The Convergence of ESG & Robotics Webinar

    Tune in to the insights of Raffaello D’Andrea on how robotics are helping with ESG initiatives, especially across warehouses and the supply chain.


    Richard Lightbound:

    Hello everyone, and welcome to our discussion with Raffaello D'Andrea, who we're delighted to have joining us from Zurich. I'm Richard Lightbound from ROBO Global in London. I'm going to give some very quick introductory remarks before we actually kick off with Raff. Raff, since you've kindly joined us many times on the stage and more recently, the virtual stage, and as you hear, he is deeply entrenched in the world of robotics and AI as an entrepreneur, as an industry expert, as a new media artist, and also as a professor at ETH, Zurich.

    Prior to Raff's current venture, which is called Verity, he co-founded warehouse automation company Kiva Systems that was acquired by Amazon in 2012, later rebranded as Amazon Robotics. In 2020, Raff was inducted into the National Inventor's Hall of Fame and was elected to the US National Academy of Engineering. I could go on, but as you hear, we're in very good hands with Raff today.

    In terms of ROBO Global, Raff's actually a co-founder, too, and a key member of our strategic advisory board. We actually established our company, ROBO Global in 2013 as a research advisory and index company focused on disruptive innovation, investment opportunities, really where we can capture long-term growth opportunities that benefit not just investors, but society as well. Ultimately, that's the focus of today's discussion. And also, where we can see a significant universe of high-quality companies where we can engage with their management teams. We score for companies across various filters, including our ESG policy.

    You can see on the left-hand side of this slide here, we've tackled three disruptive tech themes to date. Those are robotics and automation or ROBO, artificial intelligence, or THNQ, T-H-N-Q, or our healthcare tech and innovation strategy, HTEC. So these three strategies are available as research embassies. You can see here the past 12 performance of each, and I just want to emphasize that that past four months of performance comes from a very diversified portfolio. We've got about 80 companies in each of the strategies, and your events see ETFs and funds in the US, Europe, and Asia, but track these embassies and overall assets in the region of about $4 billion US dollars.

    You can see the advisory board that we have at ROBO Global. This obviously includes Raff, their expertise and guidance are really important to our research team and process. It's given us very important insights into innovation, both in terms of how it's going to impact investors again, as well as society.

    Then, if we just look at the next slide, we can see the ROBO index. This was the world's first robotics and automation investment strategy. To date, we've got 11 targeted subsectors, and you can see since inception seven years ago, you can see the performance across each of the subsectors. Logistics automation is by far the top-performing subsector. It's +500%, so clearly this is a subsector that's benefited our investors. While some of the benefits to society are obvious, others are not.

    So Raff, again, welcome, and be great if you could just walk us through your Kiva and Verity journey, share some of your thoughts about environmental and societal benefits within warehouses and the retail supply chain.

     

    Raffaello D'Andrea, PhD:

    Sure. There's a lot, obviously, to talk about. When we started Kiva back in 2003, this was something that no one was really talking about. It was just not on the radar really of most investors, most companies. There's a natural combination between robotics and automation, and being responsible in terms of the environment. So the E in ESG, and that is just simply because of the reduction of waste, doing things much more efficiently.

    Our Kiva robots would use roughly 25 cents of electricity per day. So to run a robot for one day, 24/7, 24 hours, all the time would be 25 cents per day. That is incredibly efficient in terms of being able to move things around in a warehouse, to do that comparably with other means is significantly worse. So not only does it make economic sense, but at the time it also was great for the environment. Just simply because you're not using a lot of electricity and of course, at the time, a lot of fossil fuels were being used to do that.

    With Verity, we're seeing a similar thing. We have a system that we've developed that does automated inventory. It also does things like inspection, but our initial deployments with our two clients, IKEA and DSV, are around inventory management, and there, the benefits are, again, not just economical benefits. They come from the reduction of waste.

    So in particular, we enable our clients to each what we call the zero error warehouse. So the ability to go from the median error in a warehouse in terms of keeping track of where things are of say 98%, there's a 2% error, the median error. That doesn't sound like a lot, but when you have tens if not hundreds of millions of dollars of inventory in some of these huge facilities, that amounts to quite a bit. So there's huge cost savings that the clients get from using our system like ours. They don't have to put people at heights which is dangerous. The drone solution can do it much more efficiently. It's fully autonomous, right? There's no one controlling the drones. They on their own figure out where to go, what information needs to be collected, synchronize with the client’s warehouse management system in the background.

