SustainAbility: The clean theme

At Royal London Asset Management our sustainable funds are built around four core sustainability themes: Clean, Healthy, Safe, and Inclusive.

We seek out companies that make a positive contribution to one or more of these themes, both through what they offer (their products and services) and how they operate. To qualify for potential selection, more than half of a company’s revenues must come from activities aligned with these sustainability themes. The aim of this thematic approach is to ensure that our investments are financially robust, while supporting a more sustainable future.

The ‘clean’ theme

The clean theme is about supporting the transition to a low-carbon economy and tackling environmental challenges such as carbon emissions, pollution, and biodiversity loss. Companies aligned with this theme are expected to make a tangible, positive impact on environmental sustainability. We look for businesses providing products and services to protect, preserve and enhance our environment. This can be by reducing emissions, improving resource efficiency, or protecting natural habitats.

In practice, this could mean investing in businesses that use renewable energy, promote circular resource use, or manage water more responsibly. The clean theme ensures that our capital is directed towards enterprises that combine financial strength with environmental responsibility.

Why ‘clean’ companies can make good investments

There is often debate about the relevance of environmental issues to investors, but in our experience, the clean theme can act as a driver, not a constraint, of investment performance. We believe that companies that proactively address environmental risks and opportunities tend to be better managed, more innovative, and more resilient over the long term. By integrating sustainability and financial analysis, we identify businesses that are well-positioned to thrive as the world transitions to a greener economy.

We believe that companies that proactively address environmental risks and opportunities tend to be better managed, more innovative, and more resilient.

Case study: Comfort Systems

A prime example of the clean theme in action is our investment in Comfort Systems, which in our view is a leading installer of heating, ventilation, and air conditioning (HVAC) systems. HVAC systems are essential to modern living and working environments, but they have historically been major contributors to greenhouse gas emissions due to reliance on fossil fuels and polluting refrigerants. Today, the shift towards electrification and more efficient equipment is transforming the sector. Comfort Systems is among the companies at the forefront of this change, replacing outdated systems with modern, energy-efficient alternatives and maintaining existing infrastructure to reduce leaks and inefficiencies.

As the US undergoes reindustrialisation and power demand rises, especially from data centres, Comfort Systems is installing state-of-the-art systems to maximise efficiency and minimise emissions. The company is also benefiting from the growth of AI and data infrastructure, which is driving demand for advanced HVAC solutions. This transformation is reflected in Comfort Systems’ financial performance, with record order backlogs and rising revenues and profits [1].

Our analysis reveals that well over 75% of Comfort Systems’ revenues can be classified as clean [2]. This mainly comes from the mechanical side of the business, which is involved with the installation of HVAC systems. As such, it reaches the sustainability standard that we require for inclusion in our sustainable funds.

As we can see, investing in companies aligned with the clean theme shows how environmental responsibility and financial success can go hand in hand. Examples like this demonstrate that when it comes to the cleaning up the environment, and looking for potentially competitive financial returns, investors don’t need to pick a side.

[1] Comfort Systems USA Reports Second Quarter 2025 Results | Comfort Systems USA

[2] Royal London Asset Management team internal research

For professional investors only. This material is not suitable for a retail audience. Capital at risk. This is a financial promotion and is not investment advice. Past performance is not a guide to future performance. Reference to any security is for information purposes only and should not be considered a recommendation to buy or sell.

The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested. Portfolio characteristics and holdings are subject to change without notice. The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change. Forward looking statements are subject to certain risks and uncertainties. Actual outcomes may be materially different from those expressed or implied.