The green side of investments is usually easy to understand. We can measure renewable energy production, a reduction in CO2 emissions - or maybe there's an innovation that might disrupt an incumbent brown industry? This is great for certain parts of the value chain that have easy descriptions – but what about those that don't? And what about those companies that don't easily slot into either E(nvironmental) or S(ocial) – but straddle both?
Nvidia is a such a company, and one we get asked about quite a lot. Why Nvidia? What makes Nvidia OK in a fund that focuses on companies and how they contribute to solving the UN Sustainable Development Goals? Below are some highlights that are relevant in this context.
- Technology enablers are often more diversified and are not necessarily branded as "green" or "ESG" companies. Something that often represents an interesting potential upside from an investment point of view, especially if they are riding similar trends.
From Nvidia to IBM – such companies are essential if we are to succeed in a green transition, but also often enable success on the social side as well. IBM acts as an enabler across issues like automation, data security and AI.
In July 2021 Nvidia along with partners such as AstraZeneca, Kings College London, and Oxford Nanopore, delivered the Cambridge-1 supercomputer, which they hope "will make the process of preventing, diagnosing and treating disease better, faster and cheaper".
The supercomputer represents a 100 million dollar investment by Nvidia, focusing on artificial intelligence – problem-solving by applying computer science to gigantic sets of data.
(UK supercomputer Cambridge-1 to hunt for medical breakthroughs | Artificial intelligence (AI) | The Guardian)
- The Nvidia Omniverse, listed in Time Magazine's Best Inventions of 2021, represents an important point for all avid gamers – the technology has multiple applications, is "useful for planning infrastructure like roads and buildings, and can also be used to test autonomous vehicles". That's not all, says Time: "Architects like Foster + Partners are using the tech to visualize building details earlier in the design process, and BMW has built a “digital twin” of one of its factories, enabling the company to test more efficient assembly-line possibilities".
(NVIDIA Omniverse: The 100 Best Inventions of 2021 | TIME)
This is a commonly heard argument when it comes to Nvidia, since it has perhaps best brand recognition within PC-gaming – and the application of this technology to other sectors and industries is less well known.
- Much of the automotive industry is currently in transition – it is becoming more efficient, and seemingly electrified – but the process, and the adoption of required infrastructure needs to increase in pace.
Electric automaker XPeng is only the most recent addition to the list of vehicle producers and developers that are now utilizing the NVIDIA DRIVE Orin. This is high-performance AI platform, which is used to "perceive the surrounding environment, localize the car to a map, and plan and execute a safe path forward", supports autonomous driving
(https://www.nvidia.com/en-us/self-driving-cars/drive-platform/hardware/)
Other companies that currently use the same platform include: Lotus, Baidu, WM Motor, Mercedes-Benz, Volvo Cars and NIO.
(https://www.greencarcongress.com/2021/11/20211122-nvidia.html)
There is obviously exposure to much more when investing in a company such as Nvidia. However, our thesis is that the application of this technology is becoming much more central to our success in solving many societal challenges. No single company is a solution on its own – but Nvidia has more solutions than many, and I like where this company is headed!