Investing in good business doesn’t mean sacrificing investment returns. In fact, according to Bryce Doherty, UBS’s Head of Global Asset Management, investing based on your Environmental, Social and Governance (ESG) values actually makes for a better investment.
“It is not just people wanting to make a statement about how they invest. ESG investing does not equal underperformance, ESG investing enhances the return for the investor.’’
Doherty goes on to explain why, “About 70–80 per cent of a company’s value is represented in non-financial data — the ESG data. Fast forward 10 or 20 years and ESG will be part of the investment process everyone has to use.”
Further supporting this is The Carbon Clean 200 report, Q3 2016. It ranks the largest publicly listed firms worldwide by their total clean energy revenues, as rated by Bloomberg New Energy Finance. The companies on the list are said to be outperforming their more polluting counterparts by as much as three times.
Toyota, Panasonic, Tesla, Vestas and DONG Energy are among the top-ranked companies in the first ever Carbon Clean 200 list.
Toby Heaps, CEO of market research firm Corporate Knights and report co-author, said: “The Clean200 nearly tripled the performance of its fossil fuel reserve-heavy counterpart over the past 10 years, showing that clean energy companies are providing concrete and measurable rewards to investors.”
“What’s more, the outstanding performance of this list shows that the notion that investors must sacrifice returns when investing in clean energy is outdated. Many clean energy investments are profitable now, and we anticipate that over the long term their appeal will only go up as technologies improve and more investors move away from under performing fossil fuel companies.”
More than 70 of the companies included in the list receive a majority of their revenue from clean energy, with most of the 200 from China (66 entries) and the US (40), although there is also strong representation from Japan (20), Germany (8), India (7) and Canada (5).
Toyota Motor tops the list closely followed by Siemens, while there are also strong showings for Schneider Electric (4), Panasonic (5), Vestas Wind (7), Philips Lighting (8), DONG Energy (11), Tesla Motors (17), Gamesa (18), First Solar (19) and Samsung (23).
The list excludes all oil and gas companies and utilities which generate less than 50 per cent of their power from renewable sources, as well as companies which engage in “negative climate lobbying” or profit from tropical deforestation, weapons manufacturing, and the use of child and/or forced labour.
All of which is a great sign for those interested in investing in good business. No longer should people consider investing in sustainable industries a profit sacrifice, as all the signs are showing it as win win.
Image by: Jon Tyson