ESG vs. Robots? It's Simply a Battle That Doesn't Exist

ESG vs. Robots? It's Simply a Battle That Doesn't Exist
 

Written by: Richard Lightbound, CEO of ROBO Global EMEA

For the past week, I’ve been traveling around Italy on a fascinating, whirlwind tour of some of the best and brightest companies and investors in the region. It’s an excursion with a purpose: as we approach the end of Q3, it’s time to rebalance the ROBO Global Index, which means potentially adding some rising stars to the mix that pass through our research and quality filters. It’s been amazing to ride on the coattails of Professor Wyatt Newman, one of ROBO Global’s key advisors (who we fondly refer to as “the PhDs”) as he prepared for his TEDx Luguano talk on Professions of the Future. As you can imagine, traveling with Wyatt is a continuous education when it comes to the nuances and complexities of robotics, automation, and artificial intelligence (AI). I’m stunned over and over again, not only by what is already possible using these technologies, but also by what the future will look like on the very near horizon.

When Wyatt talks to the investment community about how robotics and AI will change the entire landscape of our lives in the next decade (no, this is no longer futuristic dreaming, but our inevitable reality), the topic of ESG seems to rise to the top of the discussion more than ever. I’m not surprised. While ESG investing (short for Environmental, Social, and Governance) is rising in popularity in the US, it is still considered a “nice to have” component in a portfolio. In Europe, on the other hand, ESG is nearly always part of the investment discussion; some individual and institutional investors won’t even consider non-ESG investments. 

If that sounds foolish from a returns perspective, you haven’t seen the flurry of media coverage on the topic, including this article in last week’s Financial Times. While some attribute the recent high performance of ESG companies to a “cyclical blip,” it’s clear that not only are “green stocks” outperforming at the moment, but also that the focus on ESG among younger investors is making the development of regulatory guidelines for ESG (which currently don’t exist) non-negotiable. At ROBO Global, we have already established our own ESG policy and screening process.

Like many of my fellow Europeans, I place a high value on ESG. I believe it’s vital for investors to “put our money where our mouths are” to influence industry moving forward. Perhaps this is why the perceived battle between ESG and robots is a bit infuriating to me. Just talk to Wyatt for an hour and you too would feel frustrated by the mythical war of ESG vs. Robots.

Related: Investor Spotlight: Agricultural Robots Are Set to Solve the Global Food Crisis

Clearly, part of our fascination with robots in general, and perhaps AI specifically, is that it threatens our sensibilities of “man vs. machine.” It’s a popular topic in literature, movies, and even the news media. It’s easy to pit robots against humans, but is the threat real? Or could it be that robotics, automation and artificial intelligence (or RAAI) supports humans—and our desire for a world that is driven by ESG ideals?

Here’s some food for thought:

Robots support and strengthen the human workforce.


For decades, we’ve relied on robots to replace humans for deep-space exploration. Today, robots continue to keep humans safe by performing the dangerous work of inspecting deep-sea pipelines. “Petrobots” are programmed to do jobs that are too risky or impossible for humans to achieve. Autonomous trucks are poised to protect the lives of the nearly 800 drivers killed each year in one of the deadliest jobs in the US. And while collaborative robots are touted for their ability to drive efficiencies in factories, the biggest benefit they provide is a reduction in workplace injuries—to humans. (Read more in Robots Can Help Reduce 35% of Work Days Lost to Injury.)

Robots improve medical outcomes.


First used in the healthcare in 1985, robots have had a major impact on the industry, transforming procedures in nearly every area of medicine, including neurosurgery, laparoscopy, orthopedic surgery, emergency response, and a long and growing list of other disciplines. Robot-assisted surgeries enable surgeons to work longer hours and potentially extend the length of their careers. Robotic prosthetics like this will be life changing for thousands of current and future amputees.

Robots are good for the environment—and the world.


Robots reduce the cost of recycling by “seeing” non-recyclable materials on a conveyer belt and separating and sorting materials. “Muscle robots” are being used to clean up the reactors at Fukushima Daiichi nuclear plant. Underwater robots are in the works to help salmon farmers in Singapore complete the otherwise back-breaking tasks of ensuring their nets don’t get clogged so fish can grow in healthy conditions. Community robots are expected to increase the quality of life for people in developing countries, supporting more sustainable, healthy, and safe communities by testing water quality, providing accessibility to healthcare, performing dangerous agricultural work, and more.

The list goes on and on. While it is true that robotics and AI are used in what some consider to be ESG-averse industries such as oil and gas and certain agricultures, it’s clear that RAAI as a whole is doing much more good than harm from an ESG perspective. Robots will replace workers in certain areas of industry, but looking at the broader picture, I can only wonder if there’s something even more important for our human workforce to achieve to make our world a better, more healthy place to live—all with the support and assistance of RAAI. The first step? Let’s put the “war” between ESG and robots to rest once and for all.

The ROBO Global® Robotics and Automation Index and the ROBO Global® Robotics and Automation UCITS Index (the “Indices”) are the property of ROBO who have contracted with Solactive AG to calculate and maintain the Indices. Past performance of an index is not a guarantee of future results. It is not intended that anything stated above should be construed as an offer or invitation to buy or sell any investment in any Investment Fund or other investment vehicle referred to in this website, or for potential investors to engage in any investment activity.
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China's Push Toward Excellence Delivers a Global Robotics Investment Opportunity

China's Push Toward Excellence Delivers a Global Robotics Investment Opportunity

Written by: Jeremie Capron

China is on a mission to change its reputation from a manufacturer of cheap, mass-produced goods to a world leader in high quality manufacturing. If that surprises you, you’re not the only one.


