So welcome back to our Impact investment series Impact Investing Under the Microscope. Now for this second installment of our series, we are talking about genomics and social inclusion. And I have two excellent speakers with me here today, Jesper Fund, manager of the Better Health Solutions Strategy, and later Tembeka Stimela Dakpo Fund manager of our Diversity and Inclusion Fund. Now let's start with genomics first. In a nutshell, genomics has the potential to revolutionize health care, and we have some really interesting company examples with us here today. So, Jess, I have a couple of questions for you. What is the human genome and what role does genomics play? So the human body comprises of trillions of cells now in all living cells, with the exception of a few, you carry two copies of your entire genome. You can think of the genome as a book made up of many short stories, which we can refer to as genes. Now that the letters we call them bases and you might remember from school biology, we refer to four chemical bases, A, C, G and T. Now the entire genome is 3 billion bases long. Now, the first human genome was sequenced as part of the Human Genome Project. It took 13 years and cost billions of dollars. Today it can be done in a matter of hours and cost 2 to $300. And cost is a really important element of the equation here, because lower cost sequencing means more researchers are able to afford to incorporate genetic sequencing within their projects, as well as health care systems. They're able to afford to leverage the technology to improve medical outcomes. Jess When we focus on the health care side, what role does the genome then play in treating diseases or diagnosing diseases? Yeah, so so we can split the market into kind of two broad sections. You've got the, the part which is helping researchers conduct cutting edge research and then the part which is helping help health care professionals with clinical outcomes. And it's important to recognize that the research portion feeds into the clinical applications. If we were just to focus on the clinical side for a second, we can take rare diseases as an example. Now around 300 million people globally suffer from rare diseases. There are around 7000 rare diseases that have been classified. If we look at Europe, on average, it takes five years to get diagnosed with a genetic disease. And unfortunately, in 50% of cases, patients don't receive a diagnosis. Genetic sequencing can really help with the diagnosis here. If we take a disease such as Huntington's disease, this is where the three chemical bases C a G are repeated in the genome. If that repeat happens 40 times in a row, someone can be said to have Huntington's disease and genomics. Genetic sequencing plays a really important role in quicker diagnostics, diagnosis and accurate diagnosis, and that can lead to earlier intervention. Thanks, Jess. If you now take this back to impact investing, do you have a couple of company examples for us? Yeah, definitely. So we hold a number of investments that we believe will really benefit from the genomic revolution to which which I can talk about Illumina and Oxford Nanopore Now both of these companies benefit from the razor razor blade model. So once they place a sequencer with a customer, they benefit from a recurring profitable revenue stream through the sale of consumables and services. If we take us listed Illumina now, they're the market leader. We estimate them to have around 70% market share. They really lead when it comes to high throughput sequencing. They have 20,000 sequencers installed globally and they can sequence 20,000 human genomes a year through their latest sequencer, which is kind of an n fold of what prior sequences can do. If we look at UK listed Oxford Nanopore now, their focus really is on long read technology. Long read technology provides deeper and richer data. So the Human Genome Project, which concluded in 2003 that actually only read 90% of the genome, it was only in the last it was only last year that we were able to read the remaining dark genome. So that's 20 years later and that's with the help of long read technology, the Oxford Nanopore smallest sequencer costs as little as 2,000 USD. This means more researchers can afford to include it as part of their projects, and costs play a crucial role. In the accessibility. Lower costs mean more researchers can afford to include genetics and sequencing within their research projects. Lower costs also ensure health care systems can afford to leverage the technology to improve medical outcomes. If you take a bit of a wider view and step away from health care, we've looked at therapies, we've looked at diagnostics. But if you take a wider view, are there other uses for genomics? Yeah, there's a ton. So within agriculture, food security, water safety, environmental testing, even areas such as biodiversity conservation, if we just take agriculture for a second. The ability to sequence the genome of a plant can help understand the characteristics. This can be then be used when when trying to crossbreed particular varieties. The aim with the aim to produce plants which actually they're more nutritious. The yield is higher. Perhaps they require less water, less inputs. They're more resistance to to disease. We think we're really scratching the surface when it comes to leveraging genetic sequencing within health care, let alone the areas outside health care. But we're