    So there are huge benefits for the client. But what's also amazing is that a system like this can have a huge impact on CO2 emissions, and mainly because of the reduction in waste. You go from 98% accuracy to 100% accuracy. That impact of that 2% is tremendous in terms of CO2 savings. We just wrote a paper recently on the effects on a large warehouse, a million square feet, the savings can amount to something like taking 5,000 cars off the road for a year.

    So the environmental impact of deploying this autonomous technology is not just about doing it more effectively, cost-cutting. It's also the impact you get when you can do it much more accurately. You can do it much more often, much more efficiently, and all the savings that you get from that.

     

    Richard Lightbound:

    Yeah, Raff, thank you. Really interesting, and obviously you've got some great data points there, and we're certainly seeing that coming through with a lot of other companies that we talk to. They're moving away from almost more sort of fluffy, perhaps, ESG- type policies, but really trying to articulate with some hard data, that sort of the impact that their businesses have on the environment and society in a positive way. Really an example is someone like Adobe. We actually score very high in terms of the E in ESG, but they save it for every one million transactions completed via Adobe sign, versus paper workflows, it saves over 27 million gallons of water, 1.5 million pounds of waste, and about 23.4 million pounds of CO2 emission.

    So I'd imagine, Raff, as you're discussing Verity solutions with new clients, this must be sort of a major talking point, something you're almost leading with.

     

    Raffaello D'Andrea:

    It absolutely is, and it's interesting because it is absolutely on the radar of upper management, the folks that are running the company. And that was a little bit surprising to us how the first discussions really around, yeah, it's great to save this money. The higher up you go, then this question comes up. Well, can you tell us how your technology improves the environment, and why is that?

    It's actually pretty straightforward to answer this. Why are companies so enamored with ESG? Let's look at the environmental aspect. There are these companies, especially tech companies, that have so much cash. What do they do with this cash? They could park it in Switzerland where they can make minus .75% interest. Or what they can do is they can invest it in the future. They can invest it in the future of the company, and they see the trends. They know where things are going.

    The consumers of tomorrow are the young people of today, and the young people today are completely lined up with environmental and social issues. So it is self-serving. You may say, well, they're being altruistic. Well, actually, a lot of the founders are. No better example than Bill Gates who's devoted a huge part of his life to making the world a better place. But it's also self-serving. They know that in a world where the consumers of tomorrow are these young folks that really care about these issues that will shop with their ideals.

    Also the talent. These tech companies, they're scrambling to get the best talent. There's a shortage of talent in engineering, robotics, AI, computer science. They know that if they have a company culture where they care about the environment, they're going to do better at recruiting. So it's like a no-brainer for them to do these sorts of things.

    Just a little anecdote: At Verity, the average age of our company is 32, 33. We're a 60-person company. These issues are at the forefront of what they're thinking about. I had lunch, this was pre-COVID. I was having lunch in the common room there, and then I go to wash my dish, and one of the young folks there comes up to me and says, "What are you doing?" I said, "Well, I'm just washing my dish because the dishwasher's full." And she goes, "No, no, no, no. Just take your dish, put it on the side, and wait for the dishwasher to be done, because you're wasting so much water by washing your dish by hand. Just wait until it's done and then you can use the dishwasher."

    She had no problem that I'm the CEO of the company, the founder. She had no problem just going, "What are you doing? Are you stupid or something? You shouldn't be doing that." Now, in all fairness in that particular instance, I did end up washing the dish with my hand because I just had sardines, and I thought it was best for the welfare of the company that I washed the dish, and she understood that. So this is at the forefront of young people, that they care about these things, and it makes perfect sense for companies to do this.

     

    Richard Lightbound:

    Yeah, that's interesting. I know we've talked in the past, Raff, just about attracting talent, keeping talent in organizations. It's actually a big part of our AI index scoring process. We do talk to the management teams at companies an awful lot about it. I know you're busy at Verity at the moment recruiting as well, and I think as you say, there's absolutely this dramatic shift in terms of attitudes and tolerances with these sorts of millennials and that's a generation's eve aside in terms of their willingness to come and join companies that are sort of ESG friendly.