For decades, China has been synonymous with the word cheap. But times are changing, and much of that change is reliant on the adoption of robotics, automation, and artificial intelligence, or RAAI (pronounced “ray”). For investors, this shift is driving a major opportunity to capture growth and returns rooted in China’s rapidly increasing demand for RAAI technologies.

You may have heard of ‘Made in China 2025,’ the strategy announced in 2015 by the central government aimed at remaking its industrial sector into a global leader in high-technology products and advanced manufacturing techniques. Unlike some public relations announcements, this one is much more than just a marketing tagline. Heavily subsidized by the Chinese government, the program is focused on generating major investments in automated manufacturing processes, also referred to as Industry 4.0 technologies, in an effort to drive a massive transformation across every sector of manufacturing. The program aims to overhaul the infrastructure of China’s manufacturing industry by not only driving down costs, but also—and perhaps most importantly—by improving the quality of everything it manufactures, from textiles to automobiles to electronic components.

Already, China has become what is arguably the most exciting robotics market in the world. The numbers speak for themselves. In 2016 alone, more than 87,000 robots were sold in the country, representing a year-over-year increase of 27%, according to the International Federation of Robotics. Last month’s World Robot Conference 2017 in Beijing brought together nearly 300 artificial intelligence (AI) specialists and representatives of over 150 robotics enterprises, making it one of the world’s largest robotics-focused conference in the world to date. That’s quite a transition for a country that wasn’t even on the map in the area of robotics only a decade ago.

As impressive as that may be, what’s even more exciting for anyone with an eye on the robotics industry is the fact that this growth represents only a tiny fraction of the potential for robotics penetration across China’s manufacturing facilities—and for investors in the companies that are delivering or are poised to deliver on the promise of RAAI-driven manufacturing advancements.

Despite its commitment to leverage the power of robotics, automation and AI to meet its aggressive ‘Made in China 2025’ goals, at the moment China has only 1 robot in place for every 250 manufacturing workers. Compare that to countries like Germany and Japan, where manufacturers utilize an average of one robot for every 30 human workers. Even if China were simply trying to catch up to other countries’ use of robotics, those numbers would signal immense near-term growth. But China is on a mission to do much more than achieve the status quo. The result? According to a recent report by the International Federation of Robotics (IFR), in 2019 as much as 40% of the worldwide market volume of industrial robots could be sold in China alone.

To understand how the country can support such grand growth, just take a look at where and why robotics is being applied today. While the automotive sector has historically been the largest buyer of robots, China’s strategy reaches far and wide to include a wide variety of future-oriented manufacturing processes and industries.

Related: Smooth Tomorrow's Market Volatility With a Smart Approach to Robotics & AI

Electronics is a key example. In fact, the electrical and electronics industry surpassed the automotive industry as the top buyer of robotics in 2016, with sales up 75% to almost 30,000 units. Assemblers such as Foxconn rely on thousands of workers to assemble today’s new iPhones. Until recently, the assembly of these highly delicate components required a level of human dexterity that robots simply could not match, as well as human vision to help ensure accuracy and quality. But recent advancements in robotics are changing all that. Industrial robots already have the ability to handle many of the miniature components in today’s smart phones. Very soon, these robots are expected to have the skills to bolster the human workforce, significantly increasing manufacturing capacity. Newer, more dexterous industrial robots are expected to significantly reduce human error during the assembly process of even the most fragile components, including the recently announced OLED (organic light-emitting diode) screens that Samsung and Apple introduced on their latest mobile devices including the iPhone X. Advancements in computer vision are transforming how critical quality checks are performed on these and many other electronic devices. All of these innovations are coming together at just the right time for a country that is striving to create the world’s most advanced manufacturing climate.

Clearly, China’s trajectory in the area of RAAI is in hyper drive. For investors who are seeking a tool to leverage this opportunity in an intelligent and perhaps unexpected way, the ROBO Global Robotics & Automation Index may help. The ROBO Index already offers a vast exposure to China’s potential growth due to the depth and breadth of the robotics and automation supply chain. As China continues to improve its manufacturing processes to meet its 2025 initiative, every supplier across China’s far-reaching supply chains will benefit. Wherever they are located, suppliers of RAAI-related components—reduction gears, sensors, linear motion systems, controllers, and so much more—are bracing for spikes in demand as China pushes to turn its dream into a reality.

Today, around 13% of the revenues generated by the ROBO Global Index members are driven by China’s investments in robotics and automation. Tomorrow? It’s hard to say. But one thing is for certain: China’s commitment to improving the quality and cost-efficiency of its manufacturing facilities is showing no signs of slowing down—and its reliance on robotics, automation, and artificial intelligence is vital to its success.

Want all the details? Download the ROBO Global Investment Report - Summer Brings Best ROBO Earnings in Six Years or visit us here.

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ROBO Global LLC is the creator of the ROBO Global® Robotics and Automation Index series, which provides comprehensive, transparent and diversified benchmarks representing the ... Click for full bio