom-up stock pickers with such mandates an increasing range of options when it comes to their portfolios.
Below Bonthron identifies three companies which could become dominate markets in future thanks to their disruptive business models.
Everbridge
“US-based Everbridge provides real time emergency communications built on a cloud-based software platform. Growing quickly due to a disruptive low price combined with a step change in functionality versus old one-way communication infrastructure, the group has seen its share price double over the past five years. In terms of a sustainable investment, Everbridge provides tangible life-saving and economic benefits during natural disasters and terrorist events.”
Insulet
“Insulet, the US-listed business, is the manufacturer of the Omnipod, an innovative tubeless pump patch that delivers insulin for Type-1 diabetics. A unique technology that replaces the need for patients to have 14 needle injections over the course of three days (and is cheaper than an alternative larger pump and tube which has high upfront costs) the Omnipod improves patient quality of life and long-term health whilst reducing overall healthcare costs.”
Chroma Ate
“Taiwanese company Chroma Ate provides customisable, precision testing and measurement equipment which is a crucial part of the solar, electric battery and semiconductor development and manufacturing process. Deep relationships with customers and high quality innovative products enable them to capture profits from strong growth trends in areas that are helping to meaningfully reduce our reliance on fossil fuels.”