Embedding Sustainability is a Banker
Fascinating article in this week’s Economist, traditionally no friend of sustainability, about investing in low carbon firms. They quote research by BlackRock who found that companies in the top quintile for cutting their carbon intensity outperformed the MSCI World Index by 4% since 2012, while those in the bottom quintile trailed the Index by 5%.
On the downside, the author quotes other research which shows ‘green mutual funds’ trailed others between 1991 and 2014. The blame for this is put on volatile fossil fuel markets and Government policies. My own (rather modest) green investments seem to have flat-lined over the last couple of years, deflating my enthusiasm slightly.
The article also mentions that the cost of LEDs has plummeted by 90% since 2010, showing how quickly green technologies are still maturing. It will be very interesting to see how this and similar price drops through economies of scale and innovation across the green tech sector will impact in the medium term.
The conclusion from all this is that while the green sector itself is still immature and thus risky, embedding sustainability into a conventional company will almost certainly reap dividends.