     

    Raffaello D'Andrea:

    That's correct. They have many choices available to them, and what makes their decision many times are these what we would call secondary benefits, but actually, for them, it's in line with what kind of job am I going to be doing, and am I going to like it, and is my company doing the right thing? That is right up front with their decision-making and apprehension.

     

    Richard Lightbound:

    Yeah. We're always seeing it in some of our index companies that are using it almost as a hook to actually get people in to really progress that ESG policy. Just in terms of ROBO Global's ESG policy, we sort of expanded it quite considerably in 2017. We became a signatory to UN Pri. We're also aligned with the ten principles under the UN Global Compact, and we actually evaluate companies in our universe really using a combination of internal research, regular interaction with the management teams. We also outsource some data to lead and providers such as sustain analytics.

    I think what's really important to highlight is as you look across our three strategies, so ROBO, THNQ, and HTEC, they really tend to lean very naturally towards companies making active efforts to deliver positive ESG outcomes really because automation technology, it's largely about increasing efficiency, productivity. It's about lowering the environmental impact, really freeing up time for us as humans to focus on things that we're frankly better at doing.

    I just want to highlight TSMC, a pretty interesting company in our AI strategy. It's a Taiwan semiconductor manufacturing company, and in our investment research, we rank them very highly in terms of market leadership and tech leadership. We also actually rank them very high right across the E, the S, and the G.

    For a semiconductor manufacturer in Asia is perhaps a little bit of a surprise, but just in terms of very brief highlights why, semi-conductor manufacturers have exposure to conflict materials, and it can be a real risk if they do. So TSMC only purchases raw materials from smelters that are certified as conflict-free. They have a very strong track record in terms of employee treatment and safety. They've got very strong disclosure around the company diversity. In 2019, their waste recycling rate climbed to 96%, and in 2019, their average monthly salary of direct labor in Taiwan facilities was actually three times the minimum average wage in Taiwan.

    So Raff, as we sort of look broadly across our sort of universe of companies that we cover, as we're saying, we're seeing this real shift from simple ESG policies to much more impactful actions, real hard targets. We're seeing real job postings that dedicated ESG resources as well, but do you have any views? Is this happening more around environmental topics? Does social governance need to catch up a little bit here?

     

    Raffaello D'Andrea:

    Yeah. Again, I think the reason you're seeing these tech companies be the leads is that they are used to thinking about moving fast and employing best practices, and it is completely well understood by now that diversity is a huge strength. The more diversity you have in your team, the stronger of a team you have. Again, our company Verity, we're 65 people. We have 22 nationalities within our company. Everyone in our company, everyone, speaks at least two languages. Many speak three. It is a strength for problem-solving, for cohesion. It's huge.

    Our head of engineering is female. Our head of legal is female. Our head of manufacturing is female. Our head of HR is female. There are some companies that strive to have equal representation reflected in their employment. That's a strength. It is absolutely a strength to have this diversity. It is not just about doing the right thing. It is not just about when people ask you or your kids ask you, "Who works at your company?" So to do the right thing. It's just perfectly aligned with running a better business.

     

    Richard Lightbound:

    Yeah. I don't know if you'd agree here, Raff, something that we've really noticed in discussion with companies is just through the pandemic, they've really allowed the work from home an opportunity to hire people from very different backgrounds, as you're saying, different skill sets, different countries. So I think there is going to be a real sort of catch-up, if you will, in terms of social for the rest of this year and next year around diversity. That's a great example with Verity.

     

    Raffaello D'Andrea:

    Yeah, and I think again, I go back to these companies, the ones that are growing quickly. These tech companies, these companies that embrace technology. It is not a coincidence that they have a lot of smart, dedicated young people working in these companies, and they want this diversity. They want diversity of experience. They want their colleagues to come from different backgrounds. They don't want people to be just like them. This is why young people love to travel when they're young, right? This is just aligned with who they are.

    So I think companies that facilitate that will do a better job of recruiting. They will do a better job of retention, and they will make their employees more productive, and they will do better in the markets.

     

    Richard Lightbound:

    Yeah. We agree. It's interesting. So I just wanted to go back to the ROBO Global ESG policy. This is very much something that's evolving over time. As you look at the policy right now, we very specifically exclude companies where there might be any sort of violation of human rights, any severe environmental damage that's been caused, any real sort of violations of fundamental, ethical norms. We also have no direct exposure to fossil fuels or tobacco.

