SustainAbility: The Inclusive 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, at least 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 ‘Inclusive’ theme  

The inclusive theme is about supporting fair access to opportunity and ensuring that individuals, businesses, and communities can participate meaningfully in the economy. Companies aligned with this theme can help broaden financial and social inclusion, improve resilience, and create pathways for upward mobility – particularly for underserved or structurally disadvantaged groups. We look for businesses whose products and services enable equitable outcomes, whether by expanding access to finance, improving transparency, or fostering economic stability.

In practice, this can mean investing in organisations that provide affordable credit, advance financial literacy, promote fairer insurance coverage, or improve governance and data accessibility. The inclusive theme ensures that our capital is directed towards enterprises that combine financial strength with a commitment to widening opportunity and supporting more inclusive growth.

The inclusive theme ensures that our capital is directed towards enterprises that combine financial strength with a commitment to widening opportunity and supporting more inclusive growth.

Why ‘Inclusive’ companies can make good investments 

There is often debate about how social and inclusion-related issues translate into financial performance. However, in our experience, the inclusive theme can act as a catalyst – not a constraint – for robust long‑term returns. In our view, companies that actively advance inclusion tend to manage risk more effectively, build stronger customer relationships, and maintain more resilient business models. In the financial sector, regulatory reforms, improved governance practices, and growing transparency around issues such as diversity and community impact have accelerated meaningful progress.  

By integrating sustainability and financial analysis, we identify businesses that are well positioned to thrive as economies become more socially conscious and as inclusive growth becomes a core driver of stability. In our experience, firms that broaden access to essential services – whether financial, digital, or risk-mitigating – tend to unlock new markets, improve their competitive position, and strengthen long-term value creation. We believe that companies that proactively address inclusion opportunities and social risks are more likely to be better managed, more innovative, and more resilient over time.

In our experience, firms that broaden access to essential services – whether financial, digital, or risk-mitigating – tend to unlock new markets, improve their competitive position, and strengthen long-term value creation.

Case study: Mercado Libre

Founded in 1999, Mercado Libre began as a website rather like eBay, helping people and small businesses to sell their products to a wider audience. Fast forward just over a quarter of a century and the site boasts over one hundred million unique active buyers, operating across 18 markets in Latin America, and is the main source of income for over 1.8 million families in the region. If Mercado Libre’s markets were a country, they’d have a GDP larger than any country outside of China or the USA.

With a particular focus on Brazil, Argentina and Mexico, the company today has over 140,000 new listings of products for sale every hour, largely driven by small businesses. It backs this up with a best-in-class logistics network, online advertising for its customers and additional business services. But while its products remain highly relevant in improving access for small businesses and consumers, it’s in financial services where we believe the firm has been most transformational.

It began with Mercado Pago, a payments and finance ecosystem which now features digital wallets, payments between both physical and offline consumers and retailers, savings and credit products. It has also established lending platforms to provide its small business retail customers with working capital and financing options for consumers purchasing more expensive products like white goods.

In markets which were traditionally cash-based, informal economies, its digital payment products are more reliable, safer and faster. It also helps customers tackle the problem of high inflation through a digital wallet linked to a money market fund (which offers same-day withdrawals).

The management team continues to invest heavily into the business and invest into aiming to build Mercado Libre into a Latin American champion fit for the future. 

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. 

The actions we take may not always apply to any specific Royal London Asset Management product or strategy as each will have their own investment objective and make investment decisions according to this. Please check the product details for specific objectives and outcomes.