confident that genetic sequencing will play a really important role in the advancement -of society. -Yeah, clearly interesting health care side and also in the wider area. So thanks, Jess. That's really a great introduction to genomics. Thank you. So now we are coming to the second part of today's episode. We'll be talking about social inclusion. Now, clearly there have been good advancements in social inclusion over the last couple of years, but more needs to be done. And this is particularly true in the wake of the Covid 19 pandemic, which has disproportionately affected more vulnerable and poorer parts of the population. Now, for this part of the episode, I'm delighted to be joined by Tembeka Darboe, a fund manager of the Diversity and Inclusion Fund. Welcome to Kew Gardens. Tembeka. Thank you. -Suzanne. -Now, when we talk about social exclusion and social inclusion, can we focus first a bit on the challenges and the complexities that we're facing in terms of social exclusion, -please? -Yeah, certainly. I mean, you touched on some of them, especially given the global pandemic. But if we take that and we also take the current cost of living crisis, we have seen a widening gap in income and wealth inequality and that has partly erased some of the gains that have been made over the past two decades. And unfortunately, a lot of this is actually tends to disproportionately impact women and ethnic minorities. So gender inequality on its own is estimated to cost the global economy around $160 trillion in human capital loss. And in major economies such as the US, racial inequality is estimated to cost. That economy around 1 trillion, which is close to 4 to 6% of GDP over the next decade. So clearly that's those are areas that need to be tackled, especially amidst the crisis that we're currently in. From the investment side, I think it's more about more equitable allocation of capital towards social issues. Clearly it is important to be looking at climate and environmental topics, but those as well tend to disproportionately impact more vulnerable societies, and this could be as a result of lack of infrastructure. So the inability to deal with natcat related climate climate related natcat activity, it could also be the proximity towards polluted areas as examples. And then finally, when we think about affordable credit, something like Bank Rakyat is a micro lender in Indonesia that provides, you know, micro lending products that enable people to be able to supplement their income or to be able to grow -their businesses. -Now, clearly quite challenging areas here and complexities we have to consider when we look at the more positive side then what are potential solutions to drive more social -inclusion? -I think infrastructure is probably one of the most vital ways that that can be done and it can be anything between physical infrastructure. So that could be digital or mobile infrastructure that allows people to better be able to connect or the unbanked populations to have access to mobile payments systems as examples. And then of course, you've also got, you know, financial infrastructure. So providing greater access to affordable credit or micro loans as a way that people can empower themselves through other supplementing their income or by growing their small businesses. These are the ways that, you know, one could think about driving greater social inclusion in different. Society's thanks to Becca. I think it's really good and encouraging to see that there are several allies to get to more social inclusion. Now, given that this series is about impact investing. Do we have a couple of examples that you can bring to life? Well, yeah. I think one of the good examples that come to mind would be Helios Towers, which is a mobile Towers business operating primarily within Africa. So we're talking regions such as the DRC or Tanzania, where mobile penetration could be lower than 50%. And by by enabling, you know, tower usage and the ability for these populations to tap into mobile communications, again, it helps them empower themselves through those tools. Another example could be an affordable housing company such as Kittitas, which builds second hand homes, or rather it refurbishes second hand homes. And in a society like Japan, where 85% of the housing stock is actually new build by providing second hand homes, you can provide them significantly cheaper prices, which is close to half that of a new build and also at lower mortgage rates versus the rural rents that people would have to pay otherwise. Again, you know, seeing social inclusion come through in that way and then finally, you know, thinking about affordable credit. Bank Rakyat is a micro lender in Indonesia that has really, you know, provided a platform for which people could have access to credit. And it reaches close to 35 million people with what it does. And so this really just gives you an example of the various ways that one could invest -when thinking about social inclusion. -Thanks, Rebecca. It's really encouraging to see so many different examples to drive more social -inclusion. -Yeah, absolutely. So this brings the second episode to an end. We've covered genomics and social inclusion in this one, and in case you've missed it, we already had a first episode where we talked about impact investing one on one, and I can already announce that we have a third episode coming up where we focus on green hydrogen. So stay tuned.