    But the point I'm trying to get to almost is that actually measuring a benchmark in the E, the S, and the G across companies, is a challenge, and opinions differ significantly in the market. We have our own view of companies. We've sourced external data as well, and there are often vast differences. I think what's really important for us is as part of our process, researching the companies anyway, we have a very strong relationship with the management teams. We've got a good relationship with the management teams at the index members. So we feel pretty well-positioned to actually really drill deeper and deeper into ESG aspects.

     

    Raffaello D'Andrea:

    I think I can imagine that because you guys, because I don't do this, Richard and his team do this. I think these companies get a lot of benefits from engaging in conversations because they can hear about other best practices. This is still relatively speaking in its infancy, like 50 years ago. If you could tell someone, forget about 50, 20 years ago, this is the discussions that CEOs are having, they just wouldn't believe you. So it's still in its infancy, so there's a lot of best practices that need to be developed.

     

    Richard Lightbound:

    Yeah. Absolutely. As I said, there are sort of huge differences with opinions and data and views of different companies. Raff, if you don't mind, I was just going to change the topic a little bit. Recently, I think we were exchanging an article. It was talking about USGDP is now back to pre-pandemic levels, and I think what was really interesting is it was saying we've got there. The US has got there. We've only 95% of the workforce at the peak, and that obviously really implies a productivity revolution.

    So just kind of interested in your thoughts there, kind of what's happening. Is that a trend that's going to continue? Then also, I know we're going to get a question from the audience about the impact of robotics and AI on the labor market. So perhaps we could just tackle that one now, as well.

     

    Raffaello D'Andrea:

    Yes. For folks that say that robots and automation don't take jobs away, they're lying. Robots and automation do take jobs. What is true, however, is that they also create jobs. So the question, 130 years ago, the statistics I believe is that 98% of the US population was engaged in agriculture of some sort. Right? Over time, obviously, we've gone from that 98% to something that is probably significantly less than 1% in agriculture.

    So this is inevitable. It's a good thing. Quality of life has improved. I think from a societal perspective, we just need to make sure that we handle these transients properly from a governance perspective, and I don't mean corporate governance, which is what this seminar is about, but actually from the country's governance is that we enable this transition to happen smoothly as possible. When the pace of development, of growth, is fast, you can't just rely on retirements to naturally handle this displacement. You have to be a little bit more proactive, such as allowing folks to have more than one career in their life.

    I think a big part of this productivity gain, alluding to what you said earlier, I think we still need to wait it out a little bit, but I think a clear part of it is just simply people being able to work from home. Especially here in Europe, in Switzerland in particular, it is extremely unusual to live more than 30 minutes from the place that you work. But of course in Canada and the United States, it's not unheard of for people to travel an hour and fifteen minutes each way to go to work. Think of the loss of productivity in doing that. Think of the environmental impact of having cars on the road to do that. You're making your employers much happier. By giving them the ability to work from home, they're going to be more productive because there are fewer hours that they're spending doing tasks that don't add value.

    It makes people more productive. In an obvious way, it makes them more productive because they're happier. So I think a part of that is definitely that.

     

    Richard Lightbound:

    Yeah, thank you. Let me just highlight a couple of companies that are in our strategy just in terms of ESG observation. So the first one is auto-desk. They're actually in ROBO and THNQ strategy. We rank very highly in terms of E, quick examples, why they're actually powering all of their buildings, data centers, and Cloud services now using 100% renewable energy. They reduced their greenhouse gas emissions by 43% since 2009, and they've plopped up over 27,000 hours of one employee volunteering time.

    Another company is Trimble. They sit just in our ROBO strategy. It's a bit of a model company almost across the S and the G. Just quick examples, quick highlights. 14% of their annual revenue is reinvested in technologies. Solutions with Trimble across construction, agriculture, and transportation displayed a reduction of 19 billion pounds of CO2 compared to solutions without Trimble, and they only establish relationships with third-party partners who share that commitment to conducting business fairly, neatly, ethically, and transparently.

    I kind of picked these two, Raff, because they're a little bit lower on the market count spectrum in our strategies, ROBO and the healthcare strategy actually both have a bit of a tilt small to mid-cap companies. But anyway, certainly when we look at our artificial intelligence strategy, we start to see a lot more of the larger-cap type companies, and I'm just interested if you had a view. Are the larger companies doing enough here today? Or are we seeing a lot of perhaps small or mid-market companies really sort of moving faster?

