Q3 2025 commentary
Environmental
- Google and Microsoft announced separate agreements with waste management company Vaulted Deep. The company uses technology originating from the oil and gas industry to inject carbon-rich organic waste deep underground for permanent storage. The waste, which includes biosolids, manure, agricultural and food waste, and paper sludge, would usually be incinerated, landfilled, or spread over land, creating carbon emissions. Vaulted Deep utilises deep well injection to store waste in stable geologic formations sealed by impermeable layers of rock thousands of feet underground, permanently removing carbon and reducing pollution from contaminants such as PFAS. Microsoft signed a long-term offtake agreement with the company under which Vaulted Deep has agreed to deliver up to 4.9 million tonnes of carbon dioxide removal credits over 12 years. Google has agreed to purchase 50,000 tonnes of credits from Vaulted by 2030 and is partnering with the company to establish a methodology to quantify the methane emission reductions achieved by Vaulted’s process.
- Microsoft announced a carbon offtake agreement with Copenhagen Infrastructure Partners (CIP) and Danish waste-to-energy company Vestforbrænding. Microsoft has agreed to purchase around three million tonnes of carbon removal units generated by CIP and Vestforbrænding’s joint venture ‘Gaia Project’, a waste-to-energy plant using carbon capture and storage technology to remove carbon permanently.
- AI hyperscaler Nscale and industrial company Aker have agreed on a deal to provide Microsoft with computing power from a new large-scale AI infrastructure project in Northern Norway. The project’s location was chosen due to its abundant hydropower and low local electricity demand, which will enable the project to operate entirely on renewable energy. The three companies signed a five-year deal commencing in 2026.
- Stegra, a Swedish green iron and steel manufacturer, announced two deals with Microsoft. The deals aim to advance the use of near-zero carbon emissions steel in Microsoft’s data centre operations. Stegra utilises green hydrogen instead of fossil fuels to refine iron ore into green iron at their facility, which is powered by renewable electricity.
- Google, Kairos Power, and Tennessee Valley Authority (TVA) announced a collaboration to deliver advanced nuclear energy to Google’s data centres in the US. Under the collaboration, TVA will deliver up to 50MW of energy to the grid. Google will receive clean energy attributes from TVA to support its data centre operations in Tennessee and Alabama.
- Google and energy start-up Energy Dome announced the launch of a new long-term partnership. The partnership aims to deploy Energy Dome’s advanced long-term energy storage (LDES) technology globally. Energy storage is a key component in the clean energy transition, given the intermittent nature of many renewable energy sources.
- Brookfield Asset Management and its clean energy platform, Brookfield Renewable, announced the launch of a Hydro Framework Agreement (HFA) with Google. The agreement is for the delivery of up to 3,000MW of hydroelectric capacity to power Google’s operations across the US. The deal is the largest ever corporate clean power deal for hydroelectricity.
Innovation
- Microsoft announced that it has successfully tested a new chip cooling system that removes heat up to three times better than existing cold plate technology. The new technology utilises microfluidics in an approach that takes the liquid coolant directly inside the chip via tiny channels etched onto its back. Existing cold plate cooling methods are separated from the chip itself by several layers, which reduces the amount of heat they can remove. The microfluid approach has the potential to boost the efficiency and improve the sustainability of next-generation AI chips.
Last Quarter RRI Change
Biggest Decrease
L'Oreal -9
Biggest Increase
Amadeus +23
Amadeus’ RepRisk Index score increased by 23 during Q3 2025. A class action lawsuit was submitted against the company alleging that its software platform enables luxury hotel chains to coordinate price increases by sharing occupancy data. The complaint claims hotels such as Marriott and Ritz-Carlton use Amadeus’ Demand360 software to increase prices during periods where competing hotels are full. Amadeus’ RepRisk Index score has been zero since April 2024. The large increase reflects the novelty of negative coverage relating to Amadeus.
*Source: Bloomberg and company reports. Environmental numbers are weighted averages, others are simple averages except "R&D as a % of sales," which is a median. The Environmental numbers presented above are a guide only as only c.75% of portfolio companies reporting comparable numbers. Where constituent numbers are not available these are estimated by Fundsmith LLP Research based upon nearest comparable sector numbers obtainable and scaling for company’s assets. "Organic Growth” is the trailing twelve month, reported average sales growth excluding M&A and FX, using last reported numbers. Capital Impact™ is the Productive Asset Investment Ratio (capex/depreciation) multiplied by Return on Invested Capital (EBIT/invested capital) as last reported. The more productive the capital investment the higher the number.
RepRisk Data is sourced from RepRisk ESG Business Intelligence www.reprisk.com. RepRisk Indicator (RRI) uses an algorithm to access the risk of reputational damage to companies from 28 ESG issues and a variety of specific and thematic “hot topics”. E.g. Coral reef damage, human trafficking or threats to endangered species. 0-25 denotes low risk exposure, 26-49 medium risk exposure, 50-59 high risk exposure, 60-74 very high risk exposure and 75-100 extremely high risk exposure. We use the RRI to calculate our most/least sustainable portfolio firms. E, S and G scores are the weighted average percentage of the news stories about the related topic categories respectively. RRI change is how much the weighted average RRI score has changed in the last 30 days with best/ worst performer the largest movers. Peak RRI score is the highest weighted average RRI score in the last 2 years.
