V - eco investment
Colour me green Investing in environmentally friendly companies doesn’t mean you have to take a knock on returns. Quite the opposite, in fact Words by Georgina Guedes
P
eople are increasingly conscious of the
Of course, the mere act of reporting on
ethics and sustainability of the companies
environmental issues doesn’t actually make a
While certain industries have been earmarked for their
in which they invest their money. Nobody
company green, and there are clear leaders in
sustainability, these are not always the best industries
wants to make a few bucks off an unethical
environmental management and in the fact
to invest in as they may already be overpriced. Here’s
or environmentally harmful business process.
that the services that they provide are green.
a list of industries on which Gray is focusing at present
But despite various mechanisms being put
However, as with any investment, this isn’t
from both an environmental and an ethical standpoint:
in place that require companies to show their
just about identifying the companies you
true environmental, social and ethical colours
like – it’s about identifying those that will
1 Mobile telephony
in their financial reporting, it remains tricky
deliver a good return.
Companies such as MTN and Vodacom are big
to identify the truly green companies – and those that offer good investment potential.
INDUSTRIES TO WATCH
‘As clients become more discerning about
employers, empowering people in rural areas, and will
how and where they allocate their capital –
ultimately create efficiencies in the supply chain, which
‘One of the dominant mind-sets is that, if
aligning their personal philosophies with
will have considerable benefits for the environment.
you invest in line with your views and values,
their money philosophies – people have
2 Platinum mining
you have to be prepared to take a discount on
been trying to build green investment funds,’
Despite the political complexity, platinum is unique
returns,’ says Malcolm Gray, portfolio manager
says Gray. ‘The problem is that, intellectually,
environmentally – it’s being incorporated into the fuel
of responsible investments at Investec Asset
this all sounds nice – but in reality it’s a lot
cells of the future, and in catalytic converters it
Management. ‘I say that’s absolutely not so.
more complex.’
removes harmful chemicals from the process. It is also
An understanding of the environmental and
recyclable. While the companies will need to find ways
better-run business. The reality is that this is
BEWARE: GREENWASHING
building greater brand strength and equity.’
He raises the point that if, for instance, you
extremely low at the moment. BHP Billiton is the best
rule out mining and the related industries,
in the breed of platinum-mining companies but both
ethical contexts should, over time, result in a
SUSTAINABLE GROWTH
of making the economic benefits available to all, the potential in this industry is immense, and it is priced
you lose between 25% and 35% of the JSE.
Angloplat and Impala Platinum are also worth watching.
Companies listed on the JSE are currently
When you consider that banks will usually
3 The sugar industry
required to produce an ‘integrated report’,
finance the various mining companies, you
This is the one to keep an eye on for its waste products’
which takes into account not only the
lose out on them as well. ‘A lot of it has to do
use in biofuel, although Gray feels that the shares are not
traditional bottom line but provides detailed
with how a particular fund manager articulates
appealingly priced. Tongaat Hulett and Illovo Sugar’s
information about the company’s sustainability
the investment philosophy,’ he says. ‘They have
share prices tell the tale.
as well. According to Sustainability South
to determine their alignment and comfort,
4 Infrastructure
Africa, ‘Integrated reporting aims to give a
and they must be able to justify why they invest
Africa has a need for the development of infrastructure,
holistic view of the organisation by putting
in particular shares – and prove that it’s not
and Gray highlights railways in particular as an
its performance and strategy in the context
greenwashing.’
underused network that will be required to grow in
of its relevant social and environmental
Instead, fund managers and investment
the coming years. Grindrod, he says, is worth investing
issues.’ This is an acknowledgement by the
advisors have to identify those companies
in as the biggest private buyer of locomotives, doing
business world that the way in which a
that are environmentally and ethically sound
its bit to get trucks off the roads.
company behaves towards the environment
but that are priced relatively low, so as to offer
5 The banking industry
and the people in its communities is a vital
good potential returns. This is the core of
They are massive employers, and Absa in particular is
part of its overall health – and the pressure to
any investment philosophy, and should in no
well priced at the moment (in addition to having a strong
perform well by these measurements is only
way be disregarded because the portfolio is
community programme).
going to increase.
an ethical one. val de vie
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2013/03/27 11:44 AM