     

    Raffaello D'Andrea:

    I think that it's obviously easier for a smaller company. There's a sweet spot, right? If you're too small, you don't have the luxury. You're just trying to stay alive and grow. If you're too big of a company, there are processes in place. So I think these mid-cap companies, it's not surprising that they can lead the way, especially when they have the right leadership. I think what all of these companies share is, for the most part, is their high-margin businesses.

    So they actually have the ability to invest, invest in the future. It's a great luxury to have, and this goes back to the point you said earlier. This is a great investment in the future. Just the employee retention alone, just being able to attract the best talent, that's a great return of investment. What else are they going to do with their cap?

    That alone pays for itself, but also being able to work with clients, and clients can then downstream can say, "We work with these folks, and look at their stellar record." It a little bit rubs off on them, and of course they have their own employees that like to hear these sorts of things. So it's just really good business, and it makes sense for these mid-cap companies to be using their own.

     

    Richard Lightbound:

    Great. Thank you. Raff, earlier we were talking just within logistics, automation, perhaps some of the more sort of hidden benefits towards the environment and society of robotics and AI. If we just look more broadly at some of the sorts of macro challenges facing society. We talk about a lot of these in our discussions with investors, but things like feeding the world's population, improving healthcare systems, caring for the elderly. Just how important is the role of disruptive tech and innovation in terms of addressing big social challenges like that?

     

    Raffaello D'Andrea:

    Technology is a tool. At the end of the day, that's what it is. It's a wonderful tool that's unique to our species, and tools can be used for good. Tools can be used for bad, and the more powerful the tool, the more potential it has for good and for bad. The potential use for good is incredible. In the robotics world, we always talk about the 3 D's of robotics, and that is things that are dull, dirty, or dangerous. This is what robotics and automation are great for, is to get rid of dull tasks, and that's a service to people.

    You could argue that, when I used to live in Boston, there were folks that would spend their whole lives at the booth, giving you a ticket, taking money, and giving you change, 30, 40 years of their life doing this. You've got to automate those jobs. It's inhumane to have people do those jobs. Now that doesn't mean of course that they're better off on welfare, and again this is that retraining part, but the point being is that these are super dull jobs that really shouldn't exist. Dangerous jobs. If we could use automation to replace dangerous jobs, we absolutely should be doing that.

    I go back to our warehouse inventory solution. Some of these folks are going up at 35, 40 feet with lifting devices, forklifts, doing scanning. These are dangerous tasks. They're very careful, so the injuries are kept low. If there is an injury, it's usually a fatality, but it's a very nerve-racking task when you're at that height, and always being careful about your safety. So there's a huge impact there.

    Caring for the elderly. I'm not a big fan of removing people completely from these tasks, because people need a human touch, so maybe I'm not a big fan of the Japanese style of here's a little robot seal, and now you do need a pet anymore. No, I'm a big fan of having cats, and of course, you can have allergies, et cetera, but having real physical contact with things. Having said that, there's just a lot of tasks, especially when it comes to the elderly, that can be facilitated if you have robotics and automation. There aren't enough people to do these tasks. So you do need the help of automation to address the labor shortage to do these tasks.

     

    Richard Lightbound:

    One question we get asked a lot, Raff, is across our three strategies, so robotics, automation, artificial intelligence, and then healthcare tech and innovation, which has got the biggest, obvious benefits to society? It's a difficult question to respond to, but I think we tend to swing towards our healthcare tech and innovation strategy. It's a very broad set of technologies. It's attacking a lot of the challenges that we have in the healthcare system today. We really trying to invest in themes around shifting from a system where we literally wait for people to get sick and then we then spend an awful lot of money actually treating them. We've got the capabilities now to detect signs of disease and cancer very early, we've got customized treatment plans that we can start to build for individuals.

    It's really a whole series of technologies that essentially is going to drive a better patient outcome. It's going to allow doctors and nurses to spend more time with patients rather than no value-added type tasks and really create a better healthcare system. So we see a lot of obvious benefits to society there, but just wondering if you've got any thoughts about what's happening with technology and innovation in the healthcare industry?

     

    Raffaello D'Andrea:

    I think those are direct benefits that as you said are the most tangible ones you think have an impact, especially on people. Let's be clear. This is really only geared towards people. The environment is much broader than just human beings, so I think you have to have a broad perspective. There's just so much data that's out there that can be leveraged to improve the way that we do medicine, and we are doing that. It's not easy. There's so much variety. There's so much between people, the variances are quite large. So you need a lot of data, but you also need models that take into account the differences between people so you don't just rely on data. You do need models. So there's a lot of nice combination of science, fundamental science, with big data science, is marrying those together to improve processes.

    I had, again as an anecdote, I'm perfectly healthy, but I have a funny heart murmur. So every three years, I have to get a cardiogram to make sure that it's not getting any worse. So I'm talking to my doctor, and he's showing me his new machine that he just got. It was orders of magnitude better than his old one. It takes a long time to make these machines. Not from a technological perspective, but just the approval. He was able to perform that task so much faster than he could before. It was great being there just to see. He was like a kid in a toy store. He was showing me because he knew that I have an engineering background, so he was saying, "Look at this. Look what I can do here, and the volume," and stuff like that.

    It just allows these folks to make better decisions, to catch their mistakes. People welcome this technology. I think all of the impact is positive.

     

    Richard Lightbound:

    Great. Thank you. Raff, I'm just going to dip into a couple of the audience questions that are coming in. There's one that I can't resist, but I think it's going back to where we started when we were looking at the robotics and automation strategy. Over the past seven years, our top-performing subsector being logistics automation, but it's asking if we're surprised. I think what they're getting at is obviously we've got a lot of technology in the robotics and automation strategy as well. We've got a sensing subsector, we've got a computing and AI subsector. But by far, the top-performing subsector was logistics automation.

     

    Raffaello D'Andrea:

    Yeah. It's always easy to not be surprised in hindsight. Again, in hindsight, it is not surprising. In foresight, it wasn't either, because we obviously included it, and me personally, I'm engaged in the space, but it's not surprising because a lot of economic activity revolves around making stuff. And there's just a lot of low-hanging fruit there.

    When we started Kiva in 2003, the original name of the company was This Robot, and we were talking to potential investors, and they just said to us, "You got to get rid of that word robot because you want to be taken seriously by your clients, you can't have the word robot. You need to talk about something else." So we came up with the name Kiva, which to most people means nothing, and that was the point. It means meeting place, by the way.

    There just was no penetration of anything remotely like this. We didn't invent AGDE's, but we certainly invented having warehouses that had a thousand of them running 24/7. This was science fiction to folks. All to say is that the penetration of automation today is extremely small. There is so much more that can be done.

    There was a recent study, I think it was BCG. Something like 95% of all warehouses have little to no automation in them. We're just at the beginning, and of course in 2013 when we started ROBO, we were even more in the beginning. And I predict that we will always be in the beginning. It's just something that we're just starting this process, this ability to think about this. This is magic, right? We have the ability to create an artificial feedback loop that senses information, decides what to do, and actuates upon it without people in the loop. This has only been possible recently, and it's so powerful.

    It's not just about software. Everybody was talking about the software revolution, but the software did not have the ability to close the loop. The software was presenting data to people in a more efficient way. The first killer app of personal computers was Excel and Word, right? Still people. This ability to close this loop is just happening now, and we're at its infancy.

    So it's not surprising that it has led the way, and I believe that it will continue to be a high-performance sector for the next 20, 30, 50 years.

     

    Richard Lightbound:

    That's great. I think some really good messages in there, Raff, just for investors to hear. As we look across the 11 subsectors that are in ROBO and we've got the same approach with the other two themes as well, but each of the subsectors is there to really give investors really broad, diversified exposure to the theme, and we just fundamentally think it's too early to be thinking about picking the winners.

    I think this is a great example. As you say, seven years ago when we put ROBO into the market, who would've thought that in seven years’ time, that logistics automation would be pretty much double every other subsector we've got there? Really plays to this idea that you want broad, diversified exposure.

     

    Raffaello D'Andrea:

    That's correct. In retrospect, it's easy to point the flaws, and this is the important part. It's not that you shouldn't do retrospectives. It's that you should try to understand why did I make the wrong decision so that you don't repeat that mistake. You could argue 3D printing minus 30%, right, that's the performance of that sector. There are going to be some winners and losers, and there were a lot of people, us included, that thought that 3D printing would have a big impact, and it will, actually. It will have a big impact, just like the internet has had a tremendous impact. It's just that it had a false start. I think 3D printing has had a false start.

     

    Richard Lightbound:

    Okay. Raff, there's a question here just about different regions, different countries. Do we see any particular geographies leading in terms of ESG?

     

    Raffaello D'Andrea:

    That's a very good question. I think it's fair to say that the regions that I'm most familiar with of course are North America and Europe. I think a lot of the leadership in North America comes from the private sector, and a lot of leadership here in Europe comes from governments. I'm not a big government person, but I do believe that governments providing subsidies to start industries is a great thing. Like Germany did with solar power, of course, you could argue that their execution maybe was not great and it distorted the market. That's fine, but the intent was there.

    I think that there is more of an expectation here in Europe that the governments should lead the way, and here in Switzerland, that is absolutely the case, and it fits well. In the United States, it seems that the private sector, the leadership is there. Also, cities, not even necessarily states or federal governments, but cities are the ones that are taking the lead. It's just a different model.

    I think it's happening globally. I think everyone is realizing that this is important, that this is what the next generation consumers care about and what the next generation employees care about. Therefore, because of the global situation that we live in, and because it is easier for people to work remotely, I don't think it's tied to any specific region.

     

    Richard Lightbound:

    Yeah. Okay, thank you. Got a question here. It's outside of robots and factories, what areas do you see robots having a positive impact on the environment? I think for us, Raff, the obvious subsector that we would point to in robotics and automation is food and ag. There are a lot of very positive developments there. In terms of the public sector, it's still a relatively young subsector for us, but there's an awful lot of activity in the private sector. There's a lot of interesting companies coming into the public spaces, a lot of M&A activity.

    But really, the big thing there, we see it with companies like Deer. It's all about giving farmers the technology and the AI so that they can get more productivity out of their land with less fertilizer, less water, which is clearly a significant benefit to the environment there. But just wondering if you've got any additional comments there?

     

    Raffaello D'Andrea:

    It's interesting. Maybe just a simple anecdote is car sharing. Actually, car sharing makes things worse in the short term than you would think, because now you have all of these folks that are just driving cars all the time, driving people around from point A to point B. People, before COVID, would just use this service more because it was so convenient to use. To me, the big disruption will happen is when you have autonomous cars, because then you no longer have to move the car via person from point A to point B. Just this will be done automatically. You can much more effectively use the resources that are available. You can actually combine rides together.

    I think our love for the automobile will take a long time before we go away, but I think in the future we will view this just as a means of getting around, and we won't be so tied to the car. There'll still be race tracks, and that's where I think the love will migrate, is people that want to drive the car, just want to do it on the freeway. They'll just go somewhere else and do it.

    So I think that will have a huge societal impact. Self-driving cars will have a huge societal impact. It's completely early days. It's going to take a while before these get the plug.

     

    Richard Lightbound:

    Yeah. Thank you. I think this one's probably for me, Raff. It's a question about within our ESG policy: if we've ever actually excluded companies from the strategies. The answer is yes we have. Probably the most recent example is Hikvision in China. They actually got removed in 2020 because of human rights violations over Beijing's repression of Muslim minorities up in the northwest of China, and we have a number of other examples as well. So yeah, our ESG policies are very much active in that respect.

    Look, Raff, I think we've got a few other questions, but we'll get back to those people directly. I think that was really interesting. It's clearly a topic that is just gathering momentum. We talk about ESG at every single investor meeting that we have at the moment. It's gone from being a sort of a nice to have theme to really a must-have in our investment process. So we spend a lot of time on it. I know we're going to continue to be talking to you about it and getting your guidance, but thank you very much for sharing some of your thoughts with us today.

     

    Raffaello D'Andrea:

    Yeah. If I have 30 seconds or 20 seconds, just say one thing. What a great time to be an investor. You can deploy capital to increase that, to get great returns, and you can be doing the right thing. This is wonderful.

     

    Richard Lightbound:

    Great. Great. And if anyone's interested in receiving our updates, White Papers quarterly reviews, we do put out a bi-weekly newsletter. You can sign up for it at our website or drop us an email and we will add you in. All of our content I should say for those newsletters comes very much internally, so it's from our research team and also from our advisors, including Raff, who's put out a couple of recent articles, actually.

    But Raff, thank you very much and look forward to seeing you soon, hopefully in person.

     

    Raffaello D'Andrea:

    Yes. Thanks, Richard, looking forward to coming over